LedgerScore: Credit Scoring Cryptocurrencies in Developing Countries
Globally, two billion people do not use formal financial services and can’t access credit. That’s more than half of the world’s poorest adults.
Their ability to use financial products is limited, in part, without credit scoring. Regulators around the world require lenders to satisfy themselves about a person’s ability to repay a loan before they make the loan. Including lenders in developing countries.
Credit scoring uses a person’s banking history to assess creditworthiness. Credit scoring helps lenders avoid making loans to people that are likely to default. It’s a good thing, and it helps avoid debt traps for people who can’t afford to borrow.
It is hard enough to get a credit score in a developing country so that you can access credit, but it is especially hard if you use cryptocurrencies in a developing country. There is no tool for lenders in developing countries to give a credit score to crypto users, so there is no way crypto users in developing countries can get a loan.
As cryptocurrencies become more popular in developing countries, due to their advantages over national currencies, crypto users are seeking a bridge back into their fiat world which would enable them to borrow from a local bank.
So how can people in developing countries who use cryptocurrencies get access to credit? How can freelancers in developing countries who get paid in crypto get a credit score and access credit? How can families in developing who receive remittances in crypto from family members working overseas get a credit score and access credit? How do investors in developing countries who hold assets in crypto wallets get a credit score and access credit?
Credit scoring cryptocurrency transactions is the answer for them, and LedgerScore is the tool they can use to get their credit score.
The World Economic Forum recently observed: how do people who receive aid in a cryptocurrency (say in the form of a stable coin) do anything much with it without the ability to build a credit history?
Cryptocurrency as aid assists financial inclusion in developing countries, and credit scoring for cryptocurrencies is a necessary tool for them to leverage their aid to build a credit history.
LedgerScore gives financial institutions in developing countries the compliant tools necessary for them to credit score potential borrowers who use crypto and give them access to credit.