The Red Cross will support the use of the Blockchain in order to issue bonds with the aim of providing humanitarian aid to countries with possible volcanic eruptions.
First volcanic bond
According to CIR magazine, the Red Cross, Mitiga Solutions and Replexus have presented to the world the first blockchain-based volcanic catastrophe bond.
The purpose of the bond is to raise funds for humanitarian aid and hasten its release after a devastating volcanic eruption. According to the magazine, the bond will be backed by private companies and humanitarian institutions.
Therefore, the bond plans to raise around USD 3 million and will focus on 10 active volcanoes around the world.
In the case of Latin America, the countries that will benefit are Mexico, Colombia, Ecuador, Chile and Guatemala. In addition, Indonesia and Cameroon will also be candidates.
According to CIR magazine, the volcanoes found in the aforementioned countries represent a significant humanitarian risk, especially when we consider that more than 700,000 people live within a 60-mile radius of each volcanic mountain.
How will it work?
As reported, the bond will be activated for the country immediately after a volcanic cloud reaches a certain height.
It is worth mentioning that Mitiga is a technology company that has perfected the predictive capacity of natural disasters. In this sense, the CEO of the company, Alejandro Marti, explained that he can anticipate the trajectory of volcanic ash and, with it, evaluate its impact on the region.
Therefore, the information you provide will be key when distributing the voucher to the most affected areas. For its part, the Blockchain network that apparently reduces settlement costs by up to USD 400,000 per bond issue.
From the investors’ perspective, the money raised during the bond issue is stored in a trust fund until maturity. In the event of an event, the premium will be used to cover it. Otherwise, investors get their capital back plus interest.
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