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Can Blockchain Replace The Current Credit Scoring System?

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The credit scoring system is nothing new. For years we’ve been told to watch how we spend, to spend only what we have, and to monitor our credit card usage.

The credit scoring system is nothing new. For years we’ve been told to watch how we spend, to spend only what we have, and to monitor our credit card usage. We know that debt—whether school loans, car loans, or medical debt—can be used against us.

With the current credit scoring system, this can mean problems when we want to borrow money or rent an apartment. So what if that system experienced an upheaval? What if blockchain can make that possible?

 

What is Blockchain?

If you’re unfamiliar with blockchain, it’s the creation of Satoshi Nakamoto which is believed to be a pseudonym for a group of people, who are working together under a single name.

Blockchain allows digital information to be easily distributed without making it available to be hacked or copied. Like a digital ledger, new information can be added, but because of how it’s stored, old data cannot be easily altered or deleted.

Blockchain technology began with the creation of Bitcoin, a digital currency. Since then, it has evolved into something much more significant. Blockchain has essentially created a new foundation for improved internet infrastructure.

Is there potential for it to continue evolving until our current credit scoring system is obsolete? It’s a possibility.

You don’t necessarily need to know how Blockchain works to take advantage of it. If you’re curious, though, here are the basics.

 

How Does Blockchain Work?

If you’re at all familiar with computers and the data they host, you know there’s usually one centralized location that stores information. That information is susceptible to hacking, and what’s stored there can quickly become corrupt.

Blockchain changes the way this infrastructure of data works. Rather than one central location where data is housed, the data is duplicated and kept in multiple locations. Regularly updated, the information is no longer available for hackers to invade or corrupt.

Blockchain creates an indeed shared platform. Information is accessible to anyone at any time on the internet.

Like an outdated approach to editing documents in a group, our original understanding of the internet and documentation is limiting. Think of Google docs as an example. As people begin to gravitate toward shared platforms, we become more efficient with both our time and storage space.

Likewise, our understanding of how best to use and store data on the internet is evolving as well.

Blockchain allows for more sophisticated maintenance of information and records. There will be no mistaking whether or not you have the latest version or if some information has been misplaced.

 

What Are the Benefits of Blockchain?

While there are many benefits of using a blockchain style system, there are two highly important ones worth mentioning.

The first benefit is that there is no one single place where information is stored. This also means it has no single point of failure.

Something would have to happen to the millions of computers that have access to the information for it to be lost. It’s highly unlikely that would ever happen.

The second is that no single entity or person has control over inputting or maintaining the information. The information held within blockchain parameters cannot be altered or corrupted easily.

This is, in essence, a public platform, where information can be shared and accessed.

 

What Does All of This Mean for Our Current Credit Scoring System?

We don’t need to get too caught up in the ins and outs of the blockchain system. For now, let’s look at how this technology can change the way we approach credit scores.

Consider that the current (outdated) centralized system in this instance is the bank. The bank has all of your information. If you want to access any of it, you have to go through your bank to retrieve it.

This is the case whether you need the information for a mortgage, a new car, or educational loans.

Once that information is obtained, you then go ahead and pass it on to the party in question. This kind of system means sensitive data passes through many different hands. In this situation, there are multiple moments of vulnerability for the information that keeps your identity—and credit score—protected.

Another problem with this current method is that changes to your credit history are often slow to appear. Quite a bit of trickling down has to happen, to reflect any positive changes you’re making.

Positive changes might have taken place that should be reflected in your credit score. But this isn’t always captured quickly in the information that can be pulled by the bank.

These systems are maintained and passed along by humans. You need to worry about the security of the individual computer networks your information is traveling through. You also need to be concerned about the possibility of human error.

A blockchain system entirely changes how this information is communicated. Data breaches (such as the Equifax hack) can be a thing of the past if we move to Blockchain.

