The city of Berkeley in California, USA, made a big step forward in terms of adopting the blockchain — the new municipal bonds will be based on this technology.
Although cities have been issuing municipal bonds for a long time, this market of $ 3.7T lacks transparency, and ordinary Americans mostly cannot afford these instruments. In addition, the market is full of middlemen taking high commissions. Berkeley micro-bond will be issued directly to investors, which will eliminate middlemen and lower prices. Board members of Berkeley noted that micro-bonds on the blockchain will help expand investment opportunities for ordinary people, “help short term consumers become long term investors.”
Reducing costs and eliminating intermediaries allows the city to increase flexibility in project planning. Combining civil crowdfunding with municipal micro-bond protected by the blockchain-based system will help democratize capital markets by creating a direct investment tool for members of the community. While micro-bonds remove barriers to investing in municipal bonds, the blockchain component provides consumer information security and resistance to concentrated attacks and failures. And the irrevocable nature of the transactions increases the accuracy of records.
Image courtesy of City of Berkeley