The introduction of cryptocurrencies and blockchains is planned for humanitarian reasons for a new expansion, as the Danish Red Cross sponsored a disaster management association that aims to provide relief after the volcanic eruption.
According to the CIR, the disaster band – often abbreviated to Cat Bond – is supported by private companies and other humanitarian agencies with investors such as Solidum Partners and Plenum Investments linked to the project.
Using blockchain technology developed by Replexus, an insurance risk securitization group, cat bonds are designed to raise funds for humanitarian aid and accelerate the launch following a catastrophic volcanic eruption.
Cat’s blockchain-based bonds will increase to around $ 3 million and will focus on 10 active volcanoes around the world. According to the report, these selected volcanoes pose a serious humanitarian threat to more than 700,000 people living within a 60-kilometer radius of each volcanic mountain.
The ten active volcanoes covered by the Cat Association include Popocatepetl in Mexico and Nevado del Ruiz in Colombia. Other companies include Merapi and Raung in Indonesia, as well as Fuego in Guatemala and Villa Rica in Chile. Mountain. The insurance fund also includes Cameroon in Cameroon, Pichincha in Ecuador, Cotopaxi and Tungurahua.
Commenting on the project, Replexus CEO Cedric Edmonds said:
“The Volcanic CAT bond will be placed on an insurance-related bond, making the agreement particularly profitable for the emergency relief agency and allowing trading in the secondary market among ILS investors.”
In fact, Mitiga Solutions has clearly several risks in developing a simulation system to facilitate the allocation of funds. The system analyzes the height of the ash plume from the eruption, as well as the wind direction, to determine the risk profile of vulnerable communities living around volcanoes.
As soon as the ash plume crosses a certain height and the prevailing wind blows in the direction of these communities, a system developed by the Mitiga Institute will automatically approve the payment of compensation for cat bonds. Replexus has also created a licensed blockchain responsible for de-bonding bonds, with a system that is said to be able to reduce settlement costs by as much as $ 400,000 per bond issue.
Crypto- and blockchain companies continue to play an active role in providing humanitarian assistance in times of natural and man-made disasters as part of their social responsibility. As the Cointelegraph previously reported, crypto companies donated money to help people affected by the winter storm in Texas earlier this year.
Back in January, the American Cancer Society partnered with cryptocurrency charity The Giving Block to create the first ever cryptocurrency foundation to fight cancer.