The Solutions for Small Business Financing
Lending money is all about trust and its mechanical gears such as collateral, quantified reputation, and fear of punishment. Born in already well-established societies, we take the existing business trust culture for granted; we rarely doubt its basics and address the quantitative measurements of business friction costs. However, to solve global credit gap — we should mostly operate in younger countries where business trust is not granted. Using trust based blockchain solution Debitum Network ensures needed trust for all counterparties, especially investors, to operate within the ecosystem.
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| Source: https://debitum.network/whitepaper |
To consider comparatively complex lender-borrower relations, let’s take a step back and see how Bitcoin and other cryptocurrencies may change and simplify retailerconsumer interactions. To be able to conveniently pay in all stores, consumers go to the market of payment instruments where they have a narrow choice of VISA or Mastercard which are essentially the same.
Retailers have more options — Ingenico, Verifone, and a few others — but, since the interchange fee is still there down the line, that seeming variety does not allow them to circumvent high costs. Putting its currency and monetary dimensions aside for now, when Bitcoin, a decentralized payment tool, steps in, it theoretically allows consumers and retailers to interact with no intermediary, using the free open source tool. In practice, however, there are ‘Bitcoin operators’ such as a wallet software or side-chain providers who make life a lot easier without charging monopoly-like fees.
Three main pillars of the ecosystem
Debitum Network is based on three important pillars that ensure its uniqueness, disruptiveness as well as will ensure positive results on smalling the credit gap:
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| Source: https://debitum.network/whitepaper |
True decentralization
There are 154 countries indicated by the World Bank where SMEs experience credit gap and where a solution like Debitum Network could help closing that gap by providing ecosystem of counterparties and connecting it with global investors. However, saying that Debitum Network team will just set up in 154 countries and bring the ecosystem to market on their own would be a fallacy.
As Debitum Network is initial market maker and facilitator for solving worldwide credit gap by connecting SMEs with global investors who can rely on service provided by local or regional counterparties, i.e., verification, risk assessment, insurance, debt collection. It is possible to attract global investors to distribute their available capital as well as attract SMEs to borrow and finance their growth; however, to make the whole ecosystem truly decentralized, global and self sustainable service providers will be organized in ‘communities’.
Communities are decentralized and truly global, consisting of various service providers and ‘institutional borrowers’ — alternative finance companies already serving SMEs that could attract more global investment and restructure their portfolio by using Debitum Network.
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| Source: https://debitum.network/whitepaper |
A community consists of one or many local or regional service providers that work together to ensure service provision. Members of the community can be both crypto or non-crypto (having a crypto agent) based. Communities will offer a unique motivation for each individual as well as whole group to become more trusted as when any service is performed both the individual counterparty and their community will earn or lose trust rating.
A community leader will get a fee via community’s trust arbitrage smart contract from each of community’s members activity, hence the leader would be motivated to develop business and grow the community — thus leading to self sustainable Debitum Network ecosystem in thelong run.
Borrowers and investors should be excited to have communities within Debitum Network as they can trust their service to community and whoever is there can deliver it. On the other hand, it is better for individual counterparty to be a part of a community as it provides more business opportunities and faster growth via trust (as community’s trust grows, each counterparty’s trust de facto grows).
Communities are also the ones that take care of resolving issues, marketing their members, growing the community and other tasks relevant to the community (on and off the blockchain). Each community will have a community leader who has additional functions available for community trust arbitrage smart contract.
We believe that using communities is the only way to ensure that needed level of control is decentralized and closer to the final customers of service providing counterparties — borrowers and investors. At the same time, such organizational design provides a lot of freedom to local and regional communities and service providers. We believe that this is the only way to ensure fast, efficient and stable global growth of Debitum Network.
Setting up a community
Anyone (single or several companies, single or more individuals) who wants to start a community for service provision within Debitum Network, must implement Debitum Network Community smart contract interface / API. Additionally, in this smart contract, the community leader must provide rating calculation algorithm for community members and provide it for an audit by Debitum Network Trust Arbitrage to ensure the rating calculation fits local specifics and are objective and in line with all other rating calculations.
As an alternative Debitum Network provides an implementation of Community trust arbitrage smart contract. Community leader may order implementation of Community trust arbitrage smart contract from Debitum Network Trust Arbitrage smart contract factory. Community is listed on Debitum Network portal if and only if Community’s trust arbitrage smart contract passes audit.
If community will choose to construct their own implementation of Community trust arbitrage smart contract they have to consider implementation of community trust arbitrage smart contract standard (protocol).
Feedback management
All audited trusted communities will be listed on Debitum Network. If service requestor (borrower or investor) will have feedback about provided services from community member, community must ensure possibility to register feedback (both positive and negative) and communicate with member, especially to solve negative feedback.
Community and community leader must take responsibility for ensuring that provided service from their members is appropriate and performed on decent level of quality. Otherwise they must ensure the underperforming counterparty improves or is removed from the community.
If service requestor (borrower or investor) won’t get any follow up actions from particular community, it will be possible to register feedback with Debitum Network Trust Arbitrage. It will investigate if community actions were sufficient. If not, Debitum Network Trust Arbitrage may take a pre-designed action, i.e., use counterparty’s frozen Debitum tokens to compensate feedback provider, manually drop rating for the counterparty or its community, or even ban the counterparty or its entire community from Debitum Network.
More Information, pelase visit website below:
Telegram: https://t.me/debitum
Facebook Page: https://web.facebook.com/DebitumNetwork/?_rdc=1&_rdr
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