Good credit is one of our most valuable assets. We frequently need to prove our credit history by providing sensitive information. Social security numbers, driver license numbers, passport numbers, and other identifiers are passed back and forth during credit inquiries.

It’s worth repeating that, during the process, we are vulnerable to having information stolen. A traditional system need only have that central computer hacked to gain access or control of information.

Alternatively, a blockchain system requires a hacker gain control of over 50 percent of the network to be successful. It is doubtful to happen—and certainly not without someone noticing.

Using blockchain means credit checks no longer expose or endanger sensitive data. You will have faster, more current results to an inquiry. And at the same time, you won’t be putting your identity at risk of theft.

With blockchain, we can also seamlessly pass information back and forth outside of the existing structures in the United States. In the past, credit histories haven’t been easy to take abroad with you. Moving to a new country could result in needing to start over entirely, regarding establishing your credit.

Blockchain technology allows for a global credit platform. You’ll no longer be confined to a single country, and can take your credit history with you wherever you go. In today’s “global village” of a world, this kind of flexibility is extremely useful.

 

Who Does Blockchain Benefit?

The changes blockchain brings with it can impact everyone. However, some pockets of the population will reap more significant benefits from the transition. Those groups of people are minorities, youth, and those who are underbanked.

In a rapidly changing economic environment, these groups need more help than they ever have before. In recent decades, the entire backdrop for our financial system has experienced upheaval.

The cost of real estate and education are growing much faster than pay rates. Young adults are finding themselves saddled with more financial debt and worry. They have also noticed they aren’t in control of their credit history.

Large credit bureaus, like Equifax, aren’t viewing the average person as their client. Instead, the company sees that person’s information as something to share with other banks and lenders. Far from a client, the person in question becomes a commodity to be used as the firm sees fit.

Moving toward a blockchain system for credit scores will allow people to take back some of the control. Not only can they see and maintain their credit information, but they can also disseminate it as they see fit.

In the post-Equifax environment, two things have become increasingly apparent. The first is that the bulk of our credit information shouldn’t be stored on credit bureau systems. The second is that social security numbers shouldn’t be used as a primary identification tool.

Before the Equifax hack, there was limited interest in moving toward a blockchain credit storing system. There was a strong inclination not to change something that had been working for so long.

The Equifax breach brought home the fact that this system isn’t working quite as well as it was thought to have been. There are, however, still some things that need to be addressed in the blockchain system—speed and expense are both issues. Even so, a future involving blockchain looks mighty bright.

 

The Future of the Credit Scoring System

It’s not likely that the traditional credit scoring system is going to fade out into nothing overnight. The big names in the industry are most likely going to be around for a while to come.

There’s still a lot of work to do with the blockchain platform before we can access all the advantages that come along with it.

It’s promising that this push toward a blockchain credit scoring system can allow for less identity theft. Individuals will have more control over their information and who has access to it.

With some adjustments and improvements, a blockchain system might revitalize our understanding of credit scoring and share entirely.

Keep your eye on the blockchain system and how it continues to evolve. You may be pleasantly surprised by the overhaul our credit scoring system could experience shortly.

 

Guest Post by John Blakely

John Blakely has had a passion for all things personal finance for over a decade. He is a firm believer in having big financial dreams and executing on a plan to realize them. He is an Education Ambassador for ScoreSense, where you can find more of his writings.

#Blockchain

Bitcoin Coffee: The first blockchain coffee is a fact!

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Blockchain technology makes the massive inequality in the coffee chain transparent for consumers. Token embraces this transparency and offers a solution.

Blockchain can be used for beautiful things. You can arrange and settle a lot through blockchain. Property rights, identity, but also, for example, the origin of products. How about coffee on the blockchain? Today you can buy the world’s first blockchain coffee: Token. This newly established coffee brand is an initiative of Moyee Coffee and FairChain Foundation that want to offer you full transparency about where your coffee comes from. Thanks to the blockchain, more money can go to the poor farmers. And that must make the world a little more honest. The token is the first coffee brand that is entirely transparent with blockchain technology.

