One of the limitations in the crypto world right now is the access to credit. Modern finance is built on debt and enterprise integration will not fully occur until a system is in place allowing for credit creation and repayment fully using crypto. There a few lending platforms like SALT, ETHLend and others, but they are collateralized crypto lending programs. As they stand right now, they are more focused on developing systems to hold existing crypto assets and then lend dollars or tokens.
The problem with these systems is that they have limitations: they are restricted in the types of collateral they can take, what types of funds they can issue and must answer to their token holders or shareholders. There are many different types of debt issuance which can occur and not all of it takes place in the form of crypto or fiat. In fact, most of the world operates on debt or promises for future payment. The total amount of money in the world is only a few trillion dollars, but the total amount of debt and other obligations is in the quadrillions. We cannot have a functioning society without a massive debt market.
The Credit Protocol
The Credit Protocol (CP), created by BlockMason, seeks to provide a system for recording debts and credits on the Ethereum blockchain and open up consumer and enterprise loans on the blockchain. It works by one entity sending a debt or credit request to another, who then confirms it. This is then recorded and stored within the Credit Protocol’s smart contract. The CP is about more than just a financial tool, Co-founder Tim Galebach told me, “it’s much more about reliable recording, obviously people can layer stuff for settlement on top or collateralization; recording is extremely important.” The beauty of the CP is that any company can set up a way log and record any debts or credits, even if they aren’t in fiat or cryptocurrency tokens. The CP is simply a backbone for other DApps to be built on top of it.
The CP is made up of four parts, Credit Protocol Data smart contracts, Credit Protocol smart contracts, a Use Case Authority Contract (UCAC), and the Flux Capacitor Smart Contract.
The core of the system are Credit Protocol Data smart contracts, which have two main data structs containing all relevant information: Relationships and Debts. The former tracks the relationship between two entities, who must be “connected” in the system. Similar to a friend request, in order to receive a credit or debit request, you first must verify that you know the sender. The other struct, Debts, keep track of debts and credits between entities, what currency they are held in and hold pending debts.Think of it like a giant checkbook or accounting ledger which never can be changed or altered.
In addition, Credit Protocol smart contracts read and manipulate the Credit Protocol Data smart contracts, checking for “reading user’s debts, pending debts, sending debts, confirming debts, reading friends lists, adding friends, removing friends, etc.”
While it may seem like it only has simple applications, in fact there are a multitude of transaction types possible with the CP and each of these singular instances is paired with a Use Case Authority Contract (UCAC). The UCAC allows for certain rules to be set within the contract such as number of transactions per day, currency type, sender and receiver, etc.. and will allow for widespread use across many different business sectors. For example, an airline company could incorporate their air miles program into CP, distributing a credit (air miles) which then can be later used to purchase new tickets or for use in their company store.
Users interact with the Flux Capacitor smart contract, which “mimic the core CP contract functions, with the exception that each function also takes the address of a UCAC. The Flux Capacitor functions check the calls from the user against the UCAC at the UCAC address to make sure parameter values specified by the user are valid for that specific UCAC.” The Flux Capacitor smart contract also checks the staking by the user and for which contracts their stake has already been declared for. Thus, it acts as check for all other transactions to occur. “It administrates the parameters of a UCAC and limits transaction capacity according to the amount of CP Tokens a user has staked for a given UCAC.”
With CP acting as the protocol, any individual or enterprise will be able to build front end interfaces on top of their architecture. As the back-end processing of transactions would already be built and available for review on the blockchain, a company would simple have to hire a developer(s) to integrate CP into their existing systems, eliminating the need for costly back-end engineers.
As transaction using CP will be conducted on the Ethereum blockchain, but not always in ETH, Blockmason will issue Credit Protocol Tokens (CPT), which will act as the “gas” for their network fees. A UCAC will have to be funded by a minimum staked amount of CPT for each transaction. If that airline company described above expected 100,000 transactions a month, they would have to hold and stake the number of CPT tokens supporting that transaction capacity.. CPT tokens only allow for a certain amount of transactions per day. If an entity needs to throughput more transactions, they would have to purchase more tokens. Greater adoption would fuel higher prices for tokens as more and more entities would need them for staking purposes.
The debt/credit issuer does not always have to be the one which stakes CPT though, in FiD, any UCAC owner can “subliscense” their transactions and allow others to stake and receive a reward for it. The front end system, in this case FiD, will have an algorithm designed to determine which stakes are chosen based on a variety of inputs such as reputation, staking time, amount stakes, fees, etc. Additionally, an enterprise could limit staking to just itself, creating a staking monopoly on the UCAC contract and allowing them to charge any price they wanted to transact.
As many different entities will eventually use CP in the future, Blockmason has also created Foundation, a mechanism to easily link different wallets to one ID, called the FoundationID. Any Ethereum address the user controls can be quickly linked to the FoundationID, via smart contract. Setting up a FoundationID will be necessary to use CP and will serve as their identity when using any DApp based on CP.
