Redefining Our Credit Networks, One Loan at a Time

In an era of data breaches and regulation, it’s time our credit network got its act together. The Equifax data breach opened the eyes of millions of consumers around the world to the harsh reality that is our economic backbone. Why should companies like Equifax, Experian, and TransUnion be charged with maintaining our information and governing the terms of our loans and credit applications? It’s clear they cannot be trusted in this day and age with the unlimited information that is submitted to them every second of every day. By opening our credit networks to the blockchain and smart contracts, we will begin to see a new way in which borrowers and lenders are connected around the world, exchanging any currency they see fit and governing the terms of loans. Ripio Credit Network has identified these issues and aims to reshape the global credit network. By reducing the brokerage costs and management fees associated with traditional methods, RCN enables more favorable conditions for everyone involved. RCN is leading the way in the democratization of credit through blockchain technology.

Controlling The Terms of A Loan: A Dream Come True For Younger Borrowers

RCN’s recent upgrade, dubbed “Basalt,” includes the Oracle V2 and Cosigner V2 enhancements, offering lenders and borrowers much more flexibility, all while lowering costs. The biggest issue borrowers face, particularly students, is that they have little to no bargaining power when it comes to negotiating a loan. It’s a take-it-or-leave-it scenario. The Basalt upgrade changes the dynamic entirely. By providing the borrower with the tools necessary to select the terms of his or her loan, offering additional cosigner options, minimizing interest fees, and eliminating almost all maintenance fees, Basalt makes these loans less intimidating and more borrower-friendly.

How Can Cryptocurrency Benefit The Lending Space?

By exploring non-fungible ERC-721 tokens as potential collateral for loans, RCN is honing in on its vision for a new loan transactional model, where distributed ledger assets act as collateral for fiat credit lines. As each token is completely unique, the ERC-721 standard offers a clear way to identify each loan. Lenders can easily manage their RCN loans by integrating these tokens with compatible exchanges and crypto wallets. “The Bitcoin-based collateralized loans we envisioned in 2016 inspired our evolved concept of RCN,” says David Garcia, RCN’s managing director. Using high potential applications of distributed ledger assets, we are also refloating this concept as we notice a huge opportunity.” With ERC-721, the cosigner can act as an “escrow” to protect their collateral, and transfers the relevant asset to the borrower or lender based on the default loan repayment conditions. “These non-fungible tokens would have specific value for lenders and borrowers that agree [on] a loan transaction,” says Garcia. “We are working on a prototype [in] this regard that we expect to unveil soon.” In a 2016 patent application, Ripio laid out its original idea for a loan transaction model that does not require collateral, and uses a third party agent (the cosigner) to reduce and/or prevent defaults. According to the company, this idea was the “predecessor” of RCN´s protocol design.

Toward A More Secure Future

To advance its goals, RCN’s lead developer also recently proposed the ERC-939 variation as an EIP. This proposal, which would allow DApps and networks to connect and exchange information using claims, is currently being analyzed and discussed by the developers. The ERC-939 proposal offers the ability to include a borrower's credit risk history and identity assessment information on the blockchain.