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Frequently Asked Questions

You ask questions. We got the answers!

Business related

What is your product?

Our product is intends to decentralize the financing process. Currently, all steps of the financing process are carried out by one financial institution in a centralized manner from the very beginning to the very end. As a result, such financier can only operate in the local market due to the lack of infrastructure abroad (otherwise it becomes very expensive). Moreover, the capacity of financing is also limited, resulting in only a fraction of SMEs’ needs being fulfilled. Debitum Network will be an ecosystem where participants from all around the world will perform separate steps of the financing process. For example, a German SME needs funding, so it joins to Debitum Network; a risk assessor from Germany rates the risk; credit insurance company from France performs the insurance; a fund from the UK provides the money; a local debt collector from Germany either collects or buys the debt.

Relations between business borrowers and lenders are complex, but they can be standardized and streamlined. We build Ethereum-based decentralized ecosystem where operators of the financing market can access their clients in a more advanced way and lower costs. Operators are companies (or even individuals) who either aggregate the demand (investors/lenders) or supply (borrowers), or both. There are service providers like risk assessors, insurers, debt collectors, provision/collateral valuators, etc. Debitum Network will also act like a integration medium for various technical solutions which are related to financing process.

While technically, in terms of economical effectiveness, Debitum facilitates the process of financing, it is an opportunity for professional operators in the financing industry to enter the global market with no barriers. For example, local risk assessors working in their domestic market would be able to sell their services for global investors willing to invest in their market.

Debitum aims to create a self-growing network based on trust by uniting fragmented regional registers of business borrower trustworthiness on the blockchain basis.

Debitum purpose is to provide an access to the lucrative SME capital market for everyone. Today, investments in SME debt are profitable, relatively safe, and yet not easy to get engaged into. Debitum Network will directly face and solve this problem.

What is your value proposition?

Debitum Network offers a hybrid solution - companies’ financing will be executed in fiat. We are crypto realists instead of crypto fanatics that is why we are not using crypto while it is still not adopted mainstream. We want to create a truly decentralized network via motivated communities - so it can be a living ecosystem, rather than a bunch of individual organizations trying to deal services. It is a pragmatic approach which works in the real life.

What problem or unmet need in the market does it solve?

There are 3 types of beneficiaries of Debitum Network - small and medium enterprises (SMEs) which need capital, funds or individuals seeking to allocate their capital and various service providers.

Today there are are a lot of investment funds, high net-worth individuals, family offices and similar players in the market who are searching how to diversify their investments and where to deploy excess capital. They struggle to do it safely because they lack global (or even local) lending/investing infrastructure.

Various service providers (risk assessment, provision/collateral valuation, verification, insurance, bad debt collection) are also fragmented and working on small scale serving some fragments of the market using different methodologies. Low demand for their services order quantity doesn’t allow them to raise their expertise to the suitable level.

The current credit gap for small businesses is enormous (up to trillion worldwide). That means they are willing to borrow, pay for it and confirm they are creditworthy, however financing is just not there. It is the result of banks’ limited willingness to get to know smaller businesses and inability of alternative financiers to overcome the geographical fragmentation and lack of infrastructure.

Let’s add Debitum Network to this picture. Our solution will create a new asset class and possibility to invest in global SME loan market by providing suitable infrastructure to do that. This infrastructure and trust of it will be ensured by various service providers and blockchain solutions. Many different experts will have opportunity to participate in global financing market by proposing professional services at large scale. And finally, small businesses will get the necessary capital for growth.

Why have these problems not been solved in the past?

In the past there were no technical solutions and no global infrastructure which would address this problem in an effective and trustful way. Banks and other financial institutions were not interested in funding SMEs as it was considered to be unattractive and cost ineffective area of business. Currently, with blockchain, crypto and emerging fintech technologies, the problem might finally receive an explicit and transparent solution.

How does the product work?

