Cryptocurrencies became a part of our lives by now. They are changing the financial industry, allowing more people to have access to banking services and granting them full control of their money. There is no doubt that the future of digital banking depends on the blockchain technology. Eventually, easier, cheaper and quicker international transactions will be available to everyone in all parts of the globe.
After applying the same trends to peer-to-peer lending, even people with a bad credit history or those who do not have a bank account will be able to take out cryptoloans at significantly more honest interest rates. Many members of the cryptocurrency community believe that the P2P crypto lending will be beneficial for both borrowers and creditors. What are their arguments based on? Let us explain it to you.
Crypto lending platforms
Online lending platforms are used to connect borrowers with lenders. Each of them follows its own strategy, but their main purpose is the same: clients deposit their digital tokens into an automated smart contract as collateral for a crypto loan. The contract keeps track of interest and repayments, protecting all parties from frauds.
Unlike traditional banks, P2P platforms do not hold funds — they only act as intermediaries between creditors and debtors and facilitate the process. Such platforms gain profits from fees and commissions paid by all the parties involved in the whole process.
How do cryptoloans work?
Using blockchains, crypto lending platforms offer a low cost and transparent service to both creditors and debtors. Transactions processed through blockchain are very fast and provide 100% protection from corruption. Moreover, they have close to zero transaction fees.
Take a look at the main advantages of crypto loans:
Crypto loans are easy to get. According to the latest researches, about one-third of the world’s population is unbanked. Cryptoloans can be taken without a bank account — you only need to have internet access. This makes them extremely useful for residents of developing countries with low and middle income.
Low transaction fees. Peer-to-peer lending in fiat currencies forces providers to cooperate with banks that conduct all transactions on their behalf. Therefore, borrowers and creditors have to pay fees. Cryptocurrencies can solve this problem since they are absolutely independent of banks. Thanks to that, cryptoloans are much more cost effective for all involved parties in comparison to traditional loans.
Worldwide accessibility. Cryptocurrencies make international lending possible, offering myriads of advantages to both lenders and debtors. Cryptoloans can be used to diversify the investment portfolio across multiple countries or even continents, which is one of the most important benefits for creditors. At the same time, debtors benefit from a giant pool of lenders from all over the world.
Considering all the above, crypto loans is a safe and easy way to get money or earn interest through lending, available for any cryptocurrency holder.
Another company that offers the P2P lending platform is Loanbyte. It allows participating in a single transaction to several investors at once if one of them has insufficient funds to cover the amount requested by the borrower. This platform also acts as an intermediary when both parties to the transaction have already agreed on the size of the interest rate.