The identity associated with the FoundationID is non-binding. I thought an interesting application for the FoundationID would be to lock a user’s identity to it after KYC and AML procedures. The team wanted the FoundationID to be flexible though, so that a user could transfer their wallets or recover their past account, something which would be very hard in my example.
The FoundationID is currently in use with their Friend in Debt Beta, a fully functioning platform that is out for use on their test network. It’s really simple to get setup and add other people to create debts with. Go an try it now, however, it requires MetaMask to use.
The first Dapp built using the CP is Friend in Debt, a fully functioning platform that is out for use on their test network. It’s really simple to get setup and add other people to create debts with. Go an try it now, however, it requires MetaMask to use. The platform allows for users to issue debts and credits to persons who they have accepted into their network.
Co-founder Tim Galebach told me that the app came about organically. “One of the first things I made was a small like toy app as a database to record stuff between friends. And then I started getting more feature requests from like our friends who were using it,” he said. From there a generalized credit recording pattern emerged, and it evolved into its current form.
In order to use FiD, a FoundationID needs to be setup, and your test network address imported. Once this is done, you can try out sending IOUs to your friends and acquaitances. It’s relatively easy to use as it interfaces with Metamask.
The second Dapp planned for release is Giftchain, a platform for purchasing gift cards from local or chain stores. The app tracks your usage, allows you to transfer the gift cards to friends and family and allows for cashless transactions on the blockchain. Giftchain will allow vendors to easily create, sell and redeem gift cards of their choosing. The app looks easy to use from photos, all that’s required is to scan a QR code. The user does not have to worry about Ethereum gas or other issues which could complicate the system.
The main focus going forward, however,will be the promotion of the CP. “What I would like to do for GiftChain is find a team who wasn’t us and then just basically give that idea to them as a business, then consult with them on how to do it,” Tim said in our interview.
Future plans include the creation of Dapps for consumer loans and meal vouchers. The consumer loan business is huge. “I think there’s a ton of room for growth, if correctly executed with Venmo type functionality, if you add on settlement and have like really reliable reporting that doesn’t rely on like big banks as the finalizers and it gets to use the BlockChain, I think literally right there you have a multibillion dollar business,” Tim said about the consumer application of Blockmason in the future.
The consumer loan market has huge applications for Blockmason’s CP. In the future most consumer loans, for cars, boats, homes, and other items could all be handled by the CP. “I would probably do car loans, but you absolutely could do a home loan, especially for the private home loan market when grandparents lend money for the down payment or the mortgage” Tim said. Blockmason development of this would start further in the future, though as the CP is just in its infancy, but it has huge potential.
The Credit Protocol could even validate debt with other types of tokens used for equity asset transfers. “The credit protocol would be used as a source of truth for where the loan was at, which is important from a legal perspective. And then with the UCAC, the credit protocol has kind of a minimal set of functionality. Anything can be added like tokenizing the vehicle and having an automatic release if it queries the credit protocol and the balance is now zero.” So when a car loan is paid off, the tokenized asset for that loan is immediately transferred to the owner’s wallet.
The Blockmason team is made up of co-founders Timothy Galebach, Jared Bowie and Michael Chin.
Timothy Galebach is the founder and owner of Almond Media Solutions, a technology consulting firm in the e-commerce and display advertising space. Tim is the only member of the company listed on the website. Timothy graduated from Harvard in 2007 with a degree in computer science.
Jared Bowie previously was the managing director of Bowzed Limited, a Hong Kong based digital advertising agency focused on PPC advertising. Jared is also listed as the only member of the company on their website. He is active on Github, and Medium.
Michael Chin is also currently listed as the managing director of Constance Capital Limited, which focuses on private equity and credit structures. CCL was formed in Hong Kong on 29 January 2016. Before this Michael worked for Intermediate Capital Group and J.P. Morgan
Michael was brought on after the project had started and really was the one who kicked off the fundraising campaign. “Michael did an awesome job of kind of talking us up, especially in Hong Kong and getting hype there among people he knew, the development and investing communities,” Tim said.
Luke Zhang has been working for Elemica, a supply chain operating network in Toronto, for the past 3 years as a developer. Previously he was a UI developer for Workopolis and lead interaction designer for Shifthub. He is also active on Github.
Ola Vikholt previously worked as project manager for Warrantee, which provides cloud based storage services for warranty, until January 2017. Before this he was a senior UX engineer for KK Vesper and a software engineer II at Google.
Blockmason has two advisors.
Richard Kastelein, Founder of industry publication Blockchain News, partner at ICO services collective CryptoAsset Design Group, director of education company Blockchain Partners (Oracle Partner) and ICO event organizer at industry event CryptoFinancing. Tim explained that “we’ve talked to Richard about advertising, and he’s hooking us up with some people in different cities for meetups, press release information, basically any time we have things that were just a bit unsure about we go to him.”