Borrower provides the needed information for loan. Using Debitum tokens borrower or investor pays for various services throughout financing process, like verification, risk assessment, insurance or debt collection. Principal capital and interest move by the ordinary means as it is considered to be ‘physical goods’.

Service providers freeze some amount of tokens received as a guarantee for future service quality. While trust smart contracts automatically calculate and update trust ratings of each service provider as well as the community they represent.

Debitum Network operators will ensure smooth fiat-crypto interaction at the beginning of Debitum Network development until crypto payments become mainstream.

What is your competition?

Traditionally managed centralized aggregators (quasi-p2p platforms) is one layer. Banks, credit unions, venture capital, angel investors and other ordinary institutions is another. We believe that we will be the first trust based decentralized ecosystem in SME lending offering a hybrid solution to finance SMEs in fiat.

How does your product differentiate from the other decentralized competition?

As far as financing is concerned, there is none yet. There were a few ICOs that targeted factoring and other narrow niches but they suggest to have money circulation in crypto which we consider impossible for most businesses at the current phase of adoption. A small company could go for a difficult and costly process to arrange a ‘free loan’ (in terms of fiat accounting) and engage itself into a side process of crypto exchange to compensate the interest and small fees. However, it is unlikely for an average company to risk and enter the full scale crypto adoption process yet. That’s why we choose a hybrid solution which means that companies will be able to finance themselves in fiat, until crypto is adopted mainstream.

How does your product differentiate from centralized competition?

For small businesses it will be much easier to join from anywhere and receive the best financing offer available. Plus, Debitum system will do a lot of processing and tracking for free. As long as banks are concerned, the differentiation has already happened and the umbrella term of ‘alternative finance’ exists for quite a while. For investors and service providers there are no similar alternatives.

Why would investors choose to invest in the platform?

Investing in SME debt has an attractive risk/return ratio. However, to invest in SME debt is still unavailable in most places, though.

Why do you think your team can built this product?

Our team has an extensive knowledge in alternative finance. In addition, we have significant technical abilities with a highly skilled IT professionals on-board. We have already developed smart contract and our MVP is ready. Moreover, our solid advisory board will help to ensure that we smoothly achieve our goals.

Do you have financial partners/investors to back up loans on the platform?

The first investor in the platform will be Debifo as Debitum Networks has grown up from this fintech company. Also we are actively discussing with several partners who would join Debitum Network.

What is your next step after raising ICO funds?

Firstly, we will establish Debitum in the first target countries in Europe. At the same time expanding Debitum team with high skilled professionals in the target countries and preparing for regional and global expansion. Simultaneously, our IT technicians will work on developing, testing and auditing Debitum Network version 1.0 software.

Who will take care of bad debt recovery?

Debitum Network will have a separate service provider's - Debt Collectors. They will take care of bad debt in non-crypto world.

When will the first invoices be funded?

We are planning to open first target markets and launch Debitum Network 1.0 ecosystem on September, 2018.

Which countries and when will be connected to the platform?

Initially we will launch Debitum Network in our home market - Europe (in two steps).Then we will consequently move to Middle East, Southeast Asia, South America, Central America and Africa etc. Countries are selected based on detail IFC reports on SMEs (micro, small and medium enterprises) credit situation in every particular country. More specifically, countries are selected by following criteria, in an order of priority: largest credit gap, largest credit gap per SMEs in the country, percentage of unserved and underserved SMEs in the country.

Which loan products are you targeting first?

At the very beginning of Debitum ecosystem factoring services will be offered to the SMEs where Debitum has the most extensive experience.

How long it will take to build whole Debitum Network?

The whole Debitum Network shall be built within five years.

How long it will take for Debitum Network to become self-sustainable?

