Bitbond is a little different to other cryptocurrency sites. Bitbond was set up by CEO Radoslav Albrect in Germany and is a company where you can invest by giving a loan, or you can borrow bitcoin. It is possible to do this almost instantly and with few complications. It is the first site that offers small business loans to a global market.
It has seen a massive growth in its short time in business. There are now over 80,000 registered users on the site and there are currently over 1500 open loans being mediated by the site.
The site uses the blockchain technology to set up a contract between the borrower and the lender, with an agreed set of Bitcoins exchanging hands – with a set duration of between 6 weeks and 5 years for repayment. Borrowers get a rating that they publish as part of the loan request – to get a rating you need to verify your identity and go through a financial assessment.
The loan request placed is published in the Bitbond marketplace. Lenders can then place bids in an auction – which lasts for up to 14 days. Once the lender is successful in the auction a payment schedule is set up and displayed in the member’s area and the personal account of each participant.
This is the only possible way to get a small business loan this quick and with this lack of complication. It is also a cheap way to get a loan – much cheaper and easier than going through a bank in general.
You can start investing as little as $2. There is a 13% interest on loans – so you may want to chance more of your money than this. There is no upper limit in what you can invest – so, you are only limited by your own comfort zone.
The site is the first of its kind to offer financial inclusion for small business loans, no matter where the business is in the world. This is the sort of democratising effect that the original blockchain inventors envisioned.
It takes a lot of confidence and skill to pick out the investments that will pay – if you are a lender. Loaning money to an invisible entity – whether financially checked by the site or not – takes a lot of courage and insight. So, this site is not for everyone. However, if you are looking for a way to achieve passive income with money that would only be sat in savings – then you might want to take the risk.
The verification process can be tiresome and there is not a lot of transparency in the process. You may be unhappy with the rating you are given, and it is difficult to communicate with the verifiers to challenge the judgement.
Early repayment is not possible when taking out a 6-week loan. However, early repayment is possible after the first official payment of other loans.
Payment Methods Accepted
If you are an investor you will be asked to attach a bank account to your Bitbond user account. This requires you to click on the add funds tab and then you will organise a wire transfer. Alternatively, you can deposit Bitcoin straight into your Bitbond wallet. Again, you click on the Add Funds tab and follow the guidance.
The point of the site is peer to peer lending, therefore there really are no borders when it comes to using the site. Most borrowers are eBay sellers looking for funding to build an inventory.
Transparency is crucial in such a business model, as the lenders need to be assured of returns when they are investing. Therefore, lenders will be expected to undertake vigorous verification and the financial rating will then be published.
You are also expected to go through verification – with an ID card or a passport – if you are hoping to invest too.
Limits and Liquidity
Liquidity is reliant on there being enough investors to match the demands of the borrowers. Currently, Bitbond do not seem to be struggling to facilitate the loans that are being requested and the fact that over 1500 loans have been mediated shows that it is working.
There is no upper limited on what you can loan or borrow.
There are some issues over the speed of verification. However, once this is done then the time to getting your loan can be as speedy as a few days. When compared with the business of getting a small loan from a financial institution – it is positively light speed.
Most reviews and forums are impressed by the business model presented by Bitbond. It is a simple but genius idea rolled into one. Peer to peer lending is essentially what the smart contracts of the blockchain technology invite. The only issue is security – and Bitbond do all they can to financially vet and give information to users about the lenders. Any concerns expressed are over the time it takes for the verification to take place and the rigid views on what rating you should be given. However, the strictness of practice here is what builds trust and security in those investing money
There is no fee for the investor. There is a fee for the borrower that starts at 1% of the amount of the loan taken out.
The biggest question you are likely to have is: what happens if the borrower doesn’t make the repayments? The site, after 90 days, considers the loan to be in default and will pass the clam to a debt collection service. They will pass on details of the borrowers to financial regulators and they will suffer the legal and economic implications of the loan default.
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