The ongoing concern of the business financing to small and medium-sized enterprises is an inevitable matter to discuss and to resolve. Various organizations have been trying to address this difficulty by creating alternative solutions, but all are still bias and demands to contract with intermediaries.
With the continuous economic prejudice to SEMs, a group of young entrepreneurs and technology experts assembled with one aim which is to create a decentralized system utilizing the blockchain technology focusing on solving this global financial issue. They’ve called this project, the Debitum Network.
What is Debitum Network?
Debitum Network is purposed to provide access to funds for various underbanked small and medium enterprises globally. It permits investors worldwide to finance in loans directly, i.e., avoiding traditional agents such as banks or investment funds. It is also a blockchain-based solution to unite multiple parties, operating different levels of a lending process, involving risk assessment, insurance, and debt collection, in a single, transparent, trust-based and conveniently accessible ecosystem.
Decentralizing Using The Blockchain Technology
Disrupting the lending industry with a newer approach entails three principal characteristics: trust, full end-to-end financing process and structuring that maintains exponential growth. Any solution to meaningfully decrease the existing credit gap requires these main aspects:
- A transparent and supportive framework.
- Dealing with investment failures, to ensure certainty of global investors in credit assessment and debt collection methods.
- Gaining distribution via an efficient sales channel.
The existing centralized solutions overpower several global counterparties with diverse cultural and experiential environments to trust a single party operating the marketplace. If the central party moves out of business, possibly, investors will not be capable of acquiring their investments back straightly from the borrowers. The blockchain technology is the only innovation that can provide the most significant solution.
The Ecosystem Pillars
The Debitum Network is comprised of three essential pillars that guarantee uniqueness, disruptiveness as well as assurance for a positive result on resolving the credit gap:
Communities are decentralized and accessible worldwide, composing of multiple service providers and institutional borrowers or the alternative finance groups that are subsequently assisting SMEs that could bring more global investment and recreating their portfolio by utilizing Debitum Network.
Hybrid Connecting Crypto And Fiat
Blockchain assets or crypto tokens are not perceived as a traditional currency in most countries excluding Japan as most cryptocurrencies are considered too unpredictable. Business
borrowers and investors in short and medium duration would favor dealing with loan principal and interest payments in its conventional legacy way by fiat payments. Therefore, Debitum Network will only apply cryptocurrency for the network’s other transaction charges.
By connecting fiat services with highly trusted and valuable blockchain based financing processes, Debitum Network guarantees high interest from SMEs and investors. As lending is essentially directed by trust in the borrower’s capability to repay, Debitum Network ensures that all transactions interconnect with a trust arbitrage smart contract that provides fair trust ratings for every single counterparty and communities of counterparties such as risk assessors community in a single country.
The Debitum Token (DEB)
“Building a fast growing, trusted, self-governing and global business financing ecosystem,” is the primary goal of Debitum Network. They aim to develop a system around its members and operates a single ecosystem’s cryptocurrency, the Debitum token, to compensate for all the services performed. Only those owning Debitum token will be authorized to purchase several features via Debitum Network.
The DEB Token has two intrinsic values:
- Value Exchange – as Debitum token is the only means of payments inside the Debitum Network
- Toll – as all service providers should ‘freeze’ a particular amount of Debitum tokens to ensure execution of future assistance through the Trust Arbitrage mechanism.
The specific utility of funds acquired will be balanced by the total amount of funds collected. The concept is that the more funds received, the more countries may be ‘launched’ within a shorter timeline. For Debitum Network to become a leading global company, they must make haste; as competition rises, ‘copy-cats’ with no regard for copyright infringement pounce on the opportunity. Another implication is that most of the funds are routed right back into market making and business expansion ensuring growth.
The Core Team
The Debitum Network team originate from the advanced technology company INNTEC and DEBIFO, a successful traditional invoice financing corporation in Europe. Headed by the three founders, Martins Liberts, Donatas Juodelis, and Justas Šaltinis, the company has a promising future because of the experience and expertise these leaders possess in their individual fields as distinguished technology and finance specialists.
The core team is comprised of motivated finance and technology experts who already have a strong track record of formulating working alternative financing ecosystem in Europe.
The team has utilized the solutions based on reviews, comments and suggestions contributed by the advisor team and community. They believe that Debitum Network, due to its design and architecture in both business and technical aspects can transform the SME financing into a reliable and secure network for all types of industries.
The Future of Debitum
Debitum Network has much greater potential for success in comparison to its competitors. A pertinent reason is that it can accommodate client’s demand to a required size and smoothly alter its focus to more profitable regions where there’s more demand. Secondly, it can with relative ease, incorporate cryptocurrencies to bring principal capital gain and further types of guarantees, including those new smart-contract-based varieties. Yet most significantly, Debitum Network will expand applications invested into it over time in the form of structural improvements of distributed software; not as tangible and intangible assets presented to political uncertainty.
