“Populous is a global P2P (peer-to-peer) invoice discounting platform built on Blockchain technology. We combine the trust, transparency, security, and speed of Blockchain with our proprietary smart contracts to directly pair invoice sellers and lenders to transact directly and without third parties.”
In Our Words
Populous is a project that allows peer-to-peer invoice trading, hosted on the Ethereum blockchain. You’re probably wondering what invoice trading is and how it can be such a huge market at $3 Trillion per year; don’t worry, we’ve explained it below for you.
What is Invoice Trading/Factoring?
Imagine you’re running a small-medium sized business. Your company carries out a job for a bigger company and they give you an invoice – a document guaranteeing that they will pay you in the future.
The problem is that payments aren’t usually due immediately – you could be waiting months for it to arrive. In the meantime, you need cash to run your business – how else will you buy new stock or pay for operating costs?
In this situation, some businesses may go to the bank and ask for a loan. However, banks often don’t give loans to small-medium sized businesses and, even if they do, they will usually charge high interest rates.
Introducing Invoice Trading
Out of this problem, invoice trading was invented – what if you could sell your invoice to someone else for 90% of its value?
This way, you might lose 10% of your invoice value, but you can continue to buy stock, pay daily operating costs etc and keep your business running. Also, the bank would have charged much higher rates for a loan, so you’ve just saved by avoiding that route too.
Why Would Anyone Buy An Invoice?
Hopefully, it’s obvious to see why small-medium sized businesses would choose to sell their invoices for a discount – it’s often the only way for them to keep their business running, we’ll now describe why you would want to buy an invoice.
Let’s say your a business which has lots of reserve funds. You could either leave that money in a bank or you could buy invoices and make profits. For example, you buy an invoice for $9,000 which has a value of $10,000.
When the invoice date arrives, you will receive $10,000; you might have had to wait but you’ve now just gained $1,000.
Hopefully, you understand what invoice trading is and why it’s such a massive industry – $3 Trillion per year. If you’re confused by our explanation, check out the very brief video below:
(They use the term ‘Invoice Factoring’ where we say ‘Invoice Trading’ – don’t worry, they’re the same thing)
Populous’ Current Progress
Populous have just announced the planned release of their beta following a successful alpha release.
Think: ‘Ebay for Invoices’.
With Populous, there are 2 associated tokens which we’ll describe below and then we’ll talk about how they combine to form the overall process:
PPT Tokens
The PPT Tokens are the tokens available on the exchanges i.e. the one that you can buy if you choose.
PPT Tokens are ‘access tokens’. In other words, users must first buy them in order to be able to access the Populous platform.
Pokens
These are the ‘in platform currency’ and are used to transfer value between buyers and seller. They are pegged to a fiat currency and 1 Poken is equivalent to 1GBP. Pokens can be exchanged with fiat currencies as well as established cryptocurrencies such as Bitcoin.
The Process Explained: For Buyers
Let’s say you want to buy an invoice on the Populous platform. What’s the process?
Buy PPT Tokens from the exchanges
Convert your PPT Tokens for Pokens which you can use within the platform
Bid on an invoice; the higher you bid, the more likely you’ll win the auction
If you win, you’ll pay your Pokens to the invoice seller
When the invoice is due for payment, you’ll receive the invoice pay
The process for sellers is pretty much identical; except that you’re the one listing the invoice and you choose the bid that you wish to accept.
Problem #1 – The Pay
We discussed earlier how a regular invoice trading market will involve sellers offering their invoices to buyer for 90% of the value.
Populous’ Solution
In the current system, 90% seems to be the maximum amount companies could expect to receive on large invoices. With the Populous system, invoice sellers should benefit from the advantage of having a greater number of buyers that are competing through the auction bidding system.
If the number of buyers is high, then it is more likely favourable terms will be offered to the invoice seller, such as 95% of the invoice value or lower interest rates.
Problem #2 – Globalisation
Currently, the global invoice trading market is mostly limited to the boundaries of your own country, or at least your continent. What we mean by this is that the majority of invoice trading involves buyers and sellers from the same country.
Note: We stress the word mostly because some international invoice trading does currently occur
Populous’ Solution
While Populous will begin in the UK, over the long-term, they will be creating a global marketplace to allow buyers and sellers from around the world to buy and sell their invoices. Therefore, if you live in a country with less economic certainty where companies regularly default and are unable to pay their invoice, you will instead be able to buy much safer invoices from more economically established countries.
Essentially, the globalisation of this market should allow for residents of less economically established countries to buy much safer assets. This is similar to stock markets where you can buy stocks with various ratings.
