Blockchain Mutual Credit (BMC) is a type of mutual credit system that uses blockchain to account for the transactions within its network. BMCs are used as a form of alternative finance, allowing users to trade goods and services without relying on traditional fiat currency or banking systems. Using distributed ledger technology (DLT), BMCs create a decentralized, secure platform which allows members to transact with one another directly, eliminating the need for third-party intermediaries.
Unlike conventional banking systems where money is lent out at interest rates determined by banks and other financial institutions, BMCs operate under an “interest-free” model whereby all participants are treated equally regardless of their financial status. The idea behind this model is that everyone involved in the system can benefit from it equally. This makes it attractive for people who may not have access to more traditional forms of financing due to lack of collateral or credit score requirements set by banks and other lending institutions.
In addition to being an alternative form of finance, BMCs also offer benefits such as transparency and efficiency compared to more centralized systems since all data is recorded on the blockchain in real time so there’s no need for additional reconciliation processes between parties involved in each transaction. Furthermore, because these networks are completely digitalized they don’t require physical infrastructure like bank branches or ATMs; instead they rely entirely on peer-to-peer interaction facilitated through smart contracts which allow parties involved in each transaction to agree upon terms beforehand ensuring faster settlement times than those associated with regular banking operations.
Finally, a key feature that sets BMC apart from other forms of capital markets is its ability to enable cross border payments securely while also reducing foreign exchange risk due to fluctuations in global currencies because all transactions occur using only local currency within the system itself. This can be especially beneficial for small businesses looking for ways around expensive international payment processing fees charged by large corporations like Visa or MasterCard when dealing with customers abroad..
