Crypto Market Commentary 

24 April 2019

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The Mind Of Mav

The Identity Management Problem For Small Business And The Blockchain Solution


The economies found in the nations of the world are all unique. In the most developed nations, you’re likely to find economies driven by invention, innovation, and information. In the developing world, you’re likely to find industrial production and agricultural industries thriving. If you study the world’s disparate economies, though, you’ll find that they now have two major factors in common: they’re adopting technology at an astounding rate, and they’re powered by small businesses.


In the United States, 99.7% of businesses have 500 or fewer employees. In the European Union, the picture is much the same, with 99% of businesseshaving less than 250 employees. In fact, everywhere you look, from Africa to Asia, to South America and all points between, you’ll find similar statistics. It’s a global economic picture that clearly establishes the primacy of small businesses all over the world.


At the same time, though, those businesses face a near-universal problem that has defied all attempts at a solution. The problem is a lack of access to capital and investments that keeps growth constrained and prevents many businesses from reaching their full potential. It’s a vast and intractable problem, but the fast pace of technological adoption that’s common to all economies may be about to enable a real solution, in the form of a technology that you might not expect: the blockchain. Here’s everything you need to know.

Defining the Problem


According to experts from the World Bank, 200 million small businesses worldwide lack sufficient access to the credit and financing they need to grow, making up a finance gap greater than $2 trillion. For some perspective, that’s a sum roughly equivalent to the total yearly economic output of Italy, and they’re the fourth-largest economy in the EU. It’s a situation that acts as a serious constraint on global economic growth, and it’s been going on for decades.

The heart of the problem is the fact that small businesses often lack the financial track records to secure things like loans and lines of credit, and in many cases even have difficulty establishing a provable identity for lenders to base their evaluations on (especially in emerging markets, where government records are sparse and ill-managed).


For the businesses that manage to scrape together enough financing to begin operating, the problem still doesn’t go away. Even after operating successfully for some time, lenders are still loath to conduct the complex, records-driven due diligence required to evaluate the financial performance of small firms. The result is that small businesses have little choice but to leverage earnings to fuel growth and operate on the edge of financial ruin if they encounter any market resistance, however temporary.

The Blockchain Solution

The reason that the blockchain may be uniquely well-suited to solving the problems that hamper small business finance is that it has the capability to take the onerous identity management and financial examination processes that banks are unwilling to deal with out of their hands. Small businesses could conceivably use it as a secure and trusted repository for their financial and other operating data, creating a digital record that banks could consult to determine creditworthiness. The approach would be similar to what’s been proposed to assist freelancers and workers in the gig economy to secure the credit they need to thrive within financial systems geared toward traditional employment.


Some blockchain implementations, like the one being developed by Tokoin, aim to solve the identity management riddle for small businesses by allowing the businesses themselves build a reputation profile consisting of the data their business generates. Each business’ principal begins by identifying themselves to the system and undergoing a strict know-your-customer review. That serves to establish baseline credibility for the business, which they may then augment by adding things like business transaction data (both sales and supplier transactions) and any other relevant operational information. From that point on, the business will have a verified and secure digital financial trail — tailor-made for lenders and even suppliers to use as a basis for extending credit.

Enabling a Global Network


The other reason that the blockchain could be the breakthrough technology that the small business lending sector has been waiting for is that it may be used to create a trusted global lending network, which would allow cross-border funding options that would have been impossible before. For example, a blockchain network could connect banking institutions in financial centers like New York or London with small businesses in the emerging economies of Africa, while bypassing often-corrupt local regulatory bodies and providing a secure bridge through which to do business.


In such a scenario, lenders wouldn’t need to maintain a local presence to gain a foothold in an emerging economy, lowering their costs and making the capital risks far more manageable. They’d also have the ability to beat competitors into markets that could become the economic engines of the coming decades. Together, those incentives could be enough for traditional lenders to jump into small business lending in ways they wouldn’t have considered only a few short years ago.

The Bottom Line

In the end, the blockchain could be the technology that finally brings lenders and small businesses all over the world together. It’s a union that everyone agrees must eventually materialize to assure continued global growth, and the blockchain may be the key technology that solidifies those bonds. If it happens, it could set off a period of economic growth not seen since the dawn of the industrial revolution, as small businesses all over the globe reach their full potential for the first time.


It would also be the fulfillment of the promise of blockchain technology itself — decentralizing the global financial system and helping to democratize access to capital everywhere — which would be good for everyone involved. That future isn’t here yet, but it may be soon. The message for small businesses is clear, however — stay tuned, your long wait is almost over.

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An Update Regarding Our Portfolio

RSC Subscribers,

We are pleased to share with you our Community Portfolio V3!

Add your own voice to our portfolio by clicking here.

We intend on this portfolio being balanced between the Three Pillars of the Token Economy & Interchain:

Crypto, STOs, and DeFi projects

We will also make a concerted effort to draw from community involvement and make this portfolio community driven.


Here’s our past portfolios for reference: 



RSC Managed Portfolio (V2)


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RSC Unmanaged Altcoin Portfolio (V2)


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RSC Managed Portfolio (V1)