Envisioning Universal Access to Credit through Blockchain Tech with Co-Founder & CEO of Swapy Networks, Ed Rorigues

The world of blockchain is a funny one to be in these days. Its equal parts insanity, equal parts revolutionary and equal parts misunderstood. It’s a world for us outsiders that is frankly hard to understand. But perhaps a good place to start is by observing potential applications of blockchain technology that actually have viable business models that can clearly be spelled out on day 1.

That is where Swapy Networks comes into play. In this day and age large centralized institutions like Equifax (we know how that one turns out) own all of your financial data and big banks like Bank of America control all of your ability to access affordable (or not so affordable) credit.

But with blockchain technology Swapy Networks is taking aim at this notion that big institutions have to control and slant the game of financial services in favor of the firm over the individual. Decentralized networks enable the ability for individuals to control their own data and access credit from a larger variety of lenders outside of the traditional banking system!

Welcome to a potentially game changing provider of better access to credit in the developing world. Welcome to the vision of Ed Rodrigues, Co-Founder & CEO of Swapy Networks. Check out our discussion below.

CL: Ed, before founding Swapy you worked at Google and co-founded a social network, so what is it about tech that you love and why Swapy Networks now?

ER: I love technology because I see it as a way to solve the problems that I am passionate about. Blockchain is fascinating to me because it has the potential to revolutionize so much of our lives.

The reason I am pursuing this opportunity now is that I have built the experience, context and knowledge base that I believe is needed for me to build a company like Swapy Network. And to now have the technology in place to enable us to create new decentralized trust networks is an opportunity I can’t pass up.

CL: For those that don’t know can you define Swapy Networks as a business?

ER: Swapy Network is a solution to solve the problem of access to credit in developing nations such as Brazil. We analyze credit in these countries and have identified that the reason credit is so expensive in these countries is because there is no trustworthy information on clients and the sourcing of credible information is extremely expensive. In addition, the cost of capital is very high in these countries too.

For these reasons we are pursuing a two-pronged approach to solve for this problem. First off, we are providing access to lower cost of capital and providing efficiently sourced data for these companies.

The consumers utilizing the Swapy network to access lower cost credit will receive tokens in return for sharing their financial information. The token itself is like a warranty. For instance, if you want to borrow $10K you have to put payment in a Swapy Smart Contract, and we receive Ether equal to $10,000.

If you default this Swapy will go to the owner of the contract. So Swapy is both a way to find  consumer financial data and it acts as a warranty if you default on the loan, which allows us to lower the cost of capital and incentivize the sharing of information.

CL: Can you provide more context to how the Swapy Network solution can provide a better tool for creating access to low cost credit for all people?

ER: In Brazil the average loan is 145% per year and you only have 5 banks to go to. All the banks are oligopolies and control all the information on the clients, which enables them to make better decisions than small credit companies making it impossible for small companies to thrive in this market.

And the cost of capital within the country is so high, it creates a real challenge to compete profitably. Swapy allows us to source data on banking consumers cost effectively and source cheaper capital from other countries where the cost of capital is much lower.

CL: Is Swapy looking to bring people into the banking system through mobile technology for the first time or just serve banking customers with better service and product rates?

ER: Our customers have bank accounts, but what they don’t have is access to affordable credit. One of the great parts of developing nations is that the incumbent banking system is not as entrenched, which enables us to more easily leapfrog existing infrastructure and adopt the latest technology.

Many developing countries are more mobile banking driven so the adoption of bitcoin is higher than what you might see in a country like the United States.  In Brazil, our lack of a trustful credit system has provided us space to build that trust with the Swapy Network.

CL: What types of institutions are interested in utilizing this network to invest in loans in emerging markets?

ER: In countries like Japan and Switzerland where they have negative interest rates. I think people looking for higher returns such as family offices might invest in tokens and loans themselves.

We actually have an investor from Japan and he has very good network of investors and that is where our first investors will come from.

CL: Recently, there has been a lot of talk about data security challenges blockchain technology. What are you doing to ensure your users have a secure experience?

ER: Our data security capability is actually one of our differentiating factors. For example, most financial institutions hold every customers data on one platform, which means if you want to hack the data source you only need to find one point of entry.

In our system, every individual holds their own data, which means if someone wants to hack 100K customers, they would have to hack 100K personal devices one-by-one.

CL: What are the regulatory hurdles you face in trying to sell loans into emerging market countries?

