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Decentralization of geography and IT

Here are the 10 key features of Karma:

Source: Karma

Karma is decentralizing geography and IT, creating a platform connecting users across the globe, as well as developing socio-economic relationships.

Karma provides the opportunity for P2P exchange of resources between citizens and legal entities from various countries. There are many motivations for cross-border that includes offering services for people in countries with cheap money (negative deposits, negative mortgage rates) and those with expensive money (loans of 20-30% or more). Moreover, there are a plethora of technical and legal issues in the process of implementing the cross-border exchange.

Those who have worked with international payments know there are many complexities of cross-border transactions. For example, banks often require many references and documents to transfer capital, even small amounts. Karma is looking to provide a solution to this problem by automating and simplifying this process.

There are some options for cross-border operations:

  • “If transferring occurs in a fiat currency, they are conducted through an escrow account in a bank to which the Karma application is connected via the API. The application of the comment field to the payment order automatically identifies which payment is related to a particular contract and what sort of payment it is: an investment or a loan repayment.
  • Another version of cross-border transfer: fiat - crypto asset - fiat. To date, the transactional costs in this process are much higher than with fiat transfers. If the world had a convenient legal service for such operations at a suitable price, it will be connected to the ecosystem of Karma.”

Source: Karma

Another key point of Karma's cross-border nature is the decentralization of competencies to different countries where Karma is present. Banks, investment funds, P2P platforms are often enclosed within the same region, as they do not have competencies in other regions. Karma’s model allows it to form a community of experts in nearly any country.

Another feature of Karma’s cross-border lending is the insurance of currency risks. It is often recommended to issue loans in the fiat currency in which the borrower earns and spends the principal amount. However, the rate of this currency can rise or fall in relation to the exchange rate preferred for the investor.

At the initial stage of Karma’s development, there would be a separate fund for insurance of currency risks for investors. The fund will accumulate currency risks and reinsure them from large players or hedge in open markets.

The cost of currency insurance will be based on the market and individual for each currency pair. Just as the traditional financial industry, investors choose whether to purchase insurance for currency insurance.

Karma is also decentralizing IT by implementing blockchain technology. According to Karma, blockchain technology would provide the project with:

  • Reliability of data storage due to encryption technology.
  • The increase of fault tolerance due to decentralization.
  • The ability to operate with crypto-assets: BTC, ETH, tokenized assets (gold, real estate, shares of factories).
  • Binding to present and future blockchain registries: identification of individuals and companies, the state register of inventory, registers of depositories of valuable papers, identifiers of purses and transactions of crypto-currency.
  • The role of the electronic notary for fixing promises and the facts of their fulfillment.”

Now, the basis of Karma’s blockchain is the Graphene technology. The maximum speed of transactions would be 100K per second and the minimum transaction price would be $0.02.

Karma’s speed and efficiency of transactions are possible due to the fact that Graphene is based on consensus delegated proof-of-stake (DPoS). Therefore, there is no expensive and labor-intensive mining in Karma’s ecosystem. Tokens were mined in advance, and the network members simply exchange them and fix transactions in the blockchain. Although there is no mining, it should not cause users to stray away from the project. In fact, there are a lot of crypto assets without mining, as shown on CoinMarketCap, which are marked with asterisks. Some popular altcoins without mining include: Ripple, NEM, OmiseGo, NEO, TenX, BAT.

With decentralization of IT and geography, users can participate on Karma’s platform which should further the development of the project. That said, let’s get into Karma’s automation process and smart scoring, the two interesting features of the platform.