Debitum--Bringing Salvation to SMEs

The problems besetting small and medium enterprises (SMEs) worldwide have been recounted so often that it has become sort of a banality to revisit them. Unfortunately, these are issues that have to be rehearsed. This is especially as it relates to the number one barrier these entities face in the world of commerce; securing finance. According to the World Bank, there exists “a 2 trillion USD credit gap for small businesses… [In fact], 70% of all small and micro medium enterprises in emerging markets lack access to credit.”

Barriers to Finance
A number of factors account for this huge chasm, but at the heart of it all is the centralization of global banking. From the local to the regional level, a handful of extremely powerful players control the finances. These entities are further subservient to the international financiers who have a stranglehold on the global purse strings.

If one were to look closer at this economic system, we can see the real reasons this problem exists. First among them is the regulatory framework that obtains within the respective local and regional spheres. The rules governing the granting of loans and other means of financing to SMEs are so stifling that many businesses cannot access them and develop cash flow problems. The result is that most fail within the first several years of operation.

This is not to say that lacking access to finance is the only reason for business failure, but because the financial sector is so highly regulated and constrained, SMEs that could have survived if only they had access to funding fall along the way. The major culprits here are the local central banks and other big financial institutions that, either deny SMEs financing or block access to international and individual investments or both. Coupled with this is the trust deficit which exists between the so-called big players (lenders) and the SMEs. This makes for incompatible and at times impossible bedfellows.

The Debitum Network Solution
With this in mind, Debitum Network, a P2P decentralized hybrid ecosystem built on the ethereum blockchain, is providing SMEs across the globe access to finance through the employment of technology that works in unison with the fiat system.

Originating in Lithuania, and slated to set up shop in Gibraltar, Debitum Network, which comprises a team of highly qualified individuals, is working to remove the intermediaries and throw SMEs a lifeline in the way of accessing funds from financiers across the world.

How will this be Achieved?
Through taking on the role of an integration medium, “Debitum will bring borrowers and various entities within the financial process together. These entities that borrowers are to be brought together with include service providers, risk assessors, insurers, debt collectors, provision/collateral valuators, among other industry players.”

This illustrates that not only will the core of Debitum’s business model be providing SMEs with access to global finance, it will also afford other players within their respective niches to enter the market with no barriers, “for example, a local risk assessor working in their domestic market would be able to sell their services for global investors willing to invest in their markets.”

The wind of change that will accompany Debitum’s entrance in this area of the market promises to upend the present financial system that has been an albatross around the necks of SMEs. One can only speculate as to how much growth and development is being stifled as a result of the practices of the present banking practices. What is true though, is that the positives that will accrue from freeing up 2 trillion USD will no doubt shake up the entire financial world in ways it has never been shaken. Debitum, being a pioneer in this sector is helping to make this possible.

It is a fact that SMEs are the backbone of any economy. Not only in terms of the money it generates, but also in terms of employment. At a time when the present global economic system is in upheaval, many workers are aware that their jobs will be lost, either through automation or outsourcing. Debitum, by breathing this new energy into the SME sector, will create new opportunities where many saw only gloom and misery.

Facilitating the Old and the New
While cryptocurrency is the new craze, the reality is that most of the world has not yet migrated to this ecosystem. Experts say it will take a number of years for a substantial number of people to make this leap. If the figures are right, less than 1% of the global population are into cryptocurrencies. The vast majority of whom are in the developed world, and even within these locales, most have no idea what the blockchain is. This is something the Debitum team is acutely aware of, and hence, have taken the practical approach of embracing the fiat based system in employing their business model.

Ideally, while it would be great to use cryptocurrencies exclusively, Debitum knows that this is not possible, and hence have sought this integrative approach.

Thanks to this, William Dueterte from the Philippines will not have to be bogged down with the cumbersome nature of the blockchain. The loan he is procuring to run his chicken farm will be delivered in the cold hard cash he has been familiar with all his life.

To provide for more clarity, it seems prudent to provide a more comprehensive Use Case Scenario than the one mentioned above:

We will call this individual John. John is a small farmer who grows turmeric in rural Jamaica. Unable to compete with the large farmers who employ conventional methods of farming; that is pesticides and insecticides, among other things, he has recently decided to change over to organic farming.

