Why DCC and Bloom Might Be Competing with Wall Street
DCC and Bloom are developing blockchains with purpose to empower individuals with the right to use their credit. Can they compete with Wall Street?
Financial inclusivity is a term echoed among several governments, and continues to be a topic of discussion within the United Nations. At DCC, we share a vision with Bloom to transform the traditional credit platforms we have access to.
This article will present information on the work that both of us are doing, and why we might soon be competing with Wall Street.
Why read this article?
We know we can’t be the only ones in this credit journey: the one that works to bring financial inclusivity through the use of blockchain technology. So that’s why we believe it’s important to showcase champions within the industry, and give an in-depth analysis of the transformations we intend to bring to the finance industry.
Bloom: building a credit center
Aiming to achieve inclusive credit, Bloom intends to construct a distributed credit score system with 3 key components:
- BloomID, an account management system;
- BloomIQ, a credit history management system;
- BloomScore, a credit rating system.
BloomID
BloomID stores the credit scores of a user. Once there has been a third-party verification to authenticate a user, it will encrypt and store the user’s data on IPFS, and link it with their BloomID. In the future, the data can be transmitted and verified by transmission of URI. A P2P mutual-verification network will connect individual users, and Bloom will calculate a peerScore to evaluate each one
BloomIQ
BloomIQ processes credit information. It stores credit data, maintains the URI and peerScore. This process forms a comprehensive database of credit history.
BloomScore
BloomScore is the final output data to the user. When the BloomScore cannot fulfill all the requirements of a loan application, the lending institution may ask the user for more data.
BloomScore is the core of Bloom. With an innovative algorithm, it calculates a credit score (just like FICO) for a user within three steps. This process becomes a new standard for credit evaluation.
How to borrow or lend on Bloom:
- The lending institution creates a contract, which details the amount and repayment schedule of the loan.
- The user confirms the contract.
- A third party or a related party verifies the user’s information.
- The PII information is updated in the contract.
- The user uses the public key to add encrypted data to the contract.
- The system verifies the data provided by the user.
- RiskCo obtains the user’s transaction history from external data providers.
- RiskCo determines whether to use the data obtained from step 7.
- If every requirement is met, the borrower will receive the loan.
Bloom intends to permeate the market with Bloomcard, which will allow customers to buy with credit scores on and off the chain.
DCC: Building a communication network for credit services
DCC’s structure is similar to Bloom’s in how it is structured: DCCID is a system for user accounts, DCCVerify is the smart contract for credit management, and DCCreport maintains users’ borrowing and lending history.
DCCID is linked to the user’s credit data from external sources. It encrypts and stores the information on the chain, and the user may access it when needed.
DCCverify stores a summary of the user’s external credit history, and is used for verification during the data transmission process. It enables users to own and use their credit data.
DCCreport stores a summary of the user’s borrowing and lending history. With DCCreport, users can send and prove their own history, without the participation of the counterparty. Of course, every individual user and lending institution has a journal stored on DCCorder, which helps keep track of the loan’s repayment status during the entire period.
Let’s have a look at the loan application process on DCC:
- The user looks for potential lenders on the DCC platform.
- The user sumits the required data with the application to the lender.
- The lender verifies the information on the chain. If everything looks good, the information will be sent to risk-control system.
- The lender agrees to lend, and update the status of the loan as well as the plan for repayment.
- After the loan is issued, the user’s DCCreport will be updated, including this loan in the credit history.
DCC intends to become a distributed network for credit information. It will use different types of credit data as “genes” and construct various credit portraits for different financial situations . By providing secure, reliable information to data analysis agencies and AI companies, DCC will facilitate the growth of the increasingly diverse financial industry.
As a representative of the blockchain era 1.0, Ripple focused on transactions and settlements. Now, in the 2.0 era, fintech companies are expanding into credit and loan services. With the power of blockchain, Ripple has significantly improved the efficiency of transaction and settlement, but the new leaders are starting to evolve in some other areas. Transforming banking and credit services, they are disrupting Wall Street’s traditional finance with blockchain.
Both Bloom and DCC aim to solve the common problems in the current credit system, with a goal to make it easier for people to obtain low-cost loans.
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