By 
Jun 5, 2016
Bitcoin Lending
P2P Bitcoin Lending, smart alternative to borrow and lend money
What are Bitcoin Lending Platforms?
BTC lending platforms are places on which you are able to borrow from someone and lend to someone Bitcoins. Like in the normal banking, the borrower promises a specific interest rate to the lender for getting the BTC.
Because Lending is a Peer-to-Peer (P2P, or Person-to-Person), the platforms are there to structure the entire process in the most fair way possible.
What do the BTC lending platforms do for us?
The Bitcoin lending platforms try to make the whole process – from lending to paying back – more secure and accessible. Here are some benefits over the normal financial banks:
- Better Rates: As a lender, there is no fee. As a borrower, you need to pay between 1% and 5%.
- Quicker: It’s a lot faster to get your credit. Normal financial institutions have a high waiting period.
- Higher Bitcoin Interest Rate: The lender gets a better return of investment. Normal rates are between 3% and 7% per month. Which can not be beaten with even the best of the bitcoin savings account (check our page on the easy bitcoin interest!)
- Hand approved submissions – To reduce the possibility of scam, all of the loan-submissions are checked manually. Still take care, this doesn’t remove the risk!
What for do the borrower use our BTC?
The most typical purposes for getting a Bitcoin loan are:
- New business idea.
- Crypto-Trading.
- Building/expending a mining rig.
- Debt consolidation, Credit card refinancing, Car financing, vacation, green loan, medical expenses – in those people we don’t invest.
What do you need to apply for a Bitcoin loan?
In order to get a loan, you need to be from one of the supported countries. In addition, there are many thing you can verify, to get a cheaper credit and make your profile more trustworthy, so more people lend you Bitcoins. Here a list of criteria for getting a better trust-rank:
- Government issued document for identification.
- Credit card verification.
- Social media connection via Twitter, Facebook, Google+ and LinkedIn.
- Connection to PayPal, Amazon and/or eBay account.
- Verification of Address, Telephone, Income and Email.
What happens when the Bitcoin loan defaults?
If the borrower fails to comply with the repayment of the loan, an arbitration company gets involved. The arbitration company is there to sue the borrower in their own country and try to get your money back.
After researching this field, we think that arbitration is pretty much useless, if the person is not from your country. Even then it is kinda impossible. So don’t count on this. All of the p2p bitcoin loan platforms tell this as a fairy tale, but if your loan defaults, don’t count on getting your investment back!
Tips on BTC Lending
Take this list of Bitcoin lending tips as a guideline into investing in this area of p2p:
- DO NOT invest in anybody with low trust rating!
- DO NOT invest in anybody who has not paid off any loan in the past. Don’t trust first time borrowers!
- DO investigate the person before investing in him. He might as well have just copied a license from some place of the WWW.
- DO NOT ‘autoinvest’.
- DO NOT invest more than you are able to lose.
- DO diversification. Better to invest in many with small amounts, then in just one person with a high amount of BTC.
- See interest rates as indicator for risk. The higher the bitcoin interest rate, the higher the risk.
- Try to understand the borrower. If his story doesn’t make sense, well then just don’t invest.
- ASK questions. Do not hesitate to ask the borrower anything in detail for why he is needing the money.
- Understand the options and features on Fiat (not Bitcoin) P2P lending websites.
Summary
In summary Bitcoin lending can not be seen as a secure investment. We would grade it somewhere between BTC Cloud Mining and HYIPs.
If you are interested in lending with pretty much zero risk, but lower interest rates, then check out our article on lending Bitcoin on exchanges!
Take care in investing on different platforms than stated here from us. Those (see list here) are the ones with the least scam rate.
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