Transparency of the lender/broker ecosystem resolved
OWhat happens when a broker sends in an offer and is told it’s declined, only to find out it was approved and funded for another broker? Usually a very angry post on social media. The problem is that everyone wants transparency but the challenges persist. Who can trust whom? What can be done? When will someone do it?
Well call me crazy, but I tried to figure it out. And don’t get mad at me for using the word block chain because I promise it’s not about crypto. Everything would still be ACH-based and recorded like you already do, but this little piece of technology would sit underneath without any manual effort. All automated. No work. Also, it’s possible that I’m completely wrong or that I missed some possibilities. You are the judge. Realistic or dreamy world?
1. Brokers and traders do not need to use blockchain or know how to use it.
2. A developer at a lender just needs to understand digital wallet addresses and a little feature about them called Non-fungible tokens to create or implement a third-party add-on to it. (These “NFTs” have nothing to do with art, they’re just uniquely identifiable text files connected to the blockchain with metadata inside.)
First, here is my diagram:
Here is what it does:
1. When brokers register with a lender, the lender automatically assigns them a uniquely identifiable blockchain wallet address.
2. When a broker sends a transaction, the lender creates a unique encrypted hash of the applicant’s minimal identifiable data (like last name and EIN number). This hash is placed in a plain English text file with the candidate’s application data encrypted. (also automated).
3. The lender creates a non-fungible token from the broker wallet address and sends it to the lenders official submission wallet. (automatique). This wallet will show the NFTs for every transaction ever submitted to this lender. No one will be able to reverse engineer the trade information and only the broker who submitted the trade will be aware of the trade hash. This gives them the ability to see exactly when their transaction was posted and if there are any duplicate hashes in the wallet that would signal that the same transaction has already been submitted by someone else and when it was submitted .
4. If the deal is approved by the lender, the lender pays the broker and funds the merchant through ACH as usual. Then the lender creates an NFT with the same public hash and sends it to their approval wallet. The original NFT sent to his bid wallet is now sent to the broker’s wallet, signaling that he received the commission on this trade. (automatique).
5. If the deal is declined, the lender creates an NFT with the same public hash and all NFTs for that deal are sent to the decline wallet, signaling that the deal was killed and no one received the commission above. (automatique).
The NFT of each transaction may need to be moved to Approved or Denied. They cannot sit in submissions in perpetuity.
Final result : brokers who submit trades can see if their trade was submitted before and when it was submitted. Brokers can check if the transaction was funded, when and if someone was paid commissions (hopefully the wallet address they know.) No real money changes hands via crypto ( (although there may be transaction fees to move the NFTs.) Investors and regulators can also review the feed and, if needed, gain access to a private key so they can unlock and view the NFTs themselves. metadata in submissions, approvals, and denials.
Naturally, everyone’s first question is: what if the lender tries to circumvent this? Excellent question.
1. A broker submitting a transaction that does not see an NFT created for it in the lender’s submission portfolio, already knows that the lender is trying to operate outside the system. It is time to move on!
2. A lender who shows that a deal has been declined and the commissions paid to anyone could be easily discovered if the borrower shows a statement with proof that he received a deposit. No need to speculate on what happened. It is time to move on!
3. A broker who submitted a trade first can show that his trade was recorded first in the submission wallet. Anyone on social media or in the public square could also confirm this and the lender could not manipulate the data to play favorites.
4. Lenders operating outside of it would show little or no submissions or approval volume, signaling to a broker that for some reason they do not want anonymized data to be auditable.
5. Lenders who aren’t real and pretend to just pick up offers would have a hard time providing the three verifiable wallet addresses showing the volume of submits, approvals, denials, and the respective ratios for the latter two. If they can’t prove they’ve already closed deals or paid commissions, even if you can’t see what the individual details are, they’re not real.
6. Once a lender has moved the NFT of the transaction to a broker’s wallet to signal that they are receiving the commission, the lender may NOT actually ACH the commission to the broker. In this case, the broker would have a nice, verifiable public display that shows they were supposed to receive the commission for all to see. Public pressure ensues.
7. Traders don’t need to know anything. It does not concern them.
8. The broker does not interact with the blockchain in any way, except in the case where he just wanted to display the data.
9. The lender does not have to manually interact with the blockchain at all. The system would simply be bolted to an existing CRM. He would do all of the above on his own.
Anyway, don’t hate me for giving it a shot.
Last modification : May 4, 2022