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This Company is Making Credit Available To 3 Billion People

Cryptocurrency and blockchain technologies are paving the way for a financial revolution.

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BY Melissa Thompson - 09 Sep 2017

PHOTO CREDIT: Getty Images

Three billion people globally cannot obtain a credit card, according to the World Bank. 38 percent of the world's population does not have a bank account. The world's eight richest billionaires control the same wealth as the poorest half of the globe's population.

No matter your age, gender, language or nation, credit is the key driving force to boosting economic prosperity. Credit is the gateway to financial inclusion and the bridge to financial freedom and success.

An individual's ability to achieve social mobility and rise through the economic ladder hinges on their access to credit.

From a newlywed couple looking to settle down and buy their first home, to an aspiring entrepreneur looking to start a small business, virtually every human on the planet depends on credit to grow.

Despite this, the World Bank's analysis shows that for three billion people, obtaining a credit score is impossible. For these people, the dream of buying their first home or starting a business is simply out of reach.

In a world of globalization, the credit industry is far from global. Credit scoring providers can not operate across borders, meaning that when borrowers move to a new country, they must rebuild their credit scores from scratch as their score does not follow them.

Bloomberg recently published an analysis of the credit industry, declaring that there is "One Monopoly the U.S. Government Wants to Keep", referring of course to the credit monopoly currently controlled by FICO, which provides scoring on more than 90 percent of U.S. loans. Despite their reach, FICO's credit scoring system is deeply flawed, leaving over 45 million potentially creditworthy Americans with no credit score.

It's no secret that cryptocurrency and blockchain technologies are paving the way for a financial revolution. Yet, the difficulties of bringing something as complex as credit scoring to the blockchain would require more than just a team of blockchain hobbyists.

This is why for the team behind a startup called Bloom, it was clear that this was the issue they wanted to tackle. Despite only recently announcing their project, Bloom has already generated much noise in the crypto community, and it's quite clear why.

Bloom brings credit to the blockchain.

The company aims to address the current limitations in lending by moving credit scoring and risk assessment to the blockchain. Bloom is a standardized, programmable ecosystem to facilitate on-demand, secure, and global access to credit services.

Bloom is founded by Jesse Leimgruber, Alain Meier, John Backus and Ryan Faber. Together, the team combines Stanford researchers, Thiel fellows, and seasoned entrepreneurs.

Meier and Backus are two of the original founding members of the Stanford Bitcoin Group.

The Stanford Bitcoin Group is Stanford University's sole blockchain research organization. Originally founded in 2012 by 21.co CEO Balaji S. Srinivasan, the group spent years focused on research for the advancement of blockchain applications.

Similarly, the Thiel Fellowship is not new to cryptocurrencies. Along with Bloom founders Leimgruber and Backus, other fellowship members include notable blockchain influencers such as the founders of Ethereum, Augur, and Aragon.

Bloom isn't a lender offering credit. Instead, it's designed to allow both new and existing lenders around the globe to offer their loans using Bloom's open technology. The idea is to allow lenders to safely issue loans globally--to people without access to credit--with far more data than was previously available.

The company makes this possible by implementing a credit staking and identity attestation system. Much like how Google's PageRank algorithm ranks the most trustworthy websites based on which other sites link to them, Bloom uses social and organizational data to determine if a borrower is safe and deserving of a loan.

"Bloom makes it easy for lenders to transition to the blockchain by offering a new, compliant way for them to access new markets," said co-founder Jesse Leimgruber.

The vision is more than just opening up credit globally. Bloom provides a platform to democratize the multi trillion dollar lending market. "We aim to reduce the need for traditional banking infrastructure and eliminate opaque, proprietary credit scores," added Alain Meier.

It's an exciting time in the blockchain industry, and projects like Bloom aim to help cryptocurrency reach its full potential.