Digital Prize Bond in Pakistan. Yes! You heard it right.

An interesting idea called the digital prize bond has the potential to completely transform the prize bond industry in Pakistan

Aug 11, 2023 - 01:58
Aug 11, 2023 - 02:01
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A prize bond that is digitally or block chain-based in its issuance, recording, and settlement is known as a digital prize bond. Through online platforms, it enables investors to take part in lucky draws for significant prizes. A system of storing data using blockchain technology makes it difficult or impossible to alter, hack or cheat the system. It is a specific kind of distributed ledger or database that is shared by a network of computers known as nodes. Bitcoin and Ethereum are popular examples of blockchains. Blockchain is also used for other purposes such as digital identity, supply chain management, voting systems and more.

Pakistan is getting ready to introduce Rs1, 000 digital prize bonds, with the top prize at Rs4 million, the second prize worth Rs.1 million, and the third prize of Rs10, 000,000. Through specified institutions and mobile applications buyers can purchase the digital reward bonds.

Block chain technology has been used to issue digital bonds in other nations as well. One example is the European Investment Bank (EIB), which has introduced digital bonds in euros and pound sterling. These bonds are intended to increase bond market efficiency, security and transparency.

The following are some advantages of digital reward bonds:

·        Due to the fact that they may be bought and redeemed through online marketplaces and mobile applications, they are more available and practical for investors. As opposed to the paper-based prize bonds, which require a minimum investment of Rs40, 000, they have a lower entrance barrier because they just require Rs1, 000.

·        They are more cost-effective, involve fewer intermediaries, improve traceability and integrity and increase transaction transparency making them more efficient and secure for issuers.

·        By using the programmability of blockchain technology to fractionalize or customize the digital bonds, they have the potential to draw in a larger investor base and revolutionize the bond market.

According to media sources, National Savings will issue "Digital Prize Bond Gateway," an online platform that can be accessed through a dedicated application, in a subsequent bond to make the process paper-free. Buyers will have access through this platform. Quarterly draws for Digital Prize Bonds will take place, unless otherwise specified by the Finance Division. At the beginning of each year, National Savings will announce the draw schedule, with the results appearing in the official Gazette. This cutting-edge platform will be easily accessible through a dedicated mobile application, as well as other officially endorsed digital financial channels, which not only modernizes the prize bond participation process but also paves the way for greater inclusivity and convenience for all citizens.

According to the paper that was published, the launch would start with reward bonds worth Rs1,000 and later increase to Rs500, Rs5,000, and Rs10,000.

Unlike paper-based prize bonds, which feature separate draw dates for different amounts, digital prize bonds will be eligible for all drawings. Additionally, there will be more draws for the digital prize bonds because they will occur every three months rather than every six.

However, there are still few risks or drawbacks of buying digital prize bonds. Given that they incorporate online platforms and blockchain technology, using and managing them may require additional technical expertise. Due to their limited market adoption and trading volume as of yet, they can have lesser liquidity and availability. Due to the fact that they are governed by various laws and regulations in several nations and jurisdictions, they may experience regulatory and legal uncertainties. Given that they are dependent on the security and dependability of the blockchain network and the online platforms, they may be more susceptible to cyber-attacks, hacking, or fraud.

Therefore, investors should consider the pros and cons of digital prize bond before making their choice. An interesting idea called the digital prize bond has the potential to completely transform the prize bond industry in Pakistan and abroad.

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