Populous – The World is Populous’s Oyster

Lending money to a friend can be based on trust but trust does not apply when lending to strangers. If someone says they will pay you back can you trust them and take them at their word? How can you assess whether you are likely to be paid back or not?

What Is Credit Worthiness?

A lender need to make sure that when money is lent out some assurance is provided to ensure that what is lent out will be repaid. Someone who is of good “credit worthiness” is likely to repay the money that he has borrowed and someone who is of bad credit worthiness has a high probability of defaulting on the loan.

We can determine someone credit worthiness by requesting a credit report from a credit rating agency. A credit report contains information about your credit history and it will usually include details like bank loans, credit cards debts, repayment history and maybe even things like mobile phone contracts. An alarm is raised especially when someone has gone into bankruptcy in the past. Against these a credit score is assigned to determine the credit worthiness of a person or company.

Since money is at risk, if you score badly on your credit report then you may not be able to borrow money or you may be charged a higher interest rates.

Collecting Data to Assess Credit Worthiness

There are standards in which to calculate a person/companies’ credit worthiness or credit score but the way to collect data to establish credit worthiness appears to differ. For the purpose of this post, I will just look at three ICOs where credit worthiness has been mentioned (without mentioning names).

Usage of the Token On the Blockchain

This token will assess credit worthiness through the use of social media data collected from the individual’s mobile phone (Web Browser) and history of transactions of use of the token on the block chain. Notwithstanding, the individual will also need to provide chat histories, shared and tagged contents, geographical location social status and meta information.

Data Mining of Existing Customers Data

Another token will use the existing customer base already using their accounting solutions to determine their credit worthiness. The customers using the various accounting packages will have all their financial and transactional history consolidated to allow access to the complete history of these companies like who are their vendors, how reliable they are at making payments to their vendors, what’s the projected cash flow for coming weeks, months and year based on the historical data, balance sheet, income statement and other data points.

Freely Available Financial Information

The final token will collect financial information that is freely available via the XBRL global standard for financial reporting and this data can be used to determine a company’s credit worthiness. The XBRL is a global standard for exchanging business information and is adopted in the US, Europe, Asia and many more countries around the world for different purpose. See the list of countries that adopt XBRL here.

The XBRL will contain information such as names, addresses, creditor, vendors to loans, repayment history and much much more.

What Is Populous Doing?

Populous will provide an assessment of the credit worthiness of the invoice sellers based on information collected from the XBRL data. This is not an easy task to do because of the amount and type of data contained in the XBRL. We are talking BIG DATA.

I will not even attempt to describe the data that are contained in the XBRL data set but you can look it up yourself here. I don’t know how long this webpage will be up as Populous are in the progress of revamping their website so the information shown there may disappear at any-time soon.

Why Is Populous Using XBRL Data?

XBRL contains the financial statement of millions of companies in the UK that are required to be filed with the UK Companies House. The XBRL data not only provides current financial data but also historical financial data. So you can imagine the amount of information involved.

Populous can go to external sources to obtain credit references for companies intending to use their platform but it would cost time and money to do so. But the XBRL data already contains all the information they need to create an in-house credit referencing system. Populous only need to extract the relevant data to provide an interpretation of credit worthiness. This is not an easy task and may seem insurmountable.

However with his skill in big data analysis Stephen Williams, the CEO of Populous, was able to conquer this problem and build a XBRL “engine” to collect, sort, analyses and process the data. The work required to accomplish this was not done overnight but over a number of years to reach the stage it is at right now.

Therefore by using the XBRL data, Populous has an almost infinite pool of potential clients – think global! Populous is not interested in knowing in your social media habits and also respects your privacy. Notwithstanding the fact that Populous do not have a ready made client base from which to start.

In conjunction with the XBRL data Populous will also use the “Altman Z-Score Formula” to “find” potential customers which will be discussed in my next post. So don’t just Follow me but check in on my blog often for more upcoming Populous posts.

My Other Populous Posts

I have a few post about Populous and you can read them in my blog here or just click on the links below.

1. Populous – My Take On The PPT Price
2. Populous – A Plate of PPT With Plenty of Secret Sauce
3. Populous – Using Someone Else’s Money To Make Money
4. Populous – What Are My Risk If I Was To Invest On Populous
5. Populous – What To Expect When Investing On Populous
6. Populous – A Genius in the Making?

This is NOT Financial Advice

In my humble opinion, the risks to the downside are small compared to the potential upside rewards. This should not be construed as financial advice but an opinion only. As usual do not invest more than you can afford to lose as these investments can go to zero and always do your own due diligence.

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I’m just letting off Steem, if you found this post informative then UPVOTE (with FULL POWER), COMMENT, FOLLOW and especially RESTEEM.
Live Long and Prosper

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I wrote this article myself and it expresses my own opinions. Computer literacy is crucial in this day and age. Just because someone tells you it is good does not mean that it is good for you.