Hi everyone who is interested in the Quicktoken platform! Today, as promised, we are going to talk about how the new financial instrument offered by the platform changes the established stereotypes in such a complex area for the ordinary investor as risk.

For a detailed answer to this question, with mathematical formulas, proofs and rigorous reasoning, see the article “Comparing the risks of bank and peer-to-peer lending”. In this post, we will explain the essence of the results in simple words and explain why it is important for the further development and widespread implementation of the Quicktoken platform.

So, let’s begin.
Impact of the Quicktoken platform on market risk
May 14
The current banking system controlled by the financial regulator (whether the Central Bank, the Fed or another regulator) is a two-tiered system.

In other words, depositors (investors) put their money in the banks (first tier) and the banks lend to the borrowers (second tier). The regulator’s main headache in such a system is to prevent bank failures (which unfortunately do happen), so that upset (to put it mildly) depositors of such banks do not come out in front of the regulator with various creative demands (to return their lost funds, to feed their children, to pay their bills, etc.).

Unfortunately, it is impossible for even the most sophisticated regulator to anticipate and prevent all risks (especially in banking), and we have seen the consequences of this in the major financial institutions that have collapsed in various countries over the past decade.

What is to be done? — An astute reader will ask. Does the very nature of the two-tier system contain such a flaw?

Exactly so! Only by changing to a one-tier system (i.e. a system in which each investor directly finances a pool of different borrowers through the Quicktoken platform), is it possible to avoid the risk of bankruptcy of a particular bank whose financial policy was excessively risky, or (unfortunately, much more often) whose top management simply diverted funds from the bank in their personal interests.
Moreover, a very important result is that the average risk in a two-tier banking system (i.e. the sum of the risks of all depositors who have invested in all banks) is always higher than in a one-tier system (provided of course that the same set of borrowers is lent).

What did we end up with?

It turns out that the widespread introduction of a new financial instrument based on the Quicktoken platform is beneficial to regulators, as it allows them to solve one of their main tasks — to reduce the risk of loss of depositor funds. This is another fundamental reason for the successful development and implementation of the Quicktoken platform (as support from the regulators is never a waste).

Next time, we will elaborate on how default risks are calculated for an investor purchasing a package of tokens and how the calculation of this risk relates to the classical reliability theory.

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