Why are the loans paid out in bitcoin?
We use bitcoin as a technology and payment network at Bitbond because bitcoin offers 3 key benefits:
- Bitcoin enables cross-border lending: Cross-border lending is highly advantageous to borrowers and lender alike
- Borrowers get access to a global pool of potential lenders, regardless of how small or big their market/country of residence is. Typically local lenders charge monopolistic (i.e. very high) interest rates. On a global market like Bitbond interest rates are more affordable.
- Lenders get access to higher interest rates than what they get in a fixed term deposit account at their bank. At the same time they can diversify their portfolio much better over many regions..
- Bitbond users don't need a bank account: in order to access Bitbond all you need is a computer or smart-phone with an internet connection. This is especially relevant in emerging markets where only 20-30% of the population have a bank account.
- Fees are lower: bitcoin is an open-source infrastructure which runs with very low costs. This makes it much more cost effective to run a platform like Bitbond. All fiat currency based online lending platforms typically cooperate with banks which conduct all payment transactions for them. These banking services are expensive and the costs are passed on to borrowers and lenders via fees. At Bitbond the fees are lower because we are totally independent of banks.
Cross-border lending is not economically feasible with fiat currencies like dollars or euros. This is because the costs of global payment transactions are too high and transfers take too long.