This Startup Is Set To Finance Small Business Using Blockchain
Debitum Network is a blockchain-based lending platform that facilitates loans and investments. A platform where all transactions as well as risk assessment, insurance, and debt collection, loan applications, and investment options are all handled on the blockchain.
Martins Liberts the CEO of Debitum Network, who has been in the IT sector for more than 15 years, around 7-8 years ago started a team to start their own IT company – INNTEC. Just like any other startup they soon faced problems and these issues were related to liquidity.
The traditional financing institutions were unable to help them and they soon realized how unfair it is that better and more innovative customer service companies are not even financially supported well just because they are small.
This limits the opportunities for other creative companies to grow. This is how they then founded DEBIFO, around 5 years ago which was an alternative loan company that served loans to small and medium companies, primarily located in Lithuania, European Union.
After having sufficient experience in fintech and IT the team realized small companies and businesses financing problems can afterall be solved as they could create an ecosystem where more specialized companies could each serve a purpose. This with the combination of blockchain which provides full transparency and a security could build a system that the future of financing needs. This idea gave birth to Debitum Network in February 2017.
The reason why investors don’t fund the deserving companies is due to the lack of trust. In order to solve this issue they first had thought of creating centralized organisation, one that everyone trusts. But this came with its own drawbacks. The second was to trust a technology instead of a central body. This technology for Debitum was blockchain.
Thus blockchain helped Debitum Network to keep all the data transparent and even helped them with calculating objectively accurate trust ratings. Blockchain also helped automating the whole of financing process.
The global credit gap accounts for $2 trillion. 70% of the 90% businesses which are small or medium are not well financed. We might not realize this but most of our economies are dependent on these small businesses. Funding them would help maintain the economic balance and that is what Debitum Network aims to do.
So why is Debitum the right choice or should potentially replace the traditional financing institutions? It’s because on Debitum, all interaction between each other is done on Ethereum blockchain, using smart contracts. This allows information tracking with 100% guarantee. This helps built an environment of trust.
Current traditional institutions fail miserably to help small businesses and neither do the existing replacements do so. Though centralized they are still fragmented and thus do not serve the market as a whole only serving only a small section which again depends on trust within owners of the centralized system.
Debitum is taking a step forward and partnering with institutional borrower, verification/risk assessment, insurer, institutional investor, debt collector who all are a part of the whole financing system.
“I believe the biggest challenge will be to create Debitum Network in such a way that non-crypto businesses may use it, may use the underlying crypto, Debitum tokens, but would have user experience that would allow them to do it easily and without extra hustle”, said Martin . “To solve this issue we are already designing how potential Debitum Network members would be using the ecosystem as well as we will design the whole solution to allow for ‘invisible’ crypto – fiat conversions”.
“Trust the untrustable” he further added on his thoughts on blockchain he believes that blockchain helps building trust among parties that could not otherwise be trusted.
Blockchain’s decentralization and feature that cuts middlemen out is what Debitum has been using and they wish for the technology to develop so that they could apply it and help build the future of financing system.