The adoption of blockchain is expanding faster than imagined as various use cases are already beginning to erupt. The Danish Red Cross has created a $3M catastrophe volcano bond managed on the blockchain. According to the group, this was done to cover for volcanic events in susceptible regions.
First Volcano Bond Sponsored by the Danish Red Cross
Based on a report, the Danish Red Cross (DRC) has adopted blockchain to set up a catastrophe volcano bond – also cat bond – as immediate support in case of a volcanic eruption. The DRC has planned that the fund will cover 10 susceptible areas across Asia, the Americas and Africa. It also revealed that it has partnered with other philanthropic firms like Solidum Partners to execute the project.
The cat bond project will be managed via blockchain technology from Replexus. The DRC has proposed to use about $3 million, which will target about 700,000 people living in a 96.5 Km radius from the selected volcano-prone regions. According to the report, the named volcanoes are in Cameroon, Mexico, Chile, Indonesia, Columbia, Ecuador and Guatamela.
Danish Red Cross Volcano Bond to Lower Settlement Costs
Mitiga solutions, an advanced risk management firm, has created a model for distributing the funds. The system was designed to know the exact moment to release the funds. Therefore, once the volcanic eruption occurs, the cat bond will be immediately deployed to provide support for the affected areas.
Replexus revealed that the dematerialized volcano bond setup will lower settlement costs by about $400,000 for each bond issued. Recently, we have seen an increase in humanitarian services reaching out to help cushion the aftermath of disasters. Although, this is not the first crypto-related service, it definitely won’t be the last.
Blockchain will go a long way in improving Humanitarian aid. For instance, Bitcoin donations could help get money to people in countries experiencing an economic crisis. Generally, it will help in situations that require financial support.