He has sought to tap into this niche market because he was informed that there are small eco-friendly stores overseas, that are looking to support farms that employ sustainable farming practices to grow food. John contacts several of these stores and inquires about what the specifications are so that he can bring his products up to standard so he can export it to them. The change has proven quite costly and John seeks and finds someone to bankroll the initiative.

The problem, however, is that the profits are split down the middle. This is because the person financing the project is able to ship the product directly to small health food stores in the USA, Canada, and Great Britain. If he did not have to split the profits, John could do the shipping himself. But not only is he having to share the income, more often than not, payment is late, very late, therefore he is sitting on invoices for weeks at a time. Not only is this stifling his efforts to run an efficient farm. It is rather frustrating for him as an entrepreneur.

Desperate to cut ties with his partner, John approaches a local commercial bank, however, he has been rejected for a number of reasons. But mainly on the basis that he is a small player who is not worth the risk.

Daunted and dejected. John approaches a neighboring farmer, Beryl, and tells her about his predicament. She tells him about Debitum. Immediately, he does his research, gets in contact with the company and procures a loan at 10% interest. He uses this to ship the goods to some other health food stores he had been courting for months but was unable to cut a deal because of the aforementioned constraints. Eventually, John begins to reap the full benefit of his labor. His spending power has increased, and so is able to extend his farm and is, as a result, smiling from the extra cash that is flowing into his coffers.

Video Summary

On the Matter of Trust
With so much at stake. The issue of whether the borrower will be able to repay becomes a primary focus for investors. Or might I daresay, concern. To mitigate against defaults, “Debitum Network will ensure that all transactions will interconnect with trust arbitrage smart contract that will provide objective trust rating for every single counterparty as well as communities of counterparties (that is, the risk assessors community in a single country).”

Therefore, the borrower will have to be given a clean bill of health, through proving evidence he/she has the ability to repay the loan before it is disbursed to him/her. Of course, this is where Debitum Network’s role as an integration medium becomes useful, because all players will have to prove their competence via a trust point rating system in order to participate in the ecosystem.

The Team
An important rule of thumb when inquiring about any new offering is to look into the team. Having investigated these individuals, it is accurate to conclude that this is an all-star one that boasts decades of combined experience. Their expertise is deep and varied. From technology to finance this team’s competence is not only restricted to the blockchain, because before there was the blockchain, several had been successful, entrepreneurs.

As stated earlier, members of the team have formed successful businesses, SMEs to be precise, namely INNTEC and DEBIFO. In the case of the former, the company reported an asset turnover of 25 million Euros over a two year period. Despite this success, the businesses had problems sourcing loans from the big banks, which of course meant they could not achieve as much as they could due to this. Experiences like these has made the Debitum team all too familiar with the problems that beset small entrepreneurs, which is why they have brought so much drive and determination to this project.

“Recently, [Debitum] beat 120 other applicants in the highly regarded ICO Pitch Competition at d10e Gibraltar, the leading international conference in decentralization. The project won both the jury and audience awards, the first time this has happened in the history of the event.”

This achievement is obviously a great yardstick by which one may use to measure a team’s competence and potential. Another way is to scrutinize their road map. Zoning in specifically on the token sale, the team is doing it in stages, long stages and phases by ICO standards. And while some may become frustrated with this process, it is a positive sign that this is no fly by day project. Great care is being placed in rolling out this project. After all, hundreds of billions are at stake and much thought and preparation has to go into such a monumental undertaking.

Also, their sites and modes of communication are quite stellar, from e-mail updates, to Facebook posts, to tweets, to their Telegram page, the lines of communication are fast, efficient and open.

Conclusion
I have said it once and I will say it again ad nauseum, the banks have proven themselves to be nothing but a parasitic appendage on the body politic. It stifles growth and has held much of humanity in thrall for centuries through unfair and corrupt practices that have stunted the vast majority of the globe. Debitum has emerged as one of the blockchain’s antidote to that poison.

Additional Resources
The web site is quite thorough and comprehensive. It will answer all your questions. And if you have any question that has not been answered you may contact them through the various platforms listed on their homepage.
https://debitum.network

Disclaimer: The images and videos in this post are the property of Debitum Network and have been used in this article for informational purposes only.

ETC Address: 0x8c4f75f4f33DD8a485D8870e7f518EF027955Cc5