Initially we will launch Debitum Network in our home market - Europe. Then we want to launch regional branches it other continents like South America, Asia, Africa and Middle East. Each country will be set up by attracting local service providers and organized borrowers (like local companies lending to small businesses or associations of businesses). To ensure smooth regional / country based operations we will hire people on the ground to take care of it. We estimate that on average it will take three years for a country to become self-sustainable - that means there will be enough various counterparties such as service providers and borrowers.

Do you have support of local authorities?

Yes, we are supported by the The Ministry of Economy of the Republic of Lithuania.

What actual products for SMEs Debitum Network would offer?

Use cases of Debitum Network ecosystem for small business: invoice financing for releasing frozen capital in long payment terms, short-term loans for working capital, long-term loans for capital investments, VAT refund for increasing working capital, contract financing for delivering good to the agreed customer, to name just a few.

Do you already have any feedback from the crypto community and investors?

Our pitch won both investors and public awards at the d10e pitch competition in Gibraltar. We are the first ICO to win both awards at once. It is a proof of viability of Debitum Network and encouragement for us to make Debitum Network an actual working business. We can also feel the support for the idea from our community members on different online channels.

Join us for Round B which starts on
January 25, 2018 at 15:00 GMT

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Token/Crowdsale related

What does token do?

Debitum Network is a distributed ecosystem consisting of various counterparties involved in small and medium businesses (SME) financing process - borrowers, risk assessors, insurers, investors, debt collectors and other counterparties - who all use Debitum tokens as the only possible means of payment among themselves when transacting within the Debitum Network.

Utility of Debitum tokens will be multifold. We have analyzed various possible token models, applied the findings to Debitum Network use cases and accordingly designed Debitum token to run two key roles within the ecosystem:

Value exchange role to build and nurture Debitum Network economy: Debitum tokens will be spent by borrowers and investors to buy services on the ecosystem with an ability to set the price for the services acquired in accordance with the quantity and quality of services received. Debitum token will allow all ecosystem users to earn value and to spend it on valuable services in a measured way.

Toll role Debitum tokens will be used as a security to guarantee a counterparty’s delivery of service.

Moreover, tokens will also be used to run Trust Arbitrage smart contracts that will indicate trust levels of counterparties within the ecosystem. This way tokens will ensure credibility of Debitum Network.

Why don’t you use ether? Why do you create a new token?

Here are four key arguments:

  • Better Control of Means of Value Exchange within the Ecosystem

    With an own token created and distributed, we are able to develop smart contracts that allow to fully control of the token ensuring that Debitum Network smart contracts will be able to guarantee clear token flow and payment management for provided services in Debitum Network ecosystem.

  • Equipped for Future Developments

    Possibly, the task of decentralizing the alternative finance industry has a more elegant solution, without using Ethereum, based on a devoted blockchain or a tangle ledger or some other technology that is yet upcoming. Perhaps some newer third party infrastructure, whose development is already underway, will become a more valuable hosting platform for Debitum Network. What we do know is: (1) Ethereum is a workable and affordable solution for now; (2) if we have our own token, we are by far better prepared for a potential migration in the future. Ethereum is a launch pad for Debitum Network, but we shall have all key equipment buckled so it goes with us wherever we fly in the future.

  • More Space for Legal Compliance

    An act of onboarding an investor includes accepting some financial resources from them. Laws differ from country to country, but in most places on Earth, if you give some other commonly recognized currency in return to that — the transaction qualifies as a possible starting point in a potential money laundering chain and thus results in a full-scale KYC/AML procedures. Both Bitcoin (BTC) and Ether (ETH) are likely to become officially recognized in many countries worldwide, Japan being only the first one. Paradoxically, some waves of broad crypto adoption are not in our favour. The native token gives potentially valuable flexibility in this regard, whereby counterparties might be able to operate without (or with less) licensing requirements, etc.

