Analysis of Bloom – Decentralized Credit Scoring

Summary

  • Project name: Bloom
  • Token symbol: BLT
  • Website: https://hellobloom.io/
  • White paper: https://hellobloom.io/whitepaper.pdf
  • Hard cap: US$50 million (public crowdsale ICO contributors own 50% of total token supply if hard cap is reached)
  • Conversion rate: Total token supply is 150 million
  • Maximum market cap at ICO on a fully diluted basis: US$100 million
  • Bonus structure: None
  • Presale or white list: Whitelist registration ongoing (find out more information here)
  • ERC-20 Token: Yes
  • Timeline: November 30, 2017 for 1 month (please refer to Bloom’s website for the most up-to-date information)
  • Token distribution date: After the end of ICO
Video summary (video is 7:05 long):

Project Overview

What does the company/project do?

Bloom is a protocol for assessing credit risk through identity verification and the creation of a network of peer-to-peer and organizational creditworthiness vouching (“credit staking”). Basically, it provides a decentralized credit scoring system that can be used globally.

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system – incompatible cross-border credit scoring, backward-looking credit assessment, risk of identity theft, and outdated/uncompetitive credit scoring ecosystem.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 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 the components above, Bloom aims to decentralizes the credit industry while lowering rates and increasing security.

Bloom is also going 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.

Below is an introductory video of the Bloom protocol (video is 2:42 long):

How advanced is the project?

The business model of Bloom was announced in August 2017. It has partnerships with other blockchain lending projects such as Ethland and Lendoit.

Below is the roadmap of the project:

  • Phase 1: Bloom Invitation System and Voting
  • Phase 2: Bloom Identity Matching (BloomID)
  • Phase 3: Credit Staking (Precursor to BloomScore)
  • Phase 4: Creditworthiness Assessment (BloomScore)
  • Phase 5: Bloom Credit Protocol Launch + BloomCard
  • Phase 6: Democratized Autonomous Credit Infrastructure
What are the tokens used for and how can token value appreciate?

BLT token is both the currency and scoring enhancement mechanism of the Bloom network.

Identity attesters and risk assessors on the Bloom network can set prices and receive payment for their services in BLT tokens.

It also serves as the proposal and voting token to guide the evolution of the Bloom credit scoring system.

As BLT tokens are needed to participate on the Bloom protocol, the more users and activities the protocol has, the more valuable BLT tokens should be.

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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 – Co-founder 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 – Co-founder 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 multi-platform performance marketing agency.

Advisors of the project include 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 co-founders 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 co-founders 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. 
  • 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.

Conclusion

Overall, we are neutral about this ICO for its flipping potential and like its long-term potential if it raises less than $30 million from the ICO. Our thoughts on buying the tokens for flipping and investing for the long term are as follows:

For flipping

Neutral. Hard cap of $50 million is very high, especially for a white paper project. We are not sure if the project can reach the hard cap, so there may not be unmet demand for the ICO.

For long-term holding

Depends. We believe the project can provide attractive long-term return if the project raises less than $30 million, otherwise we are neutral. Even though the team is impressive and they have a well-thought-out plan, the project is at a white paper stage and it probably takes a long time for the protocol to launch.


For more information about the ICO, please visit the following links:

Website: https://hellobloom.io/ 

Whitepaper: https://hellobloom.io/whitepaper.pdf 

Blog: https://blog.hellobloom.io/ 

Slack: https://hellobloom.io/slack

Telegram: https://t.me/joinchat/FFWDdQ1hxqIg3jLe7zBVFQ 

Blog post detailing the story of Bloom and the founders’ background: https://blog.hellobloom.io/meet-the-people-building-bloom-6cd891111a46

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