Transform Financing using Blockchain Tech

Impact investing is really turning the world of financial returns up side down. Blockchain Impact investing, on the other hand is not focused to maximize returns but strives for a social and/or environmental impact alongside financial gains. As the market for impact investing matures, transparency and effectiveness will continue to evolve as its defining characteristics. And this is where the blockchain technology can help as it presents novel solutions for some of the sectors’ crucial issues. In this topic, we talk about how blockchain is affecting impact investing and the downtakes of its system regarding investors’ prospects with businesses.

What is Impact Investing?

Essentially, impact investment is putting capital into businesses or projects with the intention to achieve clear and well-articulated social styles. It is more of a business model that can make money, but it puts pressure on generating positive social impact beyond traditional philanthropy. The main principles of impact investing are:

• Intentionality: the intention is clear to investor before investment (social and environmental goals are part of recitals).
• Measurability: Impact investments are measured and evaluated, so outcome performance is important.
• Investors expect to get some financial return on their investments, even if below market rates.

Jumping into Blockchain Technique

A blockchain is a decentralized, distributed ledger technology that records the provenance of information across multiple computers in such a way that no backdating can change it. Individual transactions, or “blocks”, are then linked to the previous transaction in a chain of records that cannot be retroactively altered. The ability of blockchain to be both transparent and secure makes it an attractive option for multiple use cases from financial transactions, supply chain management or anything that requires trust in a digital world.

Why Impact Investment Needs to Bring in More Transparency

In impact investing, where the money belongs to stakeholders who want proof not just of results but also how exactly their money is spent and what outcomes are created. This is because impact measurement is a tricky and often not well understood process, with legacy data reporting most times lack transparency or inherent biases. Investors alike require dependable, timely information to analyze their investments in order that they genuinely fulfill what these was initially expect.

Transparency, how does the Blockchain do this

Blockchain solves the transparency and disclosure issues of impact investing as it provides an unalterable record for all transactions so that those paying money can see how their donations or profits are spent. This technology provides the transparency for investors to track their investments in real time and critically validate that impact on is being achieved. Key benefits include:

Protected Records of Investments

The most important reason is that all investment records are permanent on the verified blockchain and cannot be changed. Once a transaction has been recorded on the blockchain, it is there permanently and cannot be changed or removed. This is especially relevant for impact investing, where there can be greater operational complexity in evidencing the data that is being collected. Uphold Impact is already using blockchain to confirm investment records in real time.

Real-Time Tracking of Impact

Using blockchain, investors will have access to real-time data in terms of the impact they make with their investments. This continual monitoring enables investors to appreciate the tangible impact of their investment and allows them make decisions based on data. Blockchain can, for example, follow the flow of social programs or environmental projects in general and show its results with ease.

There should be audit trails and therefore Accountability.

All transactions are transparent because this is a trades chain, and no central authority manage it. Hence, this allows for any investment and the subsequent impact to be traced back on the blockchain. This level of transparency creates a sense of accountability and in turn provides a powerful defense against fraud or waste.

Enabling Low Latency Transactions with Blockchain

Transparency added by Blockchain: It is not only transparency that the blockchain provides but also assists in various other solutions to ease impact investing. Blockchain automation helps to eliminate processes and keep administration costs low, which is important for both organizations.

Cutting down on Administrative Costs

Blockchain has a feature called Smart Contracts which eliminates many administrative tasks associated with impact investing. These smart contracts set in motion events when a certain requirement is met, such as automatically distributing funds or determining the impact of an event. This eliminates middlemen, reduces compliance and reporting efforts.

Simplifying International Growth Investments

6- Blockchain helps enable cross-border investmentAs we mentioned, one of the key things that blockchain can provide an excellent benefit to investors is secured and fastest way for funds transfers (including verify them) from different countries. This is important for impact investment as most projects are global in nature and need international partners to make them viable.

Lower Transaction Costs

This eliminates intermediaries and reduces the administrative overhead resulting in significantly lower transaction costs. The lower fees allow more of each investment to flow directly into the projects for which they were intended, and your donation has even greater impact.

How Blockchain Is Helping to Attract a Whole New Breed of Investor

It could potentially draw in a new breed of investor — the type that are familiar with online transactions, and expect reservations about dealing solely though trust. Blockchain makes impact investment available to more people by offering a simpler, easier and faster way of the process.

Brief Tuesday, June 28,2016 Expanding Impact Investing Access

Blockchain empowers these smaller investors to take advantage of the opportunities limited only to larger institutional investors that we, for the first time ever in history Djuyoto Suntani as a Bodowantaare from OIRT people and I am also descendant on this land. Blockchain based platforms such as WePower are opening up investment opportunities to the masses.

Carson Group Commentary Engaging Next-Gen Investors (via Advisor Perspectives) Fans of Cohen’s pitch to the next gen will be glad it didn’t come off as overly preachy.

Younger investors find blockchain appealing and innovative. Additional blockchain connectivity is an appealing characteristic for impact investing platforms, as this group values transparency and therefore tech that they feel adheres to those principles.

Challenges and Considerations

Despite the positives involved, blockchain technology also presents several challenges within impact investing. These include:

Technical Hurdles and Scalability — Developing blockchain use cases demands a fair bit of technical knowledge & infrastructure. Additionally, blockchain networks must provide scalability to manage high numbers of transactions for adoption.

Regulatory & Legal Landscape: The rules around blockchain and crypto are a patchwork, varying region by region.

Security and Privacy: Among blockchain and it benefits is an increase in security however the storage of personal data, keeping information private conflicting with deploying security are other wondering issues.

The Future of Blockchain And Impact Investing

The future of blockchain in impact investment appears bright — as new tech and advancements continue to diversify its applicative extent. This means, we will see a lot more advanced blockchain applications which create a significantly higher level of transparency and efficiency in the impact sector.

Conclusion

The technology is making an impact on more levels than ever before: creating transparency, lowering transaction costs and appealing to a new generation of investors. Blockchain tackles many of the difficulties that have plagued impact investing with an intrinsic belief in immutability to provide records, real-time tracking and seamless transactions. With future generations of the technology it has potential to move us towards a more objective impact paradigm — an open book which allows us and others to see what really works, in real time.

FAQs

Key Advantages of Blockchain in Impact Investing

The system of blockchain increases transparency, lower transaction costs and real-time tracking ability for the impact allows easier manageability, measurement investments.

In a Nutshell, How Does Blockchain Enhance Transparency in Impact Investing?

It provides unchangeable records to verify the contribution outcomes, allow you track your investments and see at what stage is task that will trigger result of a token influence in which way final results.

Examples of blockchain impact investing platforms.

For example Uphold Impact and WePower who are enabling blockchain based fractionalised transparent investment records to massively grow the impact investing market.

Is it possible for blockchain to completely root out fraud in impact investing?

This substantially de-risks potential avenues of fraud, but does not entirely eliminate the threat. However, its disclosure and immutability are providing less of a platform to engage in fraudulent activities.

So what are some of the biggest challenges to using blockchain in this space, specifically for impact investments?

Difficulty scaling and regulating, conducting secure transaction in a blockchain implementation are some of the challenges.