ReSource Network is an online platform where freelancers and businesses can trade their goods and services with one another while accessing credit lines at 0% interest. The network builds on a multilateral exchange system known as Mutual Credit. Mutual Credit is a debt-clearing system that has been developed centuries ago to rival the traditional financial sector and has now been upgraded by ReSource for the blockchain age. Below are some interview questions we would love them to answer;
How will ReSource the company benefit from the system?
David Casey, CEO: ReSource is an open-source project and doesn’t follow a traditional for-profit business model. The ReSource protocol utilizes a utility token – SOURCE – which is required to operate the protocol. The more trading activity the protocol facilitates, the more demand is being exercised on SOURCE. ReSource the company, its team, and community members are SOURCE holders and trust that they will enjoy the fruits of this increasing demand.
Are there qualifications that participants must attain before they can get access to credit?
David Casey: ReSource is a decentralized network and the function of debt-underwriting is performed by a distributed network of underwriters. To get access to credit, an applicant needs to be approved by one of these underwriters. If an underwriter deems an applicant creditworthy, they will have to stake and lock SOURCE, which will be slashed in case of a default. As long as an underwriter is willing to take this risk upon themselves, they can underwrite any applicant according to their best judgment. To arrive at an informed decision, underwriters have access to financial statements and relevant information about the applicant. In return for assuming these risks, underwriters receive a cut of transaction fees generated by the network.
When businesses and participants borrow credit, how long do they have before they pay back?
David Casey: Generally speaking, six months. However, we’re not talking about lump-sum loans here, but about credit lines. A ReSource credit line behaves like a current account that can be overdrafted. You overdraft (go into the negative) when you need liquidity, and pay back when you receive incoming funds. The six months time limit pertains to each individual overdraft. This means that if you overdraft $50 today, and $10 tomorrow, you’ll need to pay back $50 in six months, and $10 in six months and a day.
These are the terms that we work with on the ReSource Network – the pilot network built on the ReSource protocol – other networks built on the protocol may set different terms if they so deem fit.
Why should businesses and freelancers choose ReSource Network over other platforms?
David Casey: ReSource is to date the only platform that offers credit lines at 0% interest, while also offering cost-effective international payments and remittances services. Additionally, credit applicants don’t need to provide collateral and have access to a free deal-brokerage system that helps them increase sales.
Why are people encouraged to trade within the network and not directly with businesses?
David Casey: Businesses do in fact trade directly with each other. In this sense, ReSource behaves like any other marketplace on which participants list their goods and services and buy goods and services offered by other users. What makes ReSource special are the 0% credit lines offered to users, which can be spent within the network and are paid back when users make sales on the marketplace. In other words: you can access credit to buy, and automatically pay back when you sell.
Are they any tax advantages when using the platform?
David Casey: Yes! Deficits on ReSource credit lines count as deductible expenses for tax purposes. This means that businesses can offset taxes by purchasing things they need at the end of the year. This is true for most business credit operations, but normally this entails the payment of high-interest rates, which often make this not worthwhile. ReSource changes this completely and allows businesses to reduce their tax burden while growing their business
Is there a common measure of value for products and services?
David Casey: As on any market, sellers price their goods and services as they see fit and will adjust prices to meet effective demand. Goods and services on ReSource are priced in rUSD – the network’s native stablecoin. Likewise, credit lines are denominated in rUSD.
How does ReSource Network plan to solve the challenges faced by most barter networks?
David Casey: Most barter networks have a very hard time managing credit risk. If a member of such a network defaults on their debt, all other members are affected. Normally, these networks use internal currencies to keep track of who holds a trade deficit or surplus. Each default debases this currency and steals purchasing power from its holders. ReSource is the first exchange network that has solved this problem. Stakes locked by underwriters, together with a network reserve, funded by transaction fees, secure the network’s currency against inflation. If a default occurs, these funds are used to cover the outstanding debt and remove excess currency from circulation.
Another problem that we’ve solved is centralized and unaccountable administration. Normal barter networks normally have one network operator that decides who gets access to credit and at what terms. The problem is that these operators mostly don’t have real “skin in the game”. If a credit candidate defaults, the operator doesn’t lose funds, but the entire network suffers inflation. This is a huge problem that we solve with our distributed underwriter network. Underwriters are a bit like validators on PoS chains: they have a stake to lose if they make bad decisions or try to compromise the network.
Does the company plan to extend its reach globally?
David Casey: Yes, definitely. Our pilot launched in Asheville, NC, US, and we’re now expanding to serve the US west coast and eventually the entire US. As soon as our system is completely ported to mainnet, with all functions including debt collection based on distributed mechanisms, we will be ready to serve credit applicants from around the world. This is planned for Q4 this year.
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