Populous - What To Expect When Investing On Populous
The Populous Platform have been release for Alpha testing and I have found it to be easy and straight forward to use. You simply select the invoice you wish to buy, enter the amount to invest, submit your bid, sit back and wait for your investment to mature.
Populous is basically an invoice market place that brings invoice sellers and invoice buyers together. It is a marketplace that also aim to introduce some competition into the market so that it is fair to all parties, both the seller and the buyer of the invoices.
Outline Of Investing on Populous
This sounds daunting but I can assure you that it is not. It is not like the stock market of old where the market makers are shouting across the floor to get their orders in.
Here are the basic steps for submitting a bid:
- Deposit TEST PPT tokens and convert them to Pokens at the prevailing rates.
- Select the invoice you want to buy.
- Bid the amount for the invoice.
- Wait until the bidding duration is over to find whether you are successful.
- If successful, sit back and wait for the invoice due date and collect your principal and interest.
- Repeat the process.
Of course the steps above outlines of the invoice buying process in the Alpha release. What new ideas the beta bring we will have to wait until it’s release sometime in November.
Alpha Testing Using Test PPT
Since the Platform is currently in Alpha that mean is that it is in its testing phase. The aim of this phase is to help find bugs and deficiencies so the team can resolve and improve.
So in order to test the platform TEST PPT tokens are used. A PPT faucet is built into the Alpha to provide TEST PPT so no real PPT tokens should be deposited into the Platform. If you do so then your real PPT will be lost forever.
Once the TEST PPT have been obtained you can then convert these to Pokens and use them for investing. The TEST PPT can also be withdrawn to a TEST MyEtherWallet. A TEST MEW is the same as MEW but you use the TEST MEW on the Ropsten Test Network which you can select when you set up a TEST MEW.
In my opinion, the Populous wallet is not yet very user friendly so hopefully this can be improved upon as the team progress into beta.
Selecting Invoices
Finding invoices to invest is very easy to do. These are all listed under the “Market” tab and shows the invoice amount, sales goal, Interest, duration and status.
To me, one of the most important aspect of the invoice seller is the credit risk. At the moment, the credit risk is not available to view on the Alpha because I assume this is related to the XBRL data and is currently being incorporated into the platform. As I am aware this will be incorporated into the beta version.
The credit risk would probably be shown as the risk level for each seller and the investors can decide which invoices to invest depending on their risk appetite. Higher risk means higher returns.
Bidding for Invoices
The bidding process is very straight forward and does not require you to constantly watch the bidding process and re-bid etc. The process just involves the investor to enter an amount he want to invest for the invoice. You can bid as an independent or as part of a pool of bidders. If you have sufficient funds you can invest in the invoice on your own otherwise you can pool your resources with others to bid for an invoice.
The purpose of creating pool bidding is so that you can bid small amount to spread your risks between many invoices. Thus if any invoice defaults then the impact on your investment will be considerably reduced.
There can be several groups bidding for the same invoice so you will need to bid strategically. Either place bids within several bid group or to bid in the group that appears to reach the sales goal first which then would become the winning bidding group.
Bidding Duration
The bidding duration is open for a short period. The Alpha indicates the bidding period of 24 hours for testing purpose and I expect the bidding duration would be longer in the beta release. However the bidding duration can be shorten by the actions of the seller and the investor in a number of ways.
The invoice seller can terminate the bidding process early by selecting a winning bid irrespective of whether the sale goal is reached or not. The seller may have an urgent need for liquidity and so may take whatever bid is on offer. The bidding process will automatically terminate when one of the bids reaches the sales goal first or when the duration time is reached and in which case the invoice is unsuccessfully in its auction.
Collecting On Your Investment
Once you successfully bid for the invoice you then just sit back and wait until the invoice due date. The due dates ranges from 30 days to 90 days. Possibly shorter duration of less than 30 days may be available. I assume that anything longer than 90 days would not be considered since these would be considered as long term loans or maybe difficult to collect.
When the due date is reached, you should collect both you principal as well as the interest on the loan. In the case when delay in payment is encountered, the invoice seller would be penalized and you can will also collect these penalty payment.
