Global peer to peer marketplace for small loans, Bitbond, allows clients the option to transfer their loans by using bitcoin. The bitcoin startup has seen its popularity grow, with the startup managing around $1 million in loans per month for 100 clients.
The revelation was made in an interview by Reuters TV with Bitbond’s German founder Radoslav Albrecht. He said the rationale behind the move is that it will help reduce the foreign exchange cost for clients.
Using Bitcoin to Cut Costs
Bitbond is a peer to peer lending platform that aims to cater to the financially deprived by providing small business loans. The platform works similarly to most peer to peer bitcoin lending services where capital is lent to a business for commercial purposes without either party knowing the identity of each other.
It’s now clear that the lending platform will use the cryptocurrency to enable faster and easier transfer of online payments. A transaction via the conventional banking system can take a few working days to settle, whereas the process is done in real time with bitcoin.
Bitbond founder Radoslav Albrecht said, “Traditional money transfers are relatively costly due to currency exchange fees, and can take up to a few days. With Bitbond, payments work independently of where customers are. Via internet it is very, very quick and the fees are low.”
Bitcoin is used by Bitbond as an alternative to SWIFT. Image: Pixabay
Bitbond will convert all fiat currency to bitcoin and then transfer it back into the equivalent fiat currency of the lender. This will help Bitbond to cut down on forex exchange costs, which under normal circumstances, would be passed on to the end user. Bitcoin will not be stored locally by Bitbond but transferred immediately back to fiat.
Bitbond and the Era of Modern Lending
While working on banking projects as a consultant in the early days of his career, Albrecht was fascinated by the idea of peer to peer lending and how it would revolutionize retail lending. He saw that there was a huge opportunity in the fintech space as banks were not able to cater to every customer demand and decided that he would turn into an entrepreneur in the fintech space.
But the breakout moment came in 2012 when he first heard of bitcoin and blockchain from a friend. He researched on the topic and concluded that he could use blockchain technology to create a peer-to-peer lending platform.
In early 2013, Albrecht launched Bitbond. Speaking about his vision for the company, he said, “Our mission is to make borrowing and lending globally accessible. Many markets and regions are underserved by banks. In emerging markets, bank account penetration tends to be below 50 percent. Without a bank account, most people are excluded from formal financial services and can neither get an affordable loan nor invest their money for interest.”
In February 2017, BTCManager reported that the bitcoin startup had raised $1.2 million in funding from German and Turkish investors.
Finance Industry Turn Toward the Blockchain
Other banks and financial institutes are also warming up to exploring the possible applications of blockchain to simplify their daily business. Banks aim to use the technology to settle trades in real time as well as transferring funds instantly.
Global technology consulting giant Accenture estimated that the top eight banks could almost save up to $8 billion by integrating blockchain technology to their business.