 

No more hard time for coffee farmers

Nowadays, many coffee farmers have a hard time. They can barely cover their production costs, let alone social and environmental costs. According to the recently launched coffee brand Token, blockchain could provide the transparency and efficiency needed to change that.
Blockchain technology makes the massive inequality in the coffee chain transparent for consumers. Token embraces this transparency and offers a solution. The first cargo of 60,000 kilos, produced by small coffee farmers and blockchain-traceable, is going to prove that an honestly distributed value chain is possible.

 

Transparency

Token attempts to become the world’s first complete end-to-end blockchain coffee.

The token is a collaboration between Bext360, Moyee Coffee and the FairChain foundation. Their blockchain system makes it clear precisely what everyone deserves in every step of the chain. Inefficiencies and unnecessary intermediaries can thus be identified. According to the organizations, this transparency makes a fairer distribution of value throughout the chain possible. Blockchain technology makes the massive inequality in the coffee chain transparent to consumers. Token embraces this transparency and offers a solution.

 

Does blockchain make coffee more honest?

Most coffee is produced by a handful of large coffee companies that do not distribute the profits equitably. For example, the vast majority of the 25 million coffee farmers in the world can barely cover their production costs. Fortunately, there are more and more coffee brands who believe that blockchain can be used to make coffee more honest. This technology provides the transparency and efficiency needed to change this unfair system.

 

The coffee chain

Cryptocurrencies provide various modern opportunities; you can use on your daily basis. Presently, you can easily gamble with cryptocurrencies or invest your money in betting with crypto. For example, you can use a betting site Fairlay to bet on anything you want. You can also choose to build up more gradual assets by investing in the blockchain technology that lies behind all cryptocurrencies. The success of digital coins is possible thanks to the revolutionary blockchain technology. You can see that there are great opportunities for companies that develop blockchain services and for other companies that benefit from the digitization of the financial sector.

To make the benefits of blockchain real, each bag of Token coffee is provided with a token. Every token is worth 50 cents that you can invest in part of the coffee chain via the KrypC Technologies platform. You can give it to the farmers who produce the coffee, but also to yourself by offering yourself a discount on your coffee.

 

Gradual growth instead of a supercharger

It is, of course, nice if you have made a significant profit with cryptocurrencies. Earning a lot of money gambling with crypto is possible. However, the chance that you have burned your fingers on the bitcoin is also quite significant. If you are tired of waking up every day with the uncertainty of having become 10% richer or poorer with a digital currency that night, you may want to consider putting your money in mutual funds. You then become for a tiny part owner of a large number of companies that make all kinds of articles and provide services. To be honest: you will not get rich with an investment in the fintech sector. Although the underlying trend is healthy, you run the risk with your assets, and it is essential to build a financial buffer and invest only with money that you can miss for a long time.

 

How blockchain makes the world fairer?

The blockchain ensures that the world becomes fairer. It offers safety and transparency. This technique can be used for all kinds of applications.

How does blockchain work?

The blockchain can be seen as a ledger containing the accounting of each transaction that has ever been done. Every time a new transaction is registered, it comes to a chain of existing data blocks of transactions. That is why we call this chain the blockchain. Information about companies can be recorded on the blockchain. This increases the chance of fair trade. Scandals can be prevented because the right information is available.

Just think of the fraud with software in cars. That would not have been possible if all the information had been recorded on the blockchain. Multiple parties check the information. It would immediately have been discovered that something is not right. The registration on the blockchain would, therefore, be rejected. With such a discovery you are almost assured that it is made public.

The blockchain can also work with clothing manufacturers. There could be registered where sweatshops are located. If a piece of clothing comes precisely from that area, it could be observed on the blockchain that it was not produced with respect for the man.