Problem #3 – Traceable Data
With large companies, it is not uncommon for clerical errors to occur, leading to the failure to forward an invoice or duplication. In other words, human error can cause big problems within the industry
Populous’ Solution – Traceable Data
Due to the visibility of the blockchain and the fact that smart contracts will automate the majority of the process, it is highly unlikely these errors will occur within the Populous platform.
Problem #4 – Accredited Investors Only
The majority of current peer-to-peer invoice trading platforms require invoice buyers to be accredited investors
Populous’ Solution – Everyone Is Allowed
Populous do not plan to implement restrictions such as this on investors. Whether government regulations in the future will force them to, however, is yet to be seen
Investing in Cryptos is not the same as traditional investing – when you buy shares in a company, you’re buying ownership. As the company makes increased profits, the share price will increase and your investment value will rise also.
With the majority of Cryptocurrencies, the tokens don’t represent shares.
Therefore, it’s possible for the company to be successful (i.e the CEO and employees get rich) and yet the token prices may actually fall if they aren’t correctly linked to platform usage.
The ONLY factor determining token price is supply and demand on exchanges.
Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following two questions
Demand – Will there be token demand on the exchanges?
Supply – Will there be excessive inflation hindering prices?
Let’s first look at demand:
What Are The Sources Of Demand?
The demand for the Populous token stems from the desire of companies or persons to sell their invoices. It should be noted that there are of course a number of established alternatives in the non-Crypto so there will not be a guaranteed demand.
When it comes to the Populous platform, the Populous token is the only way to gain access; since the token is used to bid on and purchase invoices. Therefore, as more people begin to use the Populous platform, the demand for the token should rise and so would the token price.
The Result?
The price of the Populous token has been sufficiently linked to the demand for the platform, meaning Populous have passed this test.
What Is The Likely Inflation Rate?
Populous created a fixed supply of tokens meaning a zero inflation rate but this does not mean that new tokens will not enter the market though. There were a total of 53,200,000 PPT created, 36,000,000 (67.67%) of which were distributed to investors. This means that there are still 17,200,000 PPT to potentially enter the market but how were they distributed?
12,000,000 PPT (22.56%) Team – Populous state that these tokens are locked in for a period of one year, meaning that no inflationary pressure should be felt in the short term.
4,600,000 PPT (8.64%) Business Development – This portion of tokens will be sold over time in order to fund operational costs etc. However, this is less than 1/10th of the total supply meaning any inflation would be beyond minimal.
600,000 PPT (1.13%) Promotion – These were distributed to people involved in aspects such as bounty campaigns. The percentage is so small and these participants would have already received their tokens, so no inflationary pressure should be felt.
Overall, the inflation rate should be relatively low and token demand should be based entirely on the success of the Populous project. As such, we can simply analyse whether we believe this project will be a success – while factoring in price – in order to determine if this is a worthy investment.
Populous Investor Review
A small section of the Populous team is shown above; their founder and CEO Stephen Williams can be seen in the centre. According to their website, the team consists of 11 members but little is written about them.
The first member to look at is the Populous founder and CEO Stephen Williams; his experience seems varied having spent 14 years at Tramp Magazine as a publisher, as well as founding commercial data analyst company Olympus Research.
Their only listed advisor is Shadi Paterson, he operates on behalf of a Pre and Post-ICO marketing company and has also worked as an advisor for Crypto20, a tokenized index fund.
The fact that we haven’t been able to garner too much information about the team could be seen as a red flag. To counter this, they already at the beta stage with their product so we don’t find it as concerning as we might in other situations
Populous Roadmap
The Populous website and whitepaper do not provide a roadmap for the project but Populous are a lot further along their journey than many of the projects we review. Founded in November 2016, they have just announced the planned release of their beta platform, following a successful alpha release. As such we have no worries about this aspect of the project.
Invoice trading is clearly an established market but Populous are the first to venture into it from the Cryptosphere.
They should benefit from the first mover advantage as a result. When this is combined with the cost benefits mentioned above, we believe the platform should witness a reasonable level of demand from the offset, even if only out of consumer intrigue.
$1 billion deal
A further huge positive was announced by Populous in September 2017, a $1 billion partnership with global rewards platform, Luxure Global Citizens. This should ensure that PPT investors have regular access to a supply of blue-chip invoices from which they are able to earn regular returns.
Currently $1 billion worth of deals are completed yearly through Luxure and this is forecasted to rise following their own partnership with a Chinese company called Alipay.
$3 TRILLION Existing Industry
Many Cryptocurrencies are considered ‘pioneers’ in the sense that they are aiming to create entirely new industries; similar to the early days of the internet.
While this could be extremely profitable for many, it is also a much greater risk. Populous, on the other hand, are entering into an existing and extremely profitable business. If they’re able to take a decent cut of the business sector, they could have a very successful future
