Crediting and debiting are the foundation of human interaction. Prior to the advent of blockchain technology, peers had no way to properly express credit between one another. Instead, they had to rely on banks or other intermediaries to keep track of credit and debt.
The problems with this old-fashioned system are numerous. For one, decentralized autonomous organizations and other entities that don't use traditional banking systems are left out in the cold. In addition, this system is slow and cumbersome, often taking days or even weeks to settle claims.
This is because the traditional settlement process is akin to a Rube Goldberg machine: each party has to contact their bank, which then has to contact the other bank, and so on and so forth until the claim is finally settled. This process is not only slow, but it's also expensive, as each bank charges a fee for their services.
Not only is the system slow and inefficient, but it's also controlled by a small handful of banks and other financial institutions. This oligopolistic power structure gives these institutions an unfair advantage over their customers.
Furthermore, the traditional banking system is plagued by a lack of transparency. Customers have no way of knowing how their money is being used or where it's going. This lack of transparency creates an environment ripe for abuse, as banks are free to use their customers' money however they see fit.
Last but not least, the traditional banking system is rife with fraud and corruption. This is because there is no way to verify claims or transactions. As a result, banks are free to engage in fraudulent activities with impunity. This was evidenced most prominently during the 2008 financial crisis, when many banks refused to honor claims and instead kept the money for themselves.
The tokenized credit solution
Enter the Bulla Protocol. This protocol enables users to "commit" to sending or receiving future payments by creating what's called a Bulla Claim. A Bulla Claim is an expression of credit between two parties, and it contains all the information necessary to settle the claim in the future. This way, creditors and debtors can face each other directly, without having to go through a bank or other intermediary.
The benefits of this system are numerous. For one, it's much faster than the old system, since settlements can happen in minutes or even seconds. In addition, it's far more secure, since Bulla Claims are stored on the blockchain and can't be tampered with or forged. Finally, it's more transparent, since the terms of the claim are laid out upfront.
DAOs, in particular, stand to benefit greatly from the Bulla Protocol. Using centralized banking systems introduces all sorts of risks and vulnerabilities that can be avoided by using a decentralized credit system.
A "future history blockchain"
A blockchain is a tool for documenting transactions and balances, but the Bulla Protocol takes it one step further by expressing commitments to future payments. This is possible because each Bulla Claim is minted to the creditor as an NFT.
An NFT is a "non-fungible token" that expresses an important duality: my credit is your debt. Such an NFT could even be bought and sold on a "factoring" market, where businesses that need cash immediately can sell their future receivables at a discount.
This is just one example of how the Bulla Protocol can change the way we do business. By enabling direct peer-to-peer credit, the Bulla Protocol opens up a whole new world of possibilities for commerce and finance.