The interest will vary from the riskiness of the invoice to the amount being pledged and asked for. The examples I have seen ranges from 2% to 10% in the Alpha but these are not the actual rates. The interest collected here is certainly a lot better than the interest you get if your money is parked in your bank account and being utilised by your bank without any benefit to you.
If you invest strategically you could be collecting 2% - 10% or what interest is set on the Populous every month!
Compounding The Pokens Collected
At due date, you will collect the principal, interest and penalties in Pokens. You can re-invest your principal by purchasing new invoices. The interest and penalties collected can be converted to fiat and cashed out or the Pokens saved to an external wallet.
However, rather than cashing out or saving your Pokens elsewhere, you can reinvest the interest/penalties to buy more invoices. Thus you are able to compound month after month. So if you only have a small amount of PPT to invest, the compounding effect from the interest received will help grow your investment.
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.
https://steemit.com/populous/@marcusxman/populous-what-are-my-risks-if-i-was-to-invest-on-populous
https://steemit.com/populous/@marcusxman/populous-using-someone-else-s-money-to-make-money
https://steemit.com/populous/@marcusxman/populous-a-plate-of-ppt-with-plenty-of-secret-sauce
https://steemit.com/populous/@marcusxman/populous-my-take-on-the-ppt-price
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.
What happens when a loan is not re-payed? Was there collateral?
As I understand, there are trade insurance and debentures involved. So when a loan is not repaid then insurance will indemnify the investor and collect through the debenture held. So the borrower need to provide collateral to be able to borrow. There was a recent tweet by Populous on this issue so you can follow them and as them questions as well on twitter.
Great post ....Tnx to share @marcusxman
thanks for bringing this to my attention. I had no idea there was a market for invoices.
The Invoice Factoring Market is very lucrative and only the big boys are "allowed" to play the game. There's two others that are similar to Populous. Hive, which basically copied Populous's white paper word for word and another called PayPie. I think PayPie will ICO soon. PayPie utilises existing customer base but I think Populous is the better of the three. However I have not looked into PayPie because I am in Populous.
but why do i care about an invoice... i mean I know i have many but I see no value in sharing it. I take taxi's, eat out and pass on the reciept/invoice. Im kinda scared someone would pay for it. how is a this good for me to share my invoices on a blockchain, makes many liable to pay taxes doesn't it?
Why does someone stranger need my invoice to trade?
Not invoices as in the sense you are referring to. Businesses are not done on Cash on Delivery and payment will be deferred for may be 30 days, 60 days or even 90 days later. As an invoice buyer you buy the invoice for amount less than face value of the invoice and on due date the difference is the profit.
For example XYZ have delivered parts to company ABC and has to wait 60 days before being paid. For some reason he has liquidity problems and not able to buy more materials, pay employees etc.. so XYZ goes to invoice factoring company with his invoice. His invoice has a face value of (say) $10,000. The invoice factoring company will give him $9,000 to meet his immediate liquidity needs. On invoice due date the invoice buyer receives $10,000 netting a profit of $1000, 10% in 60 days.
There are companies that do not exist on the blockchain. This one will be the first of its kind. Th blockchain offers transparency, and efficiency.
This is a $3 Trillion global market, so there are many people wanting to buy invoices.
Oh. I get it now. I didnt know what an invoice was in this sense. It sounds really interesting, thanks for explaining it. I should look into it a bit more. So much of the crytpo world is such a mystery to me.
Nice.
The words cryptos, coin and blockchain are just tagged on to raise money in many cases and doe not have must real world usage. Just takes time to find the ones where they have a purpose.
This post has received a 1.04 % upvote from @drotto thanks to: @banjo.
well put article , good job :D 💗 <did upvote wizz full power ha ha
LOVE the '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.' 💗 and thank you tons for ALL your support :D 💗
Alpha? Nice. Much like Steemit was a year ago :)
So you're using that platform too?
Nice post! Love the layout. Talk soon.
THANKS FOR YOUR SUPPORT FRIENDS
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