Debitum: Small Business Financing

The Debitum Network will facilitate loans to small businesses.

Among the challenges today facing small businesses, particularly in developing countries, is obtaining credit to meet their needs. The lack of credit has widened the economic gaps between nations and classes, and brought social unrest. Debitum aims to address the lack of financing among micro, small, and medium-sized enterprises (SMEs) by creating a decentralized financial platform powered by the blockchain.

Background and Problem

As stated in the whitepaper and citing the World Bank, 70 percent of SMEs lack access to credit. Given that SMEs account for over 50 percent of the GDP in many developing countries, the lack of credit can have devastating economic and social consequences. The inability to obtain credit can cause businesses to go bankrupt and can keep those that remain in business from expanding. The lack of credit also affects individuals who need loans to make ends meet or who informally run a business. According to the World Bank, the unmet credit needs of developing countries is well in excess of $1 trillion.

Among the reasons for the failure of traditional financial institutions from providing adequate credit are their desire to maximize profit and reduce risk, and consolidation. Banks are more attracted to large companies due to larger potential profits and a safer risk profile.  Generally speaking, larger companies have longer established histories and are perceived to be less at risk of default. The consolidation of banks in recent decades, as in the U.S., means that banks no longer cater to the needs of neighboring businesses and communities, and instead offer the same services according to their corporate directives.

Debitum Smart Contracts

With different cultures and regulations exacerbating global economic divides, Debitum aims to provide a decentralized credit network powered by the blockchain, enabling trustless P2P transactions using smart contracts — contracts that execute automatically when two parties meet their obligations, thus eliminating the need for intermediaries such as banks or brokers. Besides solving the issue of trust that creates barriers between parties, smart contracts can substantially reduce the costs of transactions, benefiting all users of the platform. As users fulfill or fail to meet expectations in a transaction, their histories are recorded immutably on the blockchain, allowing lenders and insurers to assess them more accurately over time.

Communities and Growth

Though decentralized, Debitum aims to foster an ecosystem where SMEs can obtain financing largely within their communities. The platform will incentivize the growth of communities by designating leaders who are compensated based on their growth. Debitum will provide ratings not only for individuals but also for communities as a whole. The platform thus aims to make growth as organic as possible, with all participants incentivized to promote the growth of their community.

Likewise, given the different fiat currencies used in different communities, and given the likelihood that fiat currencies will remain the primary medium of exchange for goods and services, Debitum will aim to be a facilitator of financing in fiat currencies that businesses can use to meet their needs.

Debitum Token Crowdsale

The Debitum crowdsale is taking place and ends January 25, 2018. During this time, investors can buy the native token of the platform, DEB, with bonuses available depending on the phase of the crowdsale. The DEB token will have value as it will be the means of paying for services on the platform. Thus, as the platform grows in popularity and use over time, the value of DEB tokens will increase proportionally. In total, no more than 400,000,000 DEB tokens will be minted, thus keeping the supply stable for investors. So far, the project has raised over $9.5 million, showing that investors feel confident about the potential of the project.

*I am receiving Debitum tokens for the growth of the community.

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