Bitcoin is slowly but surely nosing its way into the mainstream world of business.About a year ago, it was only accepted by a handful of hipster coffee shops and a few artisanal food trucks.Today, huge websites like Overstock and Expedia have hopped on the boat—and the list is always growing.A constant hum of activity bubbles under the surface of this mainstream emergence, as thousands of entrepreneurs compete to take advantage of a new and exciting market.One area that’s teeming with life at the moment is peer-to-peer (P2P) personal and small business loans.What makes bitcoin good for loans?What services are currently on offer, and could bitcoin loans potentially become another avenue for small business funding?Bitcoin is not just a currency.A better definition would be an open-source, decentralised exchange, capable of hosting a whole range of financial products.This exchange has many properties that are far more suited to the needs of an international marketplace than our current foreign exchange markets: The bitcoin network exists purely online, meaning anyone with an internet connection can send and receive coins.

Transferring coins over the bitcoin network is more like dealing in cash than card, in that there is no middle man.You only pay a small fee for maintaining the network.Forget waiting days for IBACS and SWIFT payments.Again, thanks to the more direct nature of bitcoin, transfers take minutes rather than days, no matter how large the geographical distance.You don’t need to enter any personal details to start sending and receiving bitcoin.The only thing that’s logged from a transfer is the amount and the bitcoin addresses involved.All these factors combined make bitcoin seem like an excellent choice for crowd-sourced loans.Its borderless nature opens your business up to literally a whole world of potential funders, as money can be sent from all corners of the globe quickly, cheaply, and securely.If funders don’t want to reveal themselves, they don’t have to, further encouraging participation.The three main companies offering crowd-sourced bitcoin loans at the moment are BTCJam, BitLendingClub, and Bitbonds.

They all operate in a very similar manner to their “traditional” currency counterparts, such as Prosper and Lending Club.As a borrower, you make a profile and create requests for loans, stating why you need the money, and how much you want.The more loans you pay back on time, the higher your approval goes, which lowers interest rates and makes it easier to find funders.As a lender, you simply browse the listings of prospective borrowers, and fund whichever ones you think offer the best or safest returns.Once the loan is paid back, you get whatever you put in, plus an interest rate determined by the website.Bitbonds is the only bitcoin P2P lender that specifically tailors itself for business loans.Its mission statement is to close the funding gap of small businesses, to deliver higher returns than other fixed income products, and to help build a more stable and trustworthy financial system by distributing credit risk.The German-based company is already receiving attention from investors, having just secured €200k (~$258) in funding from a combination of VC and angel investments.

The biggest problem that any investor faces in bitcoin is the price fluctuation.The price was just £7.50 (~$12) at the start of 2013, but by November it had peaked at £750 (~$1227) a coin, making a 1,000% increase in value in just 11 months.The value then halved in just a matter of weeks.bitcoin steam walletWith still relatively few companies accepting actual bitcoin as payment, those small businesses that accept bitcoin loans must still rely on selling to exchanges for traditional currency.inside bitcoin vegasIn the event of a massive price increase, this could leave borrowers struggling to pay back the amount they owe in bitcoins on time.litecoin price targetSo, what exactly is the benefit of using a bitcoin P2P lending service over one of the traditional currency options?ethereum mac os

On the one hand, the use of bitcoin means borrowers have instant access to funding from all over the world, and the reduced transaction fees mean that everyone gets more value for money.On the other hand, it’s a question of adoption.Prosper has completed billions of dollars worth of loans for its users, but none of the bitcoin lenders have come anywhere close to this.bitcoin hardware profit calculatorThe reality is that bitcoin is not very widely used, which limits the usefulness of services like P2P lending that rely on large scale participation to make them work.ti-84 bitcoinNonetheless, the funding put into Bitbonds shows that expert financial investors have confidence in the potential of bitcoin P2P loans.bitcoin hawaii lawIf adoption continues to increase, it seems likely that bitcoin alternatives could surpass their traditional counterparts.que es el bitcoin mining

The world of cryptocurrency is evolving at a staggering speed, with some of the greatest development minds in the world working on new projects.With the emergence of “colored coins” from projects such as ethereum, we could even see whole financial services ported from the traditional web, to decentralised networks.bitcoin raspberry pi imageThe implications of this are huge, as it would allow a liquidity and security in international financing like never thought possible.Companies like Bitbonds are currently only scratching the surface.(No Ratings Yet) Loading...Incumbent institutional investors themselves admit that they have a lot of catching up to do before they can compete with the “upstart” marketplace lending providers.A published in June discussed how banks were hampered both by their due diligence restrictions, and by the backwardness of their big data analysis techniques.Because new marketplace lenders have less operating costs, they are attractive to borrowers as they are able to offer lower commissions; their risk assessment criteria are less exacting than banks, and they incorporate demographic data into their analysis.

Thus they are able to offer lower interest rates to interested investors.At the time, Morgan Stanley analysts explained this phenomenon: As well as raising the bar in big data analysis, both for existing users and in targeting potential loan seekers, many in the marketplace lending sector have enthusiastically adopted Bitcoin and the blockchain in their payments system.was among the first forums to facilitate lending in Bitcoin.Founded in late 2012, in 2013 it gained a wealth of sponsors in Ribbit Capital, 500 Startups, FundersClub and the Bitcoin Investment Trust.By the end of 2014, BTCjam bitcoin loans of over of $10 million in value, with more than 100,000 users in over 200 countries.The fact that its due diligence procedure only goes so far as an “optional soft credit check” helps explain its popularity.Bitcoin and BTCPOP both offer bitcoin-denominated loans, of the “instant” and collateral-tied variety.Loanbase, formerly known as BitLendingClub, specializes in bitcoin loans to developing countries, where beneficiaries might not have a bank account.

Check your borrowing rates with online lending.Marketplaces are creating their own currency, too Another alternative finance startup has created an entire new currency, LoanCoin, which appreciates as interest is paid on a loan.Once the interest and principal are paid off, the attached LoanCoin is destroyed and exchanged for a currency of the coinholders’ choice, so the currency value is preserved.The system created by Lending DApp allows aspiring lenders, or “officers,” to source and guarantee new loans for coinholders and charge fees for their service.Financial institutions, marketplace lenders and even individuals can act as officers, though their commission and the size of the credit extension is dependent on credit rating.Lending is also at the officer’s own risk and in the event of default or missed payment, collateral is lost.The credit extension, also called a “trust line,” is calculated by applying an aggregate function to an officer’s weighted trust ratings.The network is able to draw on the accumulated knowledge of its participants when assessing lenders’ reputations and creditworthiness.

Max Rangeley, who works for the think tank that’s creating a Bitcoin exhibition for the European Parliament, thinks the Bitcoin transfer system “blockchain” could one day be commonplace among marketplace lenders.Users could, Rangeley says, insure the asset they use as loan collateral with blockchain.“The blockchain means [marketplace lending] can be de-centralised still further,” Rangeley adds, explaining that alternative finance companies and credit market participants are already considering the idea.Morgan Stanley analyst Smittipon Srethapramote, meanwhile, believes partnerships will be key going forward, no matter what currency loans are denominated in.“The fastest growing marketplace platforms are not really peer-to-peer but institutional investors partnering with tech platforms to cherry-pick borrowers, often with offline marketing,” he .The future is bright for alternative finance, and while there’s still uncertainty regarding some specifics, one thing is clear: is coming.