A Real Asset – No Counter-party Risk

 Counter-party Risk

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When there is no need to make a claim to an issuer of an asset to receive the underlying value, that means there is no counter-party on the other side of the trade. When you don’t need to ask permission to receive your value, there is no counter-party. When you don’t need to rely on the good graces of the person you are dealing with in order to get paid, there is no counter-party. Examples of instances where counter-party risk exists in day- to-day commerce include the basic case of leaving your money on deposit with the bank. The risk is that when you go to the bank and request the withdrawal of your cash, say $50,000, it would be a surprise if the bank was able to provide that cash upon request, firstly and without any questions asked, secondly. How long would it take to get access to $50,000 of your own currency from the bank? You may decide this isn’t really a risk though it may make sense to consider a how much more fluid life would be if there was no delay at all when money was required, as in immediate access, that is one of the benefits of an asset, like bitcoin, with no counter-party risk.

A second example of a situation where counter-party risk exists is at the root of the currency you hold: the currency is issued by a central bank or a government authority. While there is an understanding that there should not be a direct default in the value of your currency when you go to exchange it for a good or service, there is likely to be the situation where the government is issuing more currency units every day, depleting the value of the currency units you hold, the effect is a slow steady yet certain long-term default.

Bitcoin is a real asset, in and of itself, those who hold it, own it. There is no permission required to send it or redeem it for another asset. Bitcoin is …PRIVATE PROPERTY.

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