Overview

Credit Protocol

Per Bloom’s whitepaper, Bloom is a blockchain protocol for assessing credit risk through attestation-based identity verification and the creation of a network of peer-to-peer and organizational creditworthiness vouching (“credit staking”). The three main components are:

BloomID (Identity Attestation): BloomID creates a global secure identity, allowing lenders to offer compliant loans globally, without forcing borrowers to expose personal information. BloomIQ (Credit Registry): BloomIQ is a system for reporting and tracking current and historical debt obligations that are tied to a user’s BloomID. BloomScore (Credit Scoring): The BloomScore is a metric of consumers’

creditworthiness. This decentralized score is similar to FICO or VantageScore score, but with updated models.

* Per Bloom whitepaper

The Bloom protocol aims to improve the current credit ecosystem by creating a decentralized, globally portable and inclusive credit profile that lowers rates, enhances security, and improves the borrowing experience via the blockchain.

BloomCard

Bloom’s whitepaper states they will be releasing the BloomCard simultaneously in order to help expedite the adoption of their credit protocol. BloomCard will be a blockchain credit card built on the Bloom protocol and is intended to serve as a model for all future credit providers and help bootstrap the network.

Business Model and Strategy

Bloom is attempting to create a better, faster, interoperable, globally portable, and inclusive; digital “FICO” network via blockchain. The Bloom team will manage certain elements of the protocol during the bootstrapping process, but the long term goal is for the protocol to become decentralized and managed by the BLT stakeholders.

The value proposition is credit inclusion for excluded Borrowers, global credit score, more efficient lending process, and new market opportunities for loan growth for Lenders.

Revenue Model

Bloom Protocol

No explicit revenue model. The actors on the network will be compensated via BLT tokens for their services and governance, while every aspect of the protocol will gradually be turned over to BLT holders. Currently, Lenders and Borrowers do not pay access fees, but that could change in the future. The value proposition for BLT holders will be token value appreciation over time.

BloomCard

The BloomCard will generate interest income from its credit card services. The whitepaper did not mention whether this interest income will be re-invested into building the credit network or distributed to BLT holders as dividends. Management should provide guidance on this topic.

Industry and Market

Initial beach head and Beyond

BLT’s business niche is a small and unproven area of the credit scoring and lending market. This may present an opportunity for BLT to build their network users and stickiness from the ground up, while failing to attract attention or retaliation from incumbent competitors initially. Furthermore, BLT may bide additional time before attracting strong competitors since it appears their initial target consumers will be the unbanked and credit invisible. Traditional lenders and credit bureaus have skirted these segments of the market for a reason, i.e. either viewed as too risky or unprofitable. Thus BLT will have time to experiment and prove out whether their credit approach disproves these incumbent’s preconceived notions.

Potential Headwinds

Bloom will face three initial headwinds to their initial beach head and future growth. First, “fast follower” competitors, in particular, protocol lenders and credit scorers may “beat out” or fragment the market. This would hurt BLT since its long term competitive advantage is tied to network effects. Second, regulatory and compliance hurdles may negatively impact the network by delaying development, creating barriers to global operation, or burning through cash too quickly. Last, even if everything goes right for BLT, the network still may fail to generate sufficient stickiness or unit economics to attract and retain agents on the network.

Quantitative Model Rating*

Pugilist’s proprietary machine learning model generates a probability of viability that is subject to early stage investment return standards. However, given the early stage nature of these investments, the model should be viewed as directionally accurate versus a crystal ball.

Pugilist’s probability of viability is 30.95% that BLT WILL NOT be a viable ICO.

Conclusion

Bloom has a multitude of business hurdles and risks to overcome with little more than a whitepaper to articulate their strategy for achieving their vision. However, BLT has an ambitious founding team with good technical experience and advisors. The founders will need every ounce of that passion and creativity to recruit top talent and network actors, sufficient to grow the network. In particular, choosing either BloomCard or Bloom protocol may increase their odds of realizing their objective. In summary, BLT is a highly SPECULATIVE investment that carries high risk, but potentially high reward.

Pugilist’s Investment Rating*

*see full report appendix for methodology

Download the full report here.

— —

Pugilist Ventures is a research and investment firm that operates at the intersection of FinTech and Blockchain. We democratize research for blockchain enthusiasts and investors.

Please clap if you got an ounce of insight from this read.

— —

Disclaimer: Neither the author of this article, nor Pugilist Ventures, provide investment, financial, or legal advice. This site cannot substitute for professional advice and independent factual verification. The content provided on this site is for informational purposes only and should not be construed as any kind of solicitation for investment in any investment opportunity.