  • Leverage Invention of Closed-loop Economies Against Traditional Competitors

    The native token is a protectionist economic weapon for a new, disruptive ecosystem operating in the hostile competitive environment In connection with this argument, it is also important to note that some activities in Debitum Network are long-term and the dormant value of ongoing efforts needs be accounted for. The native token does that naturally and free of charges or limitations. For example, a debt collector might be handling a single case for many years. The native token naturally integrates that sort of continuous effort into the valuation of ‘gross domestic product’ as the corresponding cost of the service is temporarily locked-in in the form of tokens. When such debt collector finishes the job, tokens will be converted into fiat, which, again, will reflect the change in the system’s total value.

Why should I buy Debitum tokens?

Debitum tokens will be inevitable for those who want to use benefits provided by Debitum Network because it will be part of the system. That means, you should buy Debitum tokens for later use if you are going to be a participant of Debitum Network.

The use of Debitum tokens is constructed in a way to ensure demand for them. Investors have to buy Debitum tokens to pay service providers for services rendered. Small businesses have to acquire Debitum tokens to pay interest and/or for services rendered. The process looks like this: investors buy Debitum tokens in exchanges and use them in Debitum Network. It works the same with SMEs. Service provides receive Debitum tokens and may hold them or sell them in exchange. If there will be an excess of funds from the very beginning, we will use them to ensure better market making and to fill ‘empty room’ problem from investors’ side. If the number of users/participants of Debitum Network raises very fast, high demand of Debitum tokens will be inevitably created. If the demand is high, the price usually rises.

What technology Debitum coin will be built on?

Debitum coin is an ERC223 token.

Will there be more tokens issued over the time?

No. It is a single-time emission. We do not need additional minting because every participant adds value to the system temporarily and there is no way to monitor and ‘burn’ an excess supply when they leave. The single time mining event will guarantee the scarcity of Debitum token. It may also suggest the exchange rate for Debitum token to grow in parallel with the growth of a number of participants and a number of transactions in the Debitum Network.

How can one earn your token?

Anyone who is qualified as a lender, risk assessor, debt collector, provision verificator, etc. The market forces will decide whether you are any good at it. Or it might be a lack of local competition that might allow you to sell your services to Debitum users.

Why do you have fiat money in the business cycle?

At its first implementation, Debitum will process interest payments and other fees by using its internal coin, while leaving the principal (borrowed) capital in fiat. So far, we consider principal capital as ‘physical goods’ that cannot yet be put on a blockchain. By a premature move of onboarding principal capital today, we would scare off many potential users. There might be some of us who want all-crypto and right now, however our ultimate goal is the overall value of the system. We want to provide services for those businesses which are not ready yet to switch to using cryptocurrencies in the main cash flow.

Why would a business choose to borrow using Debitum?

For unserved and underserved SMEs around the world Debitum Network will offer a cost effective, transparent and global access to capital. As more and more businesses will join the ecosystem, the price will be more competitive and SMEs will be offered financing in better terms. In places where financing is non-existent Debitum will offer a viable and innovative solution.

How will you solve fiat-crypto conversion / volatility problem?

We will use crypto for on the ecosystem activities and services. We will use fiat transactions for ‘physical goods’ - loan principal and interest rates. Hence, we will not face fiat-crypto conversion / volatility problem. In the future when fiat-crypto conversion/volatility problem will not exist, we will move fiat loans to crypto

Where do you see return for ICO investors?

The initial Debitum token demand will be created by borrowers and investors who can pay for counterparty services in Debitum tokens only. At a mature stage of the ecosystem, the closed loop of multiple participants’ aligned incentives will co-exist. These various Debitum Network participants - risk assessors, insurers, operators, debt collectors, etc. - will all effectively raise the value of the Debitum tokens through motivated active participation in the ecosystem.

ICO investors have an opportunity to acquire at an early stage for a minimum price. Later the price of the tokens will definitely rise due to development of Debitum ecosystem and due to growing demand of tokens by the players of the ecosystem.

How the funds will be used?

The funds will be used to develop the Debitum Network 1.0 software, expand Debitum team in target countries, acquire participants in the system and promote Debitum in the target markets.