Orichal Partners, a law firm out of Hong Kong. The company does not have an English website or online presence.
Strengths and Weaknesses
It will be interesting to watch the development of Blockmason over the next few years. Talking with the team, I think there is huge application for their CP. Debt recording on the blockchain will be a major integration for many enterprises in the next few years. In fact, FiD is built to take on major money transfer companies around the world like Venmo, Paypal and others. For Blockmason, if “ETH gets decent transaction times and costs, Venmo’s main business is no longer viable, because you shouldn’t be using interactions between Bank of America and Chase to settle people’s $50 dinner tabs.”
The ability to create a debt, have a permanent record of it be kept on the blockchain and then when the debtor wants to settle, for them to be able to instantly close out the debt without any middlemen or high charges will be a game changer for the payment industry. Users of FiD and the CP will have the power of debt issuance and repayment put into their own hands and won’t be reliant on any major banks or credit cards, as the latter can be stolen and used to make illegal payments.
Right now, the use cases for CP are limited to FiD and soon to be GiftChain, however, the applications for the real world are enormous. There are hundreds of thousands of companies in the US which deal with private lending through banks, for example car dealerships. This sector issues billions of loans in USD a year all on the back of the car dealerships themselves. With the CP, a dealership would be able to cut out the banks completely and issue a car loan using the CP and then also signing a contract with the purchaser to ensure proper collateral was in place. Tim told me that all you would have to do is “build out one use case and then go and market that to every single car dealership in America.” This application alone would end up being a multi-billion dollar business. There could be many other spin-offs of this type of lending solution for other consumer loan use cases.
The long-term goal for BlockMason is to set up the CP and then help other companies build use case solutions like the one above for car dealerships, using the CP and also licensing other aspects of front-end services to do so. One interesting application that came up with in our interview would be for BlockMason to provide legal services to companies who want to use CP, bridging the technical aspects will real world enforcement. “We definitely want to start building out a legal team, maybe as a third party, recruiting lawyers, using my dad to vet them from a talent perspective in the same way that I do for developers, and build that aspect of the business,” Tim said.
Tim’s father, Stephen Galebach, has played an instrumental part in the development of CP and Blockmason. Most visibly, his law firm wrote the 40-page legal opinion on why the CPT is not a security. In all of our discussions, Tim and Jared were very clear that the CPT is a “product use token” and should not be confused as anything else. In fact, the team welcomes future SEC regulations. “I was not surprised when the announcement came out. Everyone was like oh, is the SEC technically savvy enough for this? But these are very smart dudes. All the people who work in the top part of US regulation; they’re very, very sharp people and they have zero problem understanding this.
BlockMason has several issued connected with Ethereum, such as transaction times, scaling issues, etc., which need to be solved before their CPT could really find wide adoption. However, the team are hopeful that these issues will be solved in the near future and won’t hamper growth too significantly.
In all respects, BlockMason has a very well rounded approach right now. They have FiD which is already running on the Ropsten test net, GiftChain is coming soon and they are well prepared to grow once the ICO is over.
Pre-sale for Blockmason is already over and the team has already raised 18,000 ETH worth of tokens. During the ICO, the company will sell another 27,000 ETH worth of tokens.
The recent surge in sales for the team has been brewing for a long time. “The ICO started around mid-August. Development was earlier in the year, around February, and in terms of opening things up and generating eyeballs on the white list and stuff, we had that out in mid tolate August, early September, and then it started to compound a bit in the last week or two as basically a lot of people on different telegram groups and Slacks were talking about it and sending people in.” The Blockmason team has put in the work to get their idea out there to bring on significant pre-sale interest.
There will be a significant bonus structure built in during their token sale.
Token distribution will be as follows:
|Total tokens:||116,158,667 Credit Protocol Tokens|
|Tokens to be sold to the public:||33,695,200 Credit Protocol Tokens (29%)|
|Tokens to be sold to early purchasers:||36,000,000 Credit Protocol Tokens (31%) (Finished)|
|Tokens to be Airdropped:||5,807,933 Credit Protocol Tokens (5%)|
|Tokens to be Distributed to Advisors and Strategic Partners:||5,807,933 Credit Protocol Tokens (5%)|
|Sale Duration:||30 days, from October 1st (may be adjusted for Metropolis hard fork.)|
|Hard cap:||Amount equivalent to 45k ETH (27k ETH available to the public)|
BlockMason is flying under the radar at the moment. They have a great concept and legal backing to set them right for the future. Additionally, their maxed out pre-sale validates a lot of my opinions about the company so far. A good idea doesn’t need a ton of marketing, just enough connections to the community to ensure the right money comes into the project.
I’ll be interested to see how FiD and Giftchain develop and where the company expands in the future. I really like BlockMason and as their token is a protocol for many other networks to build onto of, it could have huge applications. I will be taking part in the BlockMason token sale.
Plus the team makes amazing comics.
|Whitepaper (“coming soon”)||https://blockmason.io/cp-whitepaper/|