Another example: elections are not fair all over the world. By registering votes on the blockchain, no more results can be tampered with. The blockchain tracks the information and verifies that the information is correct. Voice fraud is then impossible

 

Fair gambling

These days, we see that blockchain technology is being used more and more often in online casinos. Not only to be able to support payment instruments such as Bitcoin and altcoins but also in games themselves. For example, players can check whether a round in a game has been fair.

 

We thank Davey Cross for this guest post.

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Can France become the Blockchain Nation?

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French MPs have recently put our a proposal trying to make France become the Blockchain Nation. This is a raft of 20 different proposals.

French MPs have recently put our a proposal trying to make France become the Blockchain Nation. This is a raft of 20 different proposals all aimed at trying to make France the number 1 Blockchain Nation specifically citing that they do not want to miss the train on this like they did the internet.

MPs in France are proposing to have a 500 million euro investment fund in order to stimulate the blockchain industry in France. They are focusing on trying to get public institutions to get into blockchain. The proposals include the Central Bank of France issuing their own cryptocurrency and providing subsidies for cryptocurrency miners.

Recently we did have legislation coming out of France that they want to make it much easier to have ICOs in France. They are aiming to attract teams from all over the world o come to France and have their ICOs.

 

Writers thoughts:

The central bank of different nations are planning to issue their own crypto assets but it recreates the problem that we are trying to solve with cryptocurrencies.

Giving subsidies to cryptocurrency miners is not actually good for the crypto community as the mining industry should remain competitive. The government of different nations should not be giving them preferential energy rates especially in France where it is mostly a nuclear-powered nation.

Setting up a legal framework for ICOs is exactly what is needed in terms of regulation.

Along with all of this, there is also a formal taxation policy which is coming up in France and all of this coming together is quite awesome. This is regulatory clarity and this is what a lot of companies and institutions are desperately asking for. This is the main reason why more and more companies are moving to nations such as Malta, Japan, and Switzerland as they have regulatory certainty. France which is one of the world’s biggest economies is hopping on board with the new proposals, the recent announcements about ICOs, taxation, tobacco shops to sell bitcoin from next year and recently setting up something called the ‘Mediterranean Seven’ which includes Spain, Portugal, Cyprus, Italy and Greece led by France with the mission to improve education in usage of blockchain technology in industries such as healthcare, transport, land, company registry, shipping and much more.

 

What are your thoughts on the above? Tell us in the comments section below.

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Blockchain and Oil Industry: IBM partners with ABNOC

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IBM is teaming up with the Abu Dhabi National Oil Company to create a blockchain supply chain system. The blockchain solution is currently in pilot phase.

IBM is teaming up with the Abu Dhabi National Oil Company or ABNOC to create a blockchain supply chain system. The blockchain solution is currently only in its pilot phase but this is no small announcement for ADNOC as ADNOC has a daily output of about 3 million barrels of oil in 10.5 billion cubic feet of natural gas. ADNOC’s digital unit manager had the following to say about the blockchain pilot:

“Blockchain is a game changer. It will substantially reduce our operating costs by eliminating time-consuming and labor-intensive processes. It will strengthen the marketing and trading of our products and create long-term sustainable value.”

 

Blockchain for Oil

The blockchain solution will also enable the ability to track every molecule of oil and its value from well to the customer. Also reducing the time to execute transactions between ADNOC’s operating companies and increase operational efficiencies and provide even greater transparency to the industry. The blockchain solution will surely increase the revenue for ADNOC and it may increase the efficiency of delivery and hopefully reduce waste.

The oil industry is currently attempting to extract a little bit more wealth before the renewable revolution takes place. But even though we have a boom in renewables, the infrastructure is lacking in many places globally and oil is here to stay with us at least for some time in the coming future. This is the first oil blockchain solution which will surely attract more oil blockchain solutions in the coming future.

 

The third industrial revolution will surely be not an oil-based revolution. The renewable revolution will basically be unstoppable. What do you think about the future of blockchain and oil industry? Tell us in the comments section below.

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