Forbes Impact Summit — The BitMinute Credit Score Discussion
One key to breaking cycles of poverty in less developed economies is to expand access to affordable credit facilities for local entrepreneurs. Working capital is hard to acquire when all you have to offer a lender is anecdotal evidence about how well you run a cash-and-barter based business.
And local lenders may only have accumulated limited amounts of cash themselves, and are careful to whom they lend it. Plus the informal nature of the financial system encourages inside dealing and “rent seeking” which makes open, transparent, objective underwriting impossible.
Blockchain-based tokens have the potential to provide the transparency and formality that could expand the ability of local enterprises to both borrow and lend micro and nanoloans profitably. And if blockchain-based financial tools get established within the community, local people using the services start to get that objective track record of solid fiscal management. We track their transactions using the token.
The BitMinutes Credit Scoring System
In the case of BitMinutes (BMTs), locals can buy BMTs to use as airtime minutes on their phones, or build balances to store their net worth in a safer place. Or they can use the BMTs to pay bills and settle debts. All this activity get tracked in their mobile BMT account app. This history builds into a credit profile that could be used to underwrite a business or personal loan. Loan payments could also be handled digitally.
The technology relies on blockchain, tokenization and “traditional” SAAS SMS-based delivery systems to keep the local cost of delivering financial products low, which is indispensible for breaking poverty cycles. The only investment required to turn a corner store into a corner banker is a smartphone through which to deliver the services, and a mobile phone of any type in the hands of the customer. The cloud provides the conduit through which these two devices conduct the needed transactions. The retailer, which is already set up to handle cash, facilitates any cash-in/cash-out needs.
The audience at the Forbes Impact Summit was fully engaged in this discussion, and had great questions. As Forbes make more clips available from the event, we will post them to the BitMinutes YouTube Channel.