The advent of Bitcoin and blockchain technology has led to the development of several interesting projects in the cryptocurrency space. Many of these projects seek to become the ‘next’ Bitcoin while others aim to leverage blockchain technology into applications which are beyond serving as an alternative to fiat currencies. Populous Platform is one such project that looks to bring blockchain technology in the world of invoice financing.
What is Populous?
Populous is a peer-to-peer platform that enables invoice financing on a global scale using blockchain. Using Populous, small and medium-sized enterprises across the world can easily participate in invoice financing and get access to cash to meet their short-term liquidity.
Invoice financing is basically a way for businesses to borrow money against the amounts they are supposed to get from customers and clients. Since most businesses sell services or goods to their clients on credit, this ties up funds that these businesses may be able to use to grow its operations, improve its working capital or invest. Therefore, in order to meet its cash requirements, businesses opt for invoice financing.
Invoice financing involves borrowing funds on a short-term basis from a lender, based on unpaid invoices. Therefore, invoices essentially act as collateral for invoice financing. The company sells a percentage of its outstanding invoices, say 80%, to the lender. When the lender receives full payment for the invoices it holds, it will remit the remaining 20% of the invoice amount to the company. The company, in turn, will pay interest/fee to the lender for its services.
Even though invoice financing is not new and it exists around the world, they still function as localised and limited markets. Populous aims to solve this problem by scaling the market of invoice financing and connecting invoice buyers with sellers around the world with the help of smart contracts. Furthermore, it also aims to reduce the need for third parties and financial institutions which have been traditionally involved in invoice transactions.
On Populous Platform, users can buy and sell invoices through auctions that have been designed using smart contracts. In order to ensure that companies on their platform are legitimate and a good fit, Populous has designed their own credit rating system known as Altman Z-score Formula. Populous uses this formula in conjunction with XBRL data to analyse the credit risk of invoices.
Whether you are looking to purchase or sell invoices, you will have to first get an approval from the administrator before you can get started. This involves providing company data, relevant documents and performing the KYC formalities. All these measures are in addition to the transaction security and privacy that come with blockchain technology. For the time being, Populous Platform is operational only in the United Kingdom and Hong Kong/China markets.
Populous Platform has two currencies and it can be quite tricky to distinguish between the two - Poken and PPT (Populous Platform Token).
In order to move the funds within the platform seamlessly which reflect the true value of the invoices, Populous has designed custom stable tokens known as Poken. This cryptocurrency is used to transfer value between buyers and sellers on the platform. Each Poken is directly pegged to an equivalent amount of fiat currency. For instance, 1 Poken GBP is worth 1 GBP and 1 Poken USD is worth 1 USD. The base fiat currency utilised by the platform is GBP.
These Pokens operate on the Ethereum Blockchain and owing to their fiat-pegged nature, they enjoy all the advantages of smart contracts and blockchain without enduring the associated volatility. When a deposit is made on the Populous Platform, an equivalent amount of Poken is minted and shown in the account balance.
As for PPT, they were distributed during the ICO in order to raise funds. Unlike Poken, they have a fixed supply of around 53.2 million and at the time of writing this article, a little over 37 million are in circulation. PPT can be used to invest in invoices.
Where to buy Populous(PPT)?
PPT is an altcoin. It trades with ETH or BTC on some of the leading cryptocurrency exchanges like Binance, Mercatox, HitBTC, Kucoin, et cetera.
PPT tokens can be stored in any wallet that is compatible with Ethereum. Some of these wallets are Jaxx, Exodus, MyEtherWallet, and many more. However, the best way to store your PPT is in a hardware wallet like Nano Ledger S or Trezor.
It is not possible to mine Populous Platform Tokens.
Populous(PPT) Price Trends
At the time of writing this article, 1 PPT is worth approximately 24 USD. Populous tokens have exhibited an interesting behaviour when it comes to their prices. In late November, 1 PPT was equivalent to $11 while the same by mid-December had gone up by more than 350%. The price increased further in January - soaring beyond $50 and in February, it crossed $70. However, the token failed to sustain this bull run and took a massive nosedive immediately after reaching its new high.
By mid-February, the price was back in the $20 territory and by April, it was moving towards the $10 mark.
Risks associated with investing in Populous
Populous Platform is undoubtedly an ambitious project that seeks to capitalise on the dormant invoice financing markets. However, as a cryptocurrency, PPT is still relatively new and is subject to high volatilities and regulations. The abrupt variation in its prices and a lack of stability in the cryptocurrency space makes PPT a risky investment.
Therefore, it is advisable to consider mutual funds.They are legal, and if chosen wisely, can deliver decent returns in the long-run.
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