ER: Certainly, there are challenges, but we are taking the right steps to ensure that our company is fully compliant with all regulations. For instance, we have incorporated being an accredited lending company into our business model to meet all lending standards.

And we have focused all of our energy on Brazil to start since this is our local market and we understand it better than we do other countries, where we will similarly have to invest in regulatory compliance.

CL: How can you access the Swapy ICO, and what is the value of the investment tied to?

ER: I would advise potential investors to subscribe to our whitelist, and when the ICO starts they will be able to access the ICO from our partner blockhouse, KYC AML. This is our process of doing due diligence.

By going to our website, you can create a profile, upload the correct documents and then invest Ethers to purchase Swapy contracts, which will be deposited into your Ether wallet. In terms of what the Swapy value is tied to, it will be tied to Ether. So, 1 Ether = 600 Swapy, which will fluctuate based on the demand for the use of the token, which you can use to make loans or access financial data.

CL: Can you talk more about how Swapy DataMarket works and why you pay individuals in tokens to utilize their data?

ER: The best analogy is we are paving a road for other people to set up businesses that can charge a fee as people pass by. Basically, our road is an information highway that where our customers get paid for their credit data.

Now, instead of organizations like Equifax controlling your data and getting paid by companies to access your data, you will control your data and be paid for it.

CL: Does Swapy, being as it is a decentralized marketplace reduce cost of distribution and sourcing compared to traditional lending institutions, and if so on what order of magnitude?

ER: The current problem in Brazil is that there are only a handful of concentrated funding sources for loans, driving high margins for the organizations and high interest rates for the customers. By decentralizing the funding mechanism for investment in Brazilian loans, we are bringing fair and open competition from abroad into the fold. This we expect will drive lots of new entrants to come in and lower the price of credit to consumers.

CL: The Drapers have been early investors in Swapy. What do you think they saw you and the team to take that leap with you?

ER: Well our story with Draper began with me studying at Draper University. During that time Tim Draper said he found me to have a lot of persistence in solving this problem in my country.

For six -months we worked without receiving investment, and continued to show the kind of grit and persistence that he was looking for. We showed that we will give up for nothing to solve this problem.

CL: How do you think companies like yourself can continue to build confidence in the blockchain as a meaningfully powerful tool to improve things like the credit markets?

ER: First off, education is crucial to teaching people about how they can reap the value of his or her financial information. Second, we need to spread the word by promoting the work we are doing and getting more users involved in utilizing our service so people can see how this can be a legitimized new way of accessing affordable credit. I expect startups like ours can help people to build improved financial health.

I have a blog post discussing how I believe we are entering an era of shared prosperity. Today companies like Facebook and Google monetize a lot of the things you do, and I just think that the blockchain will allow individuals to capture a lot of that value. I can see a world where online user behavior will be easily monetized by the individual thanks to the blockchain.

The Minute Rundown with Ed Rodrigues

CL: If you could provide one tip to someone starting up what would it be and why?

ER: First off, go to Draper University. That is how I started and it gave me access to a world class network, investment, and a network of peers who support me today. Second, find a problem that you are very passionate about solving. You will likely be wrong about the first assumptions and business model you develop, but your passion will enable you to persist through the tough times.

CL: To that point, what makes you passionate about solving the credit challenge in developing countries?

ER: The credit problem is important to me, because I had a dream of going to the United States to get an MBA, but I couldn’t because I couldn’t access affordable credit. The credit issue in Brazil hit home for me and affected my own personal dreams.

So, when I was at Draper University and I saw the potential for the blockchain to provide affordable credit, I got the buy. At Draper, they are very enthusiastic about the potential of the blockchain to solve challenges like this, which really inspired me.

CL: If you could model yourself after one founder who would it be and why?

ER: Elon Musk. I am a very big fan of Elon Musk and I admire how he got to the United States with nothing and made it through persistence.

In Closing:

As you can see, Ed is equal parts an optimist and equal parts a realist aware of the continued challenges and obstacles he and his team will face in building a regulatory compliant decentralized network for better access to credit in developing countries like Brazil.

The vision is grand, the potential is there, now is the time for execution. I look forward to watching the progression and development of the Swapy Network as I continue my search for game changing companies that are pursuing strategies in favor of democratization of financial well-being.

Thank you Ed and the whole Swapy team for investing in truly Simple.Innovative.Change