Bloom – Decentralised credit scoring powered by Ethereum and IPFS

Bloom is a fantastic use case of blockchain technology. The fundamental ethos behind blockchain technology has always been the decentralisation of existing services, then what better use case for it than that of the credit scoring system.

Bloom in a protocol for verifying identity, risk assessment, and credit scoring, all built on top Ethereum’s blockchain. It’s an all-encompassing protocol it that it allows for both traditional and digital currency (cryptocurrency) holders to serve as lenders to those who are unable to obtain a bank account or credit score.

Bloom aims to tackle 5 major issues currently being faced by the traditional credit scoring system:

  • High Risk of Identity Theft – People seeking to borrow money often expose a lot of personal information to obtain a loan, this personal information can then be easily accessible to a potential hacker to open a new line of credit.
  • Cross-Border Credit Scoring – Credit scores and history are not transferable abroad, so individuals are faced with starting from scratch to build up their scores.
  • Creditworthiness Assessment – Newcomers trying to obtain credit will find it hard if they have no previous history.
  • Limited Ability to Expand – People in developing financial markets struggle to obtain credit.
  • Uncompetitive Credit Scoring – Credit scores are centralised or the data is owned by a few selected companies.

The Bloom protocol itself allows for any lender that is authorised by a borrower to securely issue credit to that borrower. This process is done with the help of 3 main components:

  • BloomID – This is a global federated identity where independent third parties vouch for the identity and legal status of an individual.
  • BloomIQ – This system is responsible for tracking a users historical debt linked to their BloomID.
  • BloomScore – This is essentially your credit score, which determines your ability to repay debts.

The BloomToken (BLT)

Organisations that participate in verifying a users identity and their ability to repay debts, will be rewarded with this token. Although they will initially need to stake some BLT to participate. Bloom also offers the BloomCard (functions like a normal debit/credit card), which will allow users to build up their credit score.

Bloom is one of the first exciting and interesting projects I have seen in the credit lending blockchain space. I am excited to see what the future holds for Bloom.

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