Today whenever a small business needs financing they have to go to a bank to get it. Which means there’s one centralized financial institution that finances businesses in a local market area. This limits the capacity for small businesses to not just operate but also to meet their financial requirements.
To combat that limitation, the Debitum network was created. It is a decentralized financing network where SMEs from all different parts of the world can participate and apply to get financed.
But here’s the thing, the network is very similar to how you would go about getting financed normally. There are companies, individuals, borrowers, lenders, investors, debt collectors, collateral valuators, risk assessors, etc.
Everything you need to make sure that once a business or an individual is financed, there are ways through which the network can make sure that they can recoup the money. The only thing different is that the network is decentralized and is based on the Ethereum blockchain.
This makes it efficient and cheaper for the network’s clients to operate.
Here’s the best part though, you don’t have to be in New York to get the best deal. Through this network, you can get a great deal in every part of the world. And the network makes it easier for companies and individuals to join.
What Is the Debitum Network?
There are 3 very important pillars on which the Debitum network stands – True decentralization, Trust-based platform, a hybrid platform.
Right from the beginning, the goal of the network was to close the market gap that was there between the global investors and the SMEs. They wanted to make sure that everyone gets the opportunity to get some of the best financing deals out there and no small business is stuck with a bad deal just because of their location.
Not just that, they also wanted to make it attractive for the lenders. They could invest in businesses that have true growth potential. And they can choose whether they want to invest in a small business, or they want to invest in a business that is already expanding.
And to top it all off, they gained and maintained the trust of both parties by making the platform decentralized through blockchain technology. That means, both parties can have faith in each other to operate in the ecosystem.
Which leads us to our next pillar.
TRUST based platform
The #1 thing that every lender looks for, is the borrower’s ability to repay their loans. And the DEB network’s lending process relies completely on that.
This means no lender will be left holding the bag because someone mistakenly lent the money to a borrower who is known to not pay their bills.
So how does the network determine someone’s ability to repay their loans?
The network connects all the transactions on the network with smart contracts. Every smart contract will have a trust rating for the counterparty and the community of the counterparty.
Once the transaction is completed, the smart contract will also provide trust points based on the type of experience the members had. If they had a positive experience, it will add a rating point. And if they had a negative experience, it will deduct a rating point.
And based on the rating points, the lenders can decide who they would like to lend their money to.
A Hybrid Platform
The Debitum Network is a hybrid platform that contains 3 types of beneficiaries –
- Funds or individuals who would like to lend their capital
- The small and medium enterprises (borrowers) who require capital
- Other service providers (risk assessors, etc.)
Anyone within the network can buy services from the service providers and use the Debitum token to pay for them (we will cover the DEB token in the next section).
All the transactions carried out within the network are secured by the Ethereum blockchain technology and smart contracts.
What Is the Debitum Token?
The Debitum token is the currency that is used for selling and purchasing services within the network. People can provide services such as debt collection, risk assessment, collateral valuation, etc., and charge a specific amount of DEB token for that.
Think of the DEB token as the dollar bills but they can only be used on the Debitum network.
Anyone can buy the services that are available for sale on the network and they can pay for them based on the quality or the quantity of the services they purchased.
What Problems Does the Debitum Network Solve?
From an investment perspective, there are a lot of individuals and companies that are looking to diversify their capital and invest in certain markets for profit. But they cannot do that because the country that they live in either doesn’t allow them to invest or the countries in which they would like to invest, don’t have a transparent security registry that gives them the confidence that if they invest their money there, they will be able to collect their profits.
And from a borrower’s perspective, there are many SMEs that are looking to borrow money to expand their business and establish their credibility as someone trustworthy that pays back their loans. Not just that, there are certain SMEs that currently have good credit but still aren’t able to get a good deal for the amount they would like to borrow.
The Debitum network gets rid of that problem on both ends.
First, it provides global access to investors that can invest in any country they wish to and lend their money to any entity on the network that they like. And the network provides them with the information to help them decide whether an entity is trustworthy to lend the money to or not.
Like we mentioned above, every user gets a rating. The more positive ratings they have, the higher their chances are to get a successful loan compared to someone that has negative ratings.
For SMEs, the network opens up the doors to the entire world. They can now get financing from anyone around the world as long as they can establish their credibility as someone trustworthy on the network.
And not just that, the SMEs can get financing at some of the best rates out there.
The network backs everything up with the security of a decentralized Ethereum blockchain infrastructure so all the users can trust each other and make sure that nothing goes wrong.
Who Is Behind the Debitum Network?
The Debitum Network is being led by a team of financial and technology experts who are the best and have a track record of success at what they do.
Martins Liberts, Co-Founder
Donatas Juidelis, Co-Founder, Partner Relation
Justas Saltinis, Co-Founder, Financing Operations
Debitum is a great alternative for SMEs that are looking to get some of the best financing deals out there. But not just that it also provides them with a trustworthy environment where both parties (lenders and borrowers) can trust each other and make sure that they both get what they are looking for.
The network removes the third-party entirely that often eats into the fees that the borrowers have to end up paying.