Transparency in business challenges entrepreneurs to remain open and communicative about critical points of information, including their business’s objectives, history, production, and services. Moreover, it’s a goal that grows in value and influences industrial innovations including the blockchain technology.
One of the most appealing perspectives of blockchain is the degree of transparency that it can provide. Although it is often attributed to as a “trustless” technology, the central element that holds the ecosystem together is transparency and reliability. However, several negative publicity has been given to blockchain companies and ICOs in the mass media lately. The issue of transparency of the newly organized companies, exchanges, and management has been questioned again and again.
A recent study explains that about 1000 ICOs are discontinued, and that half of them experienced bankruptcy, four months after token sales. It is considerably common in an unregulated setting as clever financial criminals abuse this new way of an opportunity to collect funds for starting a business and not doing anything to accomplish the promises that they have presented.
Lack Of Transparency Among Major Banks
Transparency is something that huge mainstream companies, especially banks and likewise mass media fail to address. Transparency, or lack of it, may be the reason for major economic crises around the world and bankruptcies of well-established businesses. It is so easy to shift blame on the new and ignore that the old is opaque and careless in its business practices. Nothing can explain it better than 2008 crisis when major financial enterprises operated by short-term profits produced excessive and fraudulent transactions in derivatives, created toxic financial tools and marketed them to the public with a benefit from rating agencies that provided those products triple A’s as if they were stable and reliable securities one could invest.
Blockchain Technology Does The Regulatory Work Better
With several other advantageous aspects that blockchain based companies possess, transparency is at the core of it. It may be observed, not only in finance activities but if financial company deals over a blockchain platform, everybody sees all their holdings and all the transactions that they have processed. None of the prominent financial giants or hegemons have had this same transparency before. It is about to improve, and new blockchain driven companies will accomplish far more accountability to the entire system. No transaction will be hidden, and thus company using the technology will show real integrity towards their customers and the community.
Debitum Network A Transparent Fintech Company
Debitum is a young and ambitious alternative finance company that is founded on the principles of decentralization, accessibility, and credibility. It is an exceptional example of a transparent blockchain driven company that responsibly utilized collected funds from ICO and has just presented a promised product of an alternative lending platform.
The company has been developed from two respected and accomplished companies: the alternative finance corporation Debifo and a high-tech firm Inntec. Debifo has had a turnover of 50 million Euros in factoring lending just in three years, and Inntec has been one of the fastest developing IT company in Northern Europe. Both co-founders and advisers for Debitum Network have an extensive background in finance and IT.
Debitum continuously endeavors to provide strong and transparent service. They aim to motivate their community members to be more confident and guaranteed that they will fulfill what they have promised of being the best alternative finance platform. Aside from that, they also aspire to become a significant example of a blockchain powered project that values honesty and integrity.
As the blockchain technology advances, scammy programs, risk, and mistrust will also subsist. Debitum makes their project stand out and assist the blockchain space in developing by building the trust of their community, partners, and users.
Here are three key points that Debitum practiced to sustain transparency:
- Debitum considers that trust and transparency are the essential assets for all projects. Losing the support and trust of their community can end their project at any step.
- They build and sustain their project’s credibility by being accurate with the allocation of funds, sharing constant product development and company updates, and adequately controlling the token supply to avoid manipulation of price.
- All projects can encounter challenging situations within their community. That’s why the Debitum team values that when difficulties arise, they must always be transparent and communicate efficiently.
Financing process with a smart blockchain contract following every step raises Debitum Network’s transparency. Anything written in each block is immutable, cannot be altered, and is known by everybody. So, each counterparty in the financing process knows what has been arranged at a particular stage, and each party is capable of verifying the correctness of any specific set of data they require.
Also, the management of the company explicitly explains the vision and mission statement to every employee, and this delivers financial plans and business goals crystal clear to everyone. Communication itself within the firm is never sugarcoated, and everybody is kept in the loop, which assures employees to understand that nothing is hidden from them.
In all aspects of life, “the old” favors condemning “the new.” But, it usually turns out that “the new” has been born out of the profound necessity for innovation. The modern financial system requires disruptive and revolutionary changes in order to become more transparent, accountable and reliable. Blockchain based companies like Debitum can be the pioneers that will initiate the change and modify the opaque and outdated financial system into a much solid one.
The small and medium enterprises (SMEs) are regarded as the backbone of the economy, being the main contributors to employment in emerging and developing countries. Despite their value, access to finance is relatively limited when comparing to large firms and is a significant driving constraint for SMEs.
This financing restriction is because of SMEs nature that tends to be informal, have less publicly accessible data, and operate in unfamiliar sectors which results in higher information asymmetries and risk, and often, these businesses also do not have sufficient assets that can be utilized as collateral.
