Closing the SME Funding Gap

According to the World Bank IFC, over 40% of SMEs struggle to obtain financing, amounting to a funding gap of over $5.2 Trillion per annum. This severely limits for growth, job creation and entrepreneurial opportunities.

The reason for this gap is mainly due to the lack of trustworthy digital data such as KYC and proven cash flow information; absence of liquid collateral; high transaction costs and inefficient loan application processes.

Developed countries have established credit bureaus to collect data about individuals and businesses. These bureaus have grown into large institutions, consolidating hundreds of millions of records often at the expense of the real data owners. They charge high fees for access to third parties, thereby earning income from selling other people’s data, who are often at a loss as to how they can correct errors or otherwise influence their credit scores.

Credible aims to solve these problems.

It is the only global distributed ledger to store business KYC and credit data on the blockchain. It is designed specifically for sharing data across organizations in a decentralized model to allow for comprehensive credit scoring. By using blockchain for open access, encryption for data protection, and private keys for ownership, Credible unlocks the value of precious business credit data by moving this data from proprietary silos onto a globally accessible blockchain network.

Credible gives SMEs and business owners control over their own data. This improves on the large credit bureaus model by allowing data owners to manage and monetize their data.

This large decentralized ecosystem of credit data fits well and naturally to the practical use of blockchain technology, allowing for information on Credible to be shared across organizations, in a way that ensures the data is auditable and secure.

All data within Credible is not only immutable, it is also auditable because there is a record of all events, such as when data is added or updated. Finally, the blockchain provides heightened security, mitigating any chance of data theft or fraud. More importantly, the blockchain allows for decentralization of data capture and verification.

Most blockchains are designed purely for value transfer and are not usually well-suited for data storage as they have limited transaction throughput, limited data capacity and generally lack interfaces for querying the content. A few solutions adopt hashes (IPFS) and pointers (Multi-Chain) with data stored in flat files or central databases.

Credible actually adapts the blockchain in a novel way. It embodies design principles of a replicated database model for storing credit data in a high throughput data store. By adopting MongoDB as its storage layer in a noSQL database, Credible allows for flexible JSON data hierarchy and classification models, as well as querying across large amounts of data.

Since Credible will operate in an environment without a central control, a low latency consensus mechanism to coordinate data replication between nodes is required. We use Tendermint for the underlying consensus mechanism to ensure Byzantine-fault tolerance (BFT) across the Credible network. The way Tendermint was designed allows it to handle thousands of transactions per second. Benchmarks of of 10,000 transactions per second for 250 byte transactions with finality in 1–3 seconds.

In order for Tendermint to interact with the data store, we adopt the ABCI interface to interconnect between the consensus network and the database engine. ABCI is a messaging protocol which coordinates requests received from the Credible network, then applies them to the database.

To attach all submitted data to an owner, we adopt BigChainDB for its interfaces to the data layer, and to provide strict conditions on the ownership of the data. It enforces rules to ensure that data is cryptographically signed prior to being inserted into the database. This also prevents malicious interferences between nodes and the entire network. Both assets and tokens circulate in the Credible network.

Credible builds on these components a robust layer of logic, validation and well-defined methods for interacting with the blockchain. The team is developing RPC interfaces, function specific methods and input parameters. We’ve been designing SDKs for many years at SmartPesa and continue to apply these best practices to Credible’s API designs.

Clear function calls will be provided for consumption by Web (DApp) and Mobile SDKs, and the RPC methods provide a means for proof of existence, search, and retrieval of the owner-encrypted data. The returned data allows the requestor to validate the existence and authenticity of the records.

Anyone can search by metadata, retrieve a history of asset transactions, and even see the list of claims attached to a single wallet. These however remain encrypted until the token is exchanged with the owner (via Trusted Escrow Agents) to retrieve the clear-text records. In addition, the API also provides search by location — GPS coordinates, GeoJSON, and allow for both wide and deep searches to locate the relevant data sets on businesses.

In order to support the range of credit record data, we are defining this in the open community — JSON Schemas to define the data structure. JSON properties shall follow the specification, and enable an efficient way to convert credit data records into JSON-LD format. This JSON Schema specification also allows Credible to specify a list of fields which describe the data and fields represented in the metadata.

Our team of engineers is very experienced with cryptography, symmetric and asymmetric encryption, CBC and ECB schemes, as well as PCI compliant key management protocols. In contrast to the fact that information on the blockchain is usually public, we have been working on prototypes demonstrating how we employ the mechanics of Shamir Secret Sharing, Blakley’s scheme, multi-party PSA cryptography building on Chinese remainder theorem, and even facets of secure multiparty computation for secure cryptography nonce sharing between participants.

At the technical level, Trusted Escrow Agents (TEAs) act as token gateways bridging the Credible network with the Ethereum network, which enables the movement of value between the two blockchains. This way, there is no need for any manual intervention since the oracle serves requests in both directions.

After all this research and development, as well as real world applications with SmartPesa, we want to see Credible succeed in providing business owners the financial access which they need to grow, not only for themselves but also their own community.

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