Bloom—a blockchain platform focused on digital identity and reusable, verifiable credentials is aiming to help DeFi go mainstream by enabling compliance and risk assessment with their new enterprise product, OnRamp.
As DeFi’s growth has exploded over the past year, so has the pressure to abide by traditional financial rules that many blockchain builders view as antiquated and in conflict with the core principles of user privacy and decentralization. Over the last few months in particular, it’s become clear that regulators aren’t backing down and that more regulation could be coming.
In a speech published by Bloomberg, US regulators stated “the crypto space’s evolution from here will rely on sound regulation—something that some major crypto platforms and their executives, including FTX CEO Sam Bankman-Fried, have publicly acknowledged themselves. “At the heart of finance is trust”.
The Future of Trust
Bloom’s thesis is that digital identity and reusable, verifiable credentials are key to establishing a new system of trust, where user privacy, security, and control are prioritized.
Bloom was founded in 2017 by Stanford computer scientists in response to the Equifax scandal when hackers gained access to the private information of 147 million US citizens..
In 2018, Bloom released its iOS app, giving users the ability to create and control their own digital identity (BloomID) and connect pieces of personal data to it, verified by trusted third-party data attestors.
In 2019, Bloom released the Android version of the app, followed by the release of Bloom Radar, a free hack monitoring service. Users were given the ability to enroll in this service without compromising their data or enabling its sale to outside parties. This ability attached a tangible value to their reusable verifiable credentials (VCs).
In 2020, Bloom created more value for BloomID holders by partnering with TransUnion to enable free credit monitoring, again without compromising or selling user data.
Fast-forward to 2021. Global user privacy is at greater risk than ever before. Hackers are a greater threat than ever before. The T-Mobile hack just this past month exposed the private data of more than 50 million users. At the same time, the DeFi space is growing quickly but also facing headwinds. It’s in the midst of all this that Bloom thinks they have a solution.
Taking DeFi to the Next Level
With OnRamp, Bloom hopes that making reusable, verifiable credentials accessible to developers will help unleash the full potential of DeFi, creating a key piece of the infrastructure for KYC & AML compliance and risk assessment.
“Cryptocurrency is the wild west of our financial system and desperately needs rules of the road and common-sense oversight in order to protect the stability of our financial system,” said Senator Elizabeth Warren
Bloom hopes to help bridge the gap, by building tools that help DeFi companies seek compliance while at the same time prioritizing user privacy and continuing the pursuit of expanding global financial inclusivity.
Other limiting factors also exist. While DeFi has grown quickly, it’s remained mostly reliant on collateralized lending which limits access to asset owners. With the addition of alternative financial signals like bank account balance and transaction history, DeFi companies can now enable risk assessment and transcend the limits of collateralized lending. Bloom has future plans to include traditional credit scores, utility bill payment history, and other alternative signals that could help DeFi better evaluate creditworthiness and expand financial inclusivity.