As the credit gap is still existing and growing, the incumbent initiatives are not likely to cope with the financing dilemmas, so a different approach is needed. The decentralization of lending, and the advanced disruption to financial services, therefore, looks set to proceed to narrow the credit gap for SMEs, and these all characterize the solution called the Debitum Network.
Disrupting The Financing Sector
By developing a decentralized blockchain based ecosystem, Debitum Network will positively solve the financing concerns of small and medium enterprises. The system connects SMEs in a secure, and effective way and allowing them to utilize its power without a need for an intermediary. It also unites borrowers, lenders, insurers, risk assessors, and all those associated to the financing sector in one user-intuitive platform.
The entire project is placed on the Ethereum network and powered by Debitum (DEB) tokens. It utilizes smart contracts that make Debitum Network secure, transparent and efficient. It also operates as a decentralized ecosystem for parties globally to engage in every step of the financing process, consequently enhancing competence and reducing costs.
Instead of just giving financing options, Debitum also provides opportunities for business in the financing enterprise to access the global market without concerns.
A Unique Lending System and Processes
The financing process of Debitum was deliberately formulated to guarantee all parties are compensated in a fair, transparent, and efficient transaction system.
First-time users or borrowers are pre-qualified by the platform to ensure compliance and that their loan requests are real. After the verification, borrowers will issue a loan application where they can choose the kind of asset to receive from investors. The asset is then reviewed to see if it correspond to the loan application while risk assessors perform their part by double-checking the loan request, the available collateral, as well as providing suggestions on the financial features of the loan.
Debitum has an integrated insurance system depending on the type of loan which can be adopted to protect future investors from loan defaults as well as guaranteeing the credit is partially or fully paid in worst-case scenarios. When all is prepared, investors have the option to fund one or more loans with the data available such as the trust rating system. Also, investors who’ve financed loans can utilize the secondary market to liquidate their investments quickly. They additionally have the option to sell their current loan investments to interested investors; the rights of sold loans are then assigned automatically to the new investors with smart contracts.
Debitum’s ecosystem encourages the full payment of loans, but in the case that a loan is not returned on time or breaks the agreements, the debt collection process in Debitum will cover the losses of the investor. Insurance holders are compensated immediately while the platform’s debt collection team moves forward in reclaiming the loans from the borrower. After the financing process, the trust rating system is updated automatically by smart contracts.
The Network’s Operation
DEB as Debitum’s official utility token is utilized as the mechanism for borrowers or investors to access the services on the platform such as risk assessments, acquiring insurance, and even debt collection. A trust rating system is also integrated inside the platform which is essential for all financing process.
All activities in the platform are connected to smart contracts that influence a party’s trust rating depending on the result. It keeps a healthy ecosystem for users as low-quality parties are naturally avoided and removed from the community. To prevent service providers from rendering less than satisfactory services at the start, they are obliged to freeze a particular amount of tokens as a guarantee to produce quality service to the platform’s users.
Debitum also has a hybrid approach that enables the smooth integration of fiat-crypto infrastructures which guarantees that as the adoption of cryptocurrencies increase, Debitum Network will be capable of adapting and offering its services in both fiat and cryptocurrencies seamlessly.
Recent Update And Development
The Debitum network launches its innovative platform known as Abra 1.0 with an investment portfolio of nearly 1 M EUR on September 3, 2018. Its hybrid ecosystem connects the gap between the crypto and ‘real-world’ lending. Blockchain technology, by utilizing the network’s Ethereum-based DEB crypto token will deliver speed together with end-to-end integrity and transparency in the platform’s internal activities while loans are granted in traditional fiat currency.
The CEO of Blockchain Center Vilnius, Eglė Nemeikštytė, considers that speed, efficiency, and commitment Debitum has presented in bringing its product to market are excellent examples to other fintech startups:
“Debitum Network was the first in the Vilnius Blockchain Center community to show blockchain applicability in the fintech industry, and were the fastest to raise capital and launch their product,” says Nemeikštytė. “They proved that blockchain fintech projects can keep their promises, stick to deadlines and be efficient.”
Abra 1.0 earned a positive response from partners, early investors and key personalities in the blockchain society at an event in Vilnius on August 23rd that contributed a hands-on chance to try out its services. These comprise a central dashboard on which investors can trace their investments, see how much money they have produced, and see potential investment opportunities, ordered according to risk. They also have a live demo page for interested users and test the efficacy of their newest system: Abra 1.0 Live Demo
Debitum Network co-founder Martins Liberts expressed his confidence in the platform:
“Debitum is about allowing small business owners and entrepreneurs to be in charge of their future,” stated Liberts. “We’ve done it in around six months, and we’ve done a lot of testing. We have trust in our product, and we’ll be joining the ranks of those few ICO projects that have already delivered a real product.”
