Creditcoin Q&A | January 2024

This month we discuss how Bitcoin ETF impacts RWA, the main objective for 2024, and how to explain RWA to beginners...

Creditcoin Q&A | January 2024

Welcome to the regular Q&A, where we answer the communities most burning Creditcoin questions! 

If you'd like to have your question answered next month (and win some CTC for getting selected), then make sure you follow us on Twitter and tap the bell icon to get notified when the Q&A survey goes live! 

Otherwise, feel free to drop into the Discord, say hi, and ask any questions you may have. Without further ado, lets jump in.

Q1. How would someone explain RWAs to a person new to crypto?

Fortunately for anyone new to crypto, Real-World Assets (RWAs) is easy enough to understand. Why? Because after all, it’s all about the real-world traditional financial assets which they probably already know and love. Basically, it's everything except for the magical internet money you’ve just discovered at the beginning your crypto journey.

Think real estate, artwork, bonds, commodities and corporate stocks, except this time, it's all on a blockchain.

But - your friend now interjects- why bother putting real-world assets on a blockchain though?

Well, first you need to understand what blockchain is good at. At its simplest, blockchain is an incredibly secure and efficient way to know exactly who owns what.

At the moment, knowing who owns what relies on banks, brokers and the various other financial institutions that run the world. Unfortunately, all this settlement and figuring out who owns what actually costs quite a bit of money in fees and administration etc. Plus, there’s always the risk of someone just fiddling the books and adding a few zeroes where they don’t belong.

By using blockchain, we can make the settlement process for various real-world assets trustless, secure, and most importantly, more efficient (i.e. cheaper). The cryptography behind blockchain also prevents any single person from editing any transactions (fraud).

But that's not all. The second superpower driving RWA adoptions is asset fractionalization. By converting ownership rights into tokens, they can be split into smaller fractions. Why is this useful you say? Well simply, it allows for more liquidity. In other words, by creating smaller units, and making it cheaper to transact those units, it becomes much easier to trade various assets.

As an example: You want to invest in art, but naturally, you can’t quite afford to buy a Picasso all by yourself (or if you can then congrats). Assuming you can’t, what you can do with tokenization is buy a portion of the Picasso instead, say just 1% of the available ownership tokens. This can help to make traditionally illiquid assets much more liquid.

Q2.  With the recent approval of spot Bitcoin ETF applications, how could this make RWA protocols such as Creditcoin more compelling?

Let’s start by considering who this new ETF is really targeting. The tech-savvy youngsters are already in crypto, this ETF clearly targets a more traditional investor user base.

By extension, we can expect this segment to hold a more traditional view of how finance should work. And after all, they’re right. Bonds, securities, etc are clearly more important for the global economy than DOGE.

And this is what makes RWAs the most obvious starting point for these new market entrants. After all, it’s the same old concepts, just with a much-needed technological face-lift. Blockchain is evolving how these real-world asset markets work, but they’re not something completely new or alien. That makes RWAs a compelling industry segment, as the convergence of blockchain and the traditional financial sector continues to gather pace.

Q3. What is the main objective for 2024?

The major Creditcoin 3.0 upgrade is due to be released in the coming months. That will deliver EVM-compatibility, and transform Creditcoin into the world’s first RWA-dedicated EVM-compatible blockchain.

Of course, EVM-compatibility alone isn’t that useful. You also need builders to develop new dApps, and you also need channels to acquire new users.

The upcoming 3.0 upgrade only represents the first version of the Creditcoin 3.0 protocol, with the development of Universal Smart Contracts beginning after the EVM-compatible version is released. This will enable the protocol to interact with multiple different chains and enable all sorts of exciting new multi-chain dApp opportunities.

Q4. Do you plan to target the Creditcoin Network towards certain geographic areas or regions?

Being a decentralized network, our network is open to all. However, targeting emerging markets with less developed financial and credit systems, particularly those in Africa, has always been a part of Creditcoin’s core ethos, namely, targeting emerging markets

Quite frankly, there’s less need for something like Creditcoin 2.0 in more developed financial systems, which have established incumbents and technology, as well as extensive data sharing and transparency regulations.

On the other side, emerging markets have a huge untapped demand for private credit, making it a perfect match, with limited access to credit financing being cited as the biggest limitation on business growth on the continent, higher than water, corruption, and even electricity in many cases.

These countries have low-trust and low-transparency financial systems. Creditcoin offers these countries a chance to skip a technological generation, jumping straight into a highly transparent, secure and trustless financial future based on the principles of decentralized cryptography. To this end, Creditcoin is already working with a number of RWA companies on the ground, such as Aella based in Nigeria. Together, we’ve already recorded over a million real-world transactions on the blockchain.

For a more detailed breakdown of why these countries stand to benefit from Creditcoin, check out our “Why Creditcoin” article here.

About Creditcoin

Creditcoin is the world’s leading real-world asset infrastructure chain, with over 3 million credit transactions recorded to-date. By matching borrowers, lenders and investors on-chain, the protocol is paving the way for a new generation of globally interoperable credit markets.

Having integrated with various fintech lenders and connecting them directly to global DeFi investors, the Creditcoin network has helped thousands of borrowers, businesses, and investors secure capital financing, build credit history, and make global RWA investments.

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