Business 23 November 2017

Ed Drake

Banca IMI unveils Ethereum derivatives white paper

Italian bank Banca IMI has explored the possibility of derivatives traded on the distributed server processing system ethereum, as part of a white paper published on Wednesday.

The bank, which is part of the much larger Intesa Sanpaolo group, drew up the report to examine how the $1.2 quadrillion global market for derivative instruments could be facilitated via blockchain technology.

In particular, the report focuses on an ethereum smart contract developed by the bank in partnership with blockchain firm Oraclize, which eliminated the possibility of default in derivatives contracts, even in cases that end in legal disputes.

The report was penned by the bank’s head of credit and interest rate models, Massimo Morini, and focuses on work central to his role at the firm. In addition to his work on derivatives, Morini also revealed several other projects that are under development, which could ultimately lead to an entirely new blockchain model for derivatives transactions.

Discussing the fundamentals behind the paper, Morini said Banca IMI had been working to develop a business model around offering these guarantees via the blockchain, in a bid to help create improved systems for derivatives trading.

“We tried to design a business model exploiting the technology such that from a financial point of view it works on the public blockchain, because the guarantees are so much stronger than those we have with standard technology,” he told CoinDesk.

The system focuses on collateralized derivatives, which currently experience delays, error and defaults as a result of generic contracts. However, with the Banca IMI system leveraging smart contracts for more precise paper in derivatives trading, their proposed model could eliminate these common issues.

Banca IMI revealed in the report that a proof of concept model had been developed and tested, demonstrating how in-built terms of derivatives in smart contracts could eliminate the potential for these problems to arise.

“In the end, it’s enough that the smart contract keeps a little amount of funds to be used in case one stops paying, to guarantee that even if one stops paying, in a few hours, you are out of the contract and you have lost no money…This is really a different business model from what we are used to seeing in standard financial markets, but financially, it works,” Morini said, according to the news outlet.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper. Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

COMMENT

latest news

Blockchain, Brexit, and Ireland: What will happen?

Business 1 hour ago

Blockchain, Brexit, and Ireland: What will happen?

The economic uncertainty has led many to believe that cryptocurrency might be able to play a role, since traditional currencies might not be able to stabilize through the crisis.

Read More
Cryptopia outlines eventual return as exchange resumes trading

Business 1 hour ago

Cryptopia outlines eventual return as exchange resumes trading

Co-founder Rob Dawson categorically denies that an exit scam took place, and points out that Cryptopia actually plans on reopening. For now, the crypto exchange has resumed trading on 40 various crypto trading pairs.

Read More
Galaxy Digital invests $5.25 million in Bison Trails

Business 2 hours ago

Galaxy Digital invests $5.25 million in Bison Trails

After investing his clients money at the worst possible time, Stefanos Papanastasiou is being sued for losing most of the money.

Read More