The Hive Project is attempting to address an issue that faces many small to medium businesses that require factoring of their invoices. This is not as hard for bigger businesses but the smaller to middle size businesses have a harder time receiving this type of funding.
Factoring is when a company borrows against its invoiced receivables from a lender for a predetermined rate, usually a percentage of the invoice borrowed against. When the invoice is paid, the lender receives its portion of the payment. This allows companies to receive funds earlier than the typical 30-90 day payment terms that the company may need for other cash flow news and payroll requirements.
Why The Hive Project
The whitepaper states:
“The Hive platform lets businesses connect, encrypt and upload received and issued invoices, which can then be either traded and/or used to build a transparent financial track record. Existing market opportunity of invoice financing, audits and credit scoring is USD $ 3 trillion and it constantly growing.”
By using the Ethereum based blockchain and its smart contracts, the Hive Project can make the process of factoring more secure and streamlined. Some of the issues that face the factoring market are:
- A lot of manual work.
- Manually checking if invoices were submitted to creditworthy commercial clients.
- Checking for duplicated invoices submitted to various lenders.
- Confirming that goods or services were are really delivered, etc.
- All of this needs to be confirmed by written and signed agreements.
- This whole process is costly and time-consuming which prevents SMEs to utilize factoring for smaller amounts.
- Some of the bigger clients (for example food stores and chains) by default disallow transfer of invoices to 3rd parties in order to reduce their manual work increase and to reduce the risk of paying into the wrong account.
The Hive Project Solution
Hive (HVN) uses Ethereum blockchain (distributed ledger) technology and smart contract to assign a unique fingerprint to every invoice issued by tokenizing invoices and publishing them on the blockchain. This will eliminate the issue of double invoicing as each invoice is coded in the blockchain only once.
Companies seeking to factor can upload all their financial data and history to the blockchain and share what the wish with whom they want, such as lenders that may be interested in factoring those invoices. This enables real-time auditing to be conducted, improves the credit scoring process, expedites credit approvals, etc. Hive is an end-to-end platform that will give SMEs easy access to short-term financing by turning their accounts receivables into tradable assets. This is achieved by tokenizing and publishing each invoice to the blockchain in a secure matter, creating a whole new source of financing in the process.
Hive platform uses two core calculations for helping the investor in evaluating an investment opportunity. These two calculations are:
- 1. Opportunity Qualification and Risk Assessment
- 2. Predictive Behavior Credit Scoring with Artificial Intelligence
The whitepaper (linked in Resources Section below) goes through the details of these two solutions for the lender in detail.
The Hive Project and The Use of Smart Contracts
The Hive Project can address these issues through the use of smart contracts as it states perfectly in the whitepaper as follows:
“Exchanging information related to these events in a distributed ledger facilitates the trigger events that need to take place for the goods to arrive at their final destination, a service to be fulfilled and for the suppliers to receive payment. However, the block chain’s ability to facilitate these trigger events does not end with the mere exchange of information along with a supply chain. Smart contracts not only allow trigger events to take place, they ensure they have carried out automatically.
A smart contract can include multiple parties such as, for example, lenders, borrowers, buyers, sellers, and others. Once tokenized, they cannot be altered. For example, if a smart contract is entered into between a lender and a seller, which indicates that both parties have agreed on the borrowing conditions, the smart contract will automatically disburse a payment event that requires action to be taken by the bank. The payment is automatically remitted once confirmation has been entered into the system. With a smart contract, legal terms and conditions are embedded in the computer code, which enables the automatic execution of functions defined by the contract itself.
Since the contract will not allow for additional financing to be received for an invoice that has already been financed, this architecture also prevents duplicate invoice factoring. Invoice duplication has been a significant obstacle preventing invoice factoring solutions from being more readily available to SMEs, but the incorporation of blockchain technology eliminates this issue.”
We have quoted a lot of information from the whitepaper as it is well written and explains clearly the factors. We suggest reading it in its entirety if you find this project interesting.
The Hive Project Token HVN
To finance the Hive Project moving forward, the company is issuing its token HVN to the market. Lenders who want to access credit scores or claim an invoice to factor will pay a fee for that permission. Hive will use that fee to continue to develop and strengthen the project and release them back into circulation as necessary.
The Hive Project ICO
As per the companies web site the terms of the sale are:
ICO begins: July 2, 2017
Token name Hive token (HVN)
ICO duration 6 weeks
What does this token represent? Hive grants access to Hive network services.
Token owners will be repaid through a token buyback mechanism executed on the stock exchanges where HVN tokens will be listed. The amount of tokens repurchased will depend on the revenues generated on the Hive network. Once the token holders get their initial investment value repaid through buybacks, the project should be treated as mature and attractive for acquisition by key players in finance industry. If a takeover is successful, the proceeds will be split equally for each token.
Total supply 500,000,000 tokens
Price per token This will be confirmed 7 days after the ICO ends.
Threshold amount BTC 2,000 – BTC 10,000
Liquidity pool Above BTC 1,500 raised
Week 1 – 15% bonus
Week 2 – 12% bonus
Week 3 – 9% bonus
Week 4 – 6% bonus
Week 5 – 3% bonus
Week 6 – 0% bonus
Hive Project Summary
All-in-all, the Hive Project looks like a good solution to revolutionize the factoring business as a whole and will bring larger benefits to the smaller to medium size businesses to get the funds they need in a faster way.