Importance for the market
Blockchain-based solutions can improve the financial viability of impact investments in multiple ways. First, they can eliminate or mitigate significant project-related risks, which would otherwise need to be priced in by investors. These risks include counterparty risk, data risk, liquidity risk, and some forms of political risk. The mitigation of these risks will result in a lower cost of financing, improving the overall bankability of projects. Second, blockchain-based solutions can decrease transaction-related costs significantly. This is particularly a problem in the case of projects based in emerging or developing countries. Blockchain enables the frictionless transfer of value, eliminating most, and in some cases all, of the intermediaries needed to facilitate transactions.
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