Also, the Lithuanian Vice Minister of Economy Elijus Čivilis in attendance emphasized the importance of solutions like Debitum’s in tackling the global issue of access to finance among small businesses.
The Debitum team has said that they are already at work on version 2.0 of the platform and is scheduled to operate out in 15 countries by 2019. For complete specifications of Debitum Network’s platform features, development, and team, they have summaries and available Whitepaper to view.
Debitum Network is recognized as an advanced hybrid ecosystem for small to medium business financing, using the Ethereum blockchain based system together with principal and interest moved using fiat. This ecosystem-based on decentralized and dedicated communities collaborating SME borrowers, local and international risk assessors, debt collectors, insurers as well as investors worldwide with interconnected trust-based smart contracts.
The platform purposed to decentralize the financing system. Presently, all levels of the financing process are conducted by one financial institution in a centralized way from the very start to the very end. As a result, such a financier can only work in the local market due to the lack of infrastructure abroad, or otherwise, it becomes very expensive. Furthermore, the inclination of financing is also restricted, ending in only a fraction of SMEs’ needs being satisfied.
Debitum Network is a network where participants globally will implement separate steps of the financing process. Associations between business borrowers and lenders are complicated, but they can be standardized and streamlined that’s why Debitum develop an Ethereum-based decentralized ecosystem in which operators of the funding market can access their clients innovatively with lower expenses.
How Debitum Network Operates
Operators are businesses or even individuals who either aggregate the demand (investors and lenders), or supply (borrowers), or both. There are also service providers like risk assessors, insurers, debt collectors, provision or collateral valuators, etc. Debitum Network will also operate like an integration medium for several technical solutions which are related to the financing process. While technically, regarding efficacy, Debitum promotes the process of financing, it is an opportunity for professional operators in the financing industry to access the global market with no restrictions.
Debitum aims to build a self-growing network based on trust by consolidating fragmented regional registers of business borrower trustworthiness on the blockchain foundation. Debitum purpose is to grant access to the productive SME capital market for everyone. Today, investments in SME debt are profitable, relatively secure, and yet not simple to get involved into. Debitum Network will take the challenge and solve this problem.
The DEB Token Economy
Debitum network’s native currency DEB tokens are primarily utilized by borrowers to pay for services rendered by the ecosystem members during the financing process, e.g., for validation of loan application or credit risk evaluation. Investors will also use DEB tokens to obtain services on the ecosystem, e.g., to guarantee a loan or portfolio of loans.
A limited amount of DEB tokens was produced during the Token Generation Event (crowdsale round A). No additional minting or mining of the tokens will be possible, which indicates that the token supply is fixed. As Debitum Network develops and incorporates more and more borrowers, investors and services providers of the lending process, the token demand will grow, which, given the fixed supply, will raise its value. In other words, DEB token is devised to increase in value as an activity within Debitum Network grows. Debitum Network model does not permit the burning of tokens in any situation, i.e., it is designed as a pure utility token.
The Team Behind The Success
The founders of Debitum Network, Mārtiņš Libertš, Donatas Juodelis, and Justas Šaltinis, have an exceptional background in both financial and technology sectors. Together, they have already built a successful invoice financing company and IT services and can leverage this experience when developing a lending platform based on the currently most outstanding IT solution, the blockchain technology.
In addition to the core management, Debitum Network has introduced a team of developers and business development managers, who are already accomplishing on the deployment of the platform.
Development and Update
Debitum Network has already raised $1.2 million, adequate for initial product development and launch in the first market. Upon achievement of Crowdsale Round B, Debitum Network will pursue Stage 1 development: setting up the ecosystem in 15 countries across Central and Eastern Europe (CEE) and Balkan region. Stage 2 represents expansion into four major geographical regions outside Europe. Overall, Debitum Network endeavors to establish operations in 50 countries with the worst indicators for access to credit.
On August 23, 2018, European crypto community members and Lithuanian finance professionals assembled to Vilnius Blockchain center to test the efficacy of Debitum Network as an aspiring alternative financing ecosystem.
The Debitum Network founders cleared that they never intend to compete with the traditional centralized banking, but they desire to improve the current financing market with a purpose to promote the growth of small to medium enterprises (SMEs), a sector profoundly dependent on favorable financial assistance.
The event highlighted the Vice Minister of Economy and Innovation of Lithuania, Elijus Čivilis, reiterating the significance of alternative financing and affirming that the SME funding gap is a global dilemma like Lithuania where small enterprises are the central economy drivers and that projects like Debitum Network are critical. Also, the CEO of the Blockchain Center Vilnius Eglė Nemeikštytė stated that Debitum Network does not only demonstrated an excellent example for other startups but also proves a point to the blockchain skeptics.
The new and advanced Debitum Network platform was officially launched on September 3, 2018. Registration is now available for investors, borrowers and service providers.