The past couple years of data breaches have illustrated how dangerous centralizing people's personal data can be, culminating dramatically with the Equifax breach. The other problems across the world with regards to creditworthiness are

  • 90% of top lenders in the US use FICO score which the United States government considers a monopoly.
  • The credit score is directly affected by political opinions in China
  • Some European and Nordic countries don’t have credit scores
  • religious restrictions on lending have prevented the development of a consumer credit reporting system in Middle East and the GCC countries

This differences in global standards and data breaches is what I guess gave the creators of this token the idea. The team at Bloom decided the best way to keep a standard credit rating system and similar data breaches from happening again was to create a decentralized credit rating system, which includes identity, risk assessment and credit scoring. Acting as an end-to-end protocol for identity attestation, risk assessment and credit scoring, entirely on the blockchain, Bloom is expected to be able to help traditional and digital currency lenders to serve billions of people who currently cannot obtain a bank account or credit score.

Why was Bloom built?

Bloom is built with a mission to decentralize credit scoring and enhance security so that one centralised authority doesn’t not have a broad hold of people’s individual data- which can be leaked or breached easily. The Bloom team aims to bring transparency, community, and the crypto community together to create a new credit ecosystem and is working with over 300 partners and lenders to make this mission a reality. The team has developed the token with an aim that

  • One should not have to rebuild your credit from scratch when you move to a new country.
  • Billions of people around the globe should not be forced to take out dangerous, informal loans.
  • Governments should not lower ones score because of his or her political affiliation, or require that one register to vote to have a high score.
  • Borrowers must expose all of their personal information when applying for a loan — the same info an attacker can use to open new lines of credit. This information is stored in insecure central locations which makes the data susceptible to data breaches.
  • Credit histories are not portable across countries, forcing individuals to reestablish their credit track records from scratch when they relocate.

What does the project do ?

The project aims to solve the problems with the current credit rating system – incompatible cross-border credit scoring, backward-looking credit assessment, risk of identity theft, and outdated/uncompetitive credit scoring ecosystem.

Bloom is developing three main components: BloomID , BloomIQ and BloomScore

BloomID establishes identity and creditworthiness. Third parties can publicly vouch for others’ identity information, legal status and creditworthiness. These third parties can be friends, family, peers or organizations who earn revenue by evaluating a user’s credentials.

BloomIQ is a decentralized system that manages credit history. One of its primary goals is to allow a user to import existing credit history to this system.

BloomScore calculates credit risk. It is a dynamic indicator of an individual’s likelihood to pay debts that adapts to the maturity of a user’s credit history.

With these components mentioned above, Bloom aims to decentralizes the credit industry while lowering rates and increasing security.

Bloom is also planning to launch the BloomCard, a blockchain credit card built on the Bloom protocol, allowing the Bloom protocol to be deployed and developed in a live environment. It is intended to set as a precedent for other lenders.

The token provides an added layer of security to the network by mitigating fraudulent identity creation. Additionally, the token ensures the network remains free of influence from states, banks, and central actors. This is achieved by gradually turning over control elements to BLT token holders. Lastly, the token serves as a payment and settlement mechanism for the network. The key components of the coin that the team has put emphases on are

  • Security: While the network is in its early stages without a wide array of attesters, it is more susceptible to attack. In order to increase the immediate resilience of the network, users will be required to put up a small amount of BLT as collateral for users who they invite. This collateral serves as protection against a mass scale network of malicious accounts.
  • Scoring Proposals: Bloom token is ultimately the voting mechanism for the BloomScore. Token-based voting allows to root out bad actors and keep the system stable and provide influence to those who are contributing most to the network. This is also the primary mechanism for defining future changes to the BloomScore.
  • Payment: The token serves as a network currency for validating identity and evaluating creditworthiness with autonomous vendors.

Team

Bloom is founded by Ryan Faber, John Backus, Jesse Leimgruber and Alain Meier, all of whom are serial entrepreneurs. Three of them were roommates while they were attending Stanford.

Below are the bios of the key members of the team:

  • Alain Meier – Cofounder and CEO of Cognito, an identity verification company serving various cryptocurrency exchanges, including Coinbase.
  • Jesse Leimgruber – CEO of NeoReach, a company providing influencer intelligence with customers including NBC, Walmart, Honda, Amazon, and others. Also Founder and Chairman of Rank Executives, an enterprise internet marketing and content agency. A recipient of the Thiel Fellowship.
  • John Backus – Cofounder and CTO of Cognito. A recipient of the Thiel Fellowship.
  • Ryan Faber – Founder and CEO of Flatiron Collective, a digital marketing company with $100 million ad spending a year. Also Founder & CEO of AdKick, a multiplatform performance marketing agency.

 

Supporters and Investors

  • Meg Nakumura, CEO of Shift Payments
  • Joseph Urgo, co-founder of District0x
  • David Raphael, CEO of Infinity Media, and
  • Devon Zuegel, independent consultant.

Opportunities

  • The Equifax hack in September 2017, which allowed attackers to obtain crucial personal identity information for 143 million people, shows that a decentralized and secured credit scoring system like the Bloom protocol is much needed.
  • Bloom is a protocol that other lending platforms can build on top of, meaning that Bloom will be mentioned anytime it is being used by a lending platform. In crypto, news flow is one of the factors that drive liquidity and price so this is important.
  • The cofounders all have impressive credentials, with Alain and John being in the identity space since 2013.
  • The white paper is well written and covers ways to prevent exploits of the protocol, for example, users creating a new BloomID after ruining the original one, or users manipulating BloomScore by creating fake BloomIDs to vouch for themselves. This shows that the team has put a lot of thoughts into the technical side of the project and shows the team’s competency. 

Concerns

  • The team has not developed any proof of concept/beta, so essentially this project is still at the white paper stage.
  • The project has a high hard cap of $50 million, the majority of which will be used for user acquisition. This makes sense from a business perspective, but in general, the higher the starting market cap for a project, the lower the potential return for ICO participants. Therefore, we believe the attractiveness of the ICO depends on how much funds are raised.
  • It looks like all the cofounders are working on Bloom on a part-time basis while they are also working on other businesses that they have founded. It is unclear how much time they are able to allocate to Bloom. 
  • Team is an allstar one with a lot of talent in CS, but no team member has experience making lending decision or scoring borrowers creditworthiness.
  • There is no estimated completion timeframe for the milestones listed in the roadmap, so we are unsure when the protocol will be completed and ready to roll out.
  • Creating a blockchain ID and linking it to credit worthiness poses several regulatory challenges, amplified if the network will operate in multiple jurisdictions with different regulations.

Conclusion

Overall, Bloom can position themselves as a disruptor in a market that was long overdue for some changes. They probably won’t become a staple and overtake or even join the credit monopoly of the big firms, BUT they will provide an ALTERNATIVE to individuals who prefer to go their route.