How much are you planning to raise?

The Stage 1 Round B crowdsale hard cap is 20 000 ETH.

Hard-cap for the entire Crowdsale allows the team to focus on Stage 1 of the roadmap. This effectively means the company will focus on rolling the platform out to the first 15 countries on their roadmap.

Also, the Stage 1 crowdsale is split into 2 rounds:

Round A already finished which and we raised 1,2 million USD which is enough to develop and launch the basic software functionality, onboard the initial ecosystem participant in key markets where the SME credit gap (lack of financing for small and medium businesses) is indicated by the World Bank organization as being worst. will be capped at 4,000 ETH, and will be a chance for early supporters to gain a 30% bonus. This will take place on Thursday 7th December at 3PM GMT and will run for a period of 14 days but only until the Round A hard cap of 4 000 ETH is reached. Round B will be capped at 2046,000 ETH. It will take place on Thursday 25th January, 2018 and will run for a period of 30 days.

What are the risks for investors?

The loss or destruction of a private key required to access tokens may be irreversible. Currently, the use of crypto assets in retail and commercial marketplaces is relatively small in comparison to the relatively large use by speculators, thus contributing to price volatility that could adversely affect the utility of Debitum tokens.

How to participate in an ICO?

Debitum Network crowdsale is split into two rounds. Once the crowdsale Round B begins (January 25th, 2017 15:00 GMT) our website (https://debitum.network) will be updated to a new design. At the right top corner of the website there will be a ‘Join Crowdsale’ button. By clicking on it you will be introduced to terms and conditions of the crowdsale. If you agree with our terms and conditions, you will be asked to click ‘Continue’ button and will be shown the contract address for Debitum Network crowdsale. Copy the contract address for the Debitum crowdsale and note the recommended gas limit. Transfer Ether (ETH) from your preferred wallet (such as MyEtherWallet) to join the crowdsale. All purchased Debitum tokens will be distributed within 15 calendar days after the closing of the Crowdsale. Note: do not send your Ethers directly from the exchange.

What are the discounts for the ICO?

Debitum token price will have a two-step increase during the Crowdsale, to provide an additional bonus opportunity to early supporters:

  • Step 1: 7,800 DEB for 1 ETH for up to 500 ETH - 20% bonus

  • Step 2: 7,500 DEB for 1 ETH after 1 step up to 2 000 ETH - 15% bonus

  • Step 3: 7,150 DEB for 1 ETH after 2 step up to 6 000 ETH - 10% bonus

  • Step 4: 6,850 DEB for 1 ETH after 3 step up to 14 000 ETH - 5%

  • Step 5 (the Main price): 6,500 DEB for 1 ETH after 4 step up to 20 000 ETH - no bonus

Does your token pay dividend?

Debitum token is not a security, our token owners do not receive any dividend payments. Debitum token is used to access and operate on Debitum Network ecosystem. Token owners may sell the token to others, if they don’t need them.

What will happen with the tokens that won’t be sold?

The unsold tokens will be moved to Reserve. Our Debitum Token is a utility token, hence it can't be burned. If tokens would be burned, they should be considered securities. We do not want our utility token to be considered a security.

Do you already have any feedback from the crypto community and investors?

Our pitch won both investors and public awards at the d10e pitch competition in Gibraltar. We are the first ICO to win both awards at once. It is a proof of viability of Debitum Network and encouragement for us to make Debitum Network an actual working business. We can also feel the support for the idea from our community members on different online channels.

In your MVP there is a fiat to ETH conversion. If we invest fiat, what is this for?

1) our MVP shows secondary market of Debitum Network. From experiences a must have feature to re-sell / liquidate existing loan positions. Those can be done in crypto.

2) we do mostly concentrate our MVP on implementation of smart contracts and how they link between various parties - you can find it on Github link (https://github.com/debitum)