How token-based Microfinance can benefit small businesses
Microfinance companies help fund businesses in developing countries, but it’s not without its drawbacks: businesses typically pay more in interest for loans allocated in this manner, digital assets can offer a more transparent, frictionless, and trust-based alternative, particularly when combined with social credit, in which participants who earn and maintain trust are more likely to be allocated capital by lenders. In the tokenization sphere, microfinance assumes a number of forms, but at its core, it revolves around funding community-backed borrowers, who have demonstrated that they are of good character and sound business model. Business owners who pass these tests with flying colors can unlock capital in the form of tokens, coins, crypto currencies or other digital assets, with lenders receiving monthly interest payments in return. This system effectively bypasses banks altogether, which are no longer the gatekeepers that decide which businesses flourish and which are left to die. The infrastructure finance gap has long-standing implications for economic and social development. Owing to low efficiency, high transaction costs, and long transaction time, conventional infrastructure financing instruments are considered to be major contributors to the increasing mismatch between the need for infrastructure development and available financing. We provide a number of crypto-based tools for micrifinance companies to aid the growth small businesses which enables businesses to tokenize illiquid assets, releasing the unrealized value trapped within them, which can then be leveraged to obtain finance. Schedule a free Demo here