[avatar user="James Lucas" /]
The Crowd might just be paving the way for a significant change in traditional financial systems, I am specifically talking here about crypto currency and P2P lending.
The world we live in today revolves around currency and what can be traded with that currency. Traditionally these currencies are centralised and controlled by governments – the most widely used being the US dollar. The internet has given birth to decentralised crypto currencies the most recognised and one of the pioneers being Bitcoin.
Six years on Bitcoins (and its many variants) are still ‘relatively’ uncommon within online communities as a stable and usable currency for trade. However, P2P lending could be about to change this with a raft of new platforms entering the market to capitalise on what they see as a huge opportunity.
Bitbond, BTCjam and BitLendingClub are just some of the first to allow Bitcoin owners to lend and receive interest on their virtual currency. The platforms see their mission as connecting individual lenders looking for attractive returns with borrowers looking for accessible and affordable loans.
In emerging economies like Mexico and India it is very difficult for citizens to obtain affordable loans. For example, in Brazil the interest rate for a personal loan can easily reach 200% whilst ‘bureaucratic hoops’ make the application process a painful and lengthy one.
Through the completely global, independent and digital currency like Bitcoin these new platforms can facilitate fast and cheap transactions overcoming the boundaries between countries. They have even developed peer-to-peer reputation systems in lieu of traditional credit scores to qualify borrowers across the world and allow them to build a transparent credit profile.
It might be early days but decentralised crypto currencies are here to stay and Bitcoin is set to become a player in P2P lending.