One area where it seems hard to argue blockchain wouldn’t offer radical efficiency improvements is supply chain finance.
And driving forward in positioning themselves as a thought leader and product innovator in this space is the blockchain alliance Sweetbridge, a global, open-source project, originating out of Switzerland.
One of the cornerstones of the Sweetbridge offering is the Liquidity Protocol. In the case of a small business owner, this protocol would allow them to borrow money against assets they already own, removing the need for a traditional lender.
So how exactly does it work? Well, full details can be found in the whitepaper, but a quick, high level summary below should give you enough of a flavour. As you will see, the process is much the same from a conceptual standpoint as how a traditional lender or bank would operate.
- The business owner assigns custody of their assets to Sweetbridge via a smart contract, and are issued Bridgecoin, reflective of the value of the assets pledged.
- This Bridgecoin can then be used to grow the business, assuming it is accepted or easily exchanged for more accepted forms of currency.
- Once the original Bridgecoin is repaid, custody of the assets is returned to the business owner.
The whitepaper is interesting and well worth a read. But aside from faster, cheaper finance, what is extra compelling about Sweetbridge, from a small business owner’s perspective, is the variety of assets that can be pledged to unlock Bridgecoin. The list – which includes cryptocurrencies and other cryptoassets, future products and services, valuable work time pledged by a professional or a team and intellectual property – makes banks, and even online lenders, look primitive by comparison.
For those business owners starting out, this proposition could be seriously compelling. Online lenders still haven’t really solved the asset variety problem at scale and digital banks seem for the most part to be shying away from small business specific offerings – with consumer propositions outstripping them by a long mile.
The second token on the network is Sweetcoin, which entitles holders to a discount on any service fee charged for Bridgecoin issuance. If you hold enough Sweetcoin, then it’s possible your lending costs could be reduced to zero.
If you’re still struggling to get your head around it all, the whitepaper offers a nice ‘real world’ example of how a fictional ‘Alice’ might borrow Bridgecoin against an Ether asset she owns, with Sweetbridge’s custody over Alice’s Ether allowing them to sell some of it, should the asset drop in value. But what is harder to envisage (and not explained) is how this would work with far less liquid assets. How do you sell a tenth of an IP pledge?
Nevertheless, there is something in the concept overall. But like most coin offerings, it does pay to think through the what if questions. The Sweetcoin crowdsale launches in 19 days.