There’s a growing trend of people looking to borrow and lend in non traditional ways. It is used to be as easy as going to the bank, making small talk and shaking hands with the manager. If you were lucky, maybe that included a cigar and some decent whiskey.
A large portion of the world’s population is underbanked. They either lack access to proper identification or to retail banks. Many people simply don’t trust banks. It is for reasons like these that so many are turning to alternative ways to borrow.
And there are plenty of opportunities for individuals and/or alternative lenders to make these types of loans. Micro loans are popping up everywhere. A micro loan is a peer to peer loan. In other words, instead of getting money from a bank, you get it from individuals.
As you know, this site is about covering anything related to cryptocurrency.
While I was researching for another post, I happened to stumble upon an organization called Bitbond. They allow people from around the world to pool money together and fund a loan for anyone they choose.
The difference with Bitbond is when you want to make a deposit to loan money, you must do so in Bitcoin.
I reviewed over 30 different people’s requests for money and they all had different stories to tell. Some better than others. The site has a somewhat rigorous sign up process. I know this because I did it myself. I figured how can I write an article on this without jumping in headfirst?
In order for me to lend money, I had to provide my personal information, confirm an email, and then take part in a one on one video conference interview with a representative in Germany. She had a hard time reading the information on my passport as the images were showing up blurry. Then I tried my driver license which was a little better, but she was still struggling to see it clear enough. Finally, I adjusted the lighting and the camera angle and she was able to process the images needed.
At that point I was provided a 5 digit code via email to enter on the screen to complete my verification process. Due to my patience growing weary after being on hold for so long, I accidentally entered the wrong number and the video conference ended and I was kicked out of queue. After waiting in line a few more minutes, we were able to reconnect. However, she still needed to get the photos of my ID again.
By this time I was nearly a seasoned pro and probably could have worked for them. We completed the verification must faster this time around and I was finally setup.
Did I mention this was just to be able to lend?
Those who wish to borrow have to take additional steps such as connect their social media and eBay accounts. I definitely had more trust for those individuals who had 500+ friends and excellent online reviews than I did for those with only 37 Facebook friends and not much else to go on. The company then takes all this information and provides a credit worthiness ranking to each potential borrower. The lowest risk individuals are rated “A” and the highest risks are “E” rated.
Perhaps the feature I liked most was the personal interaction. I felt connected when I would reach out and ask a question to clarify their situation. If loans were for medical school, people would ask for which school or special program. If it was for their online business they asked for financial statements or anything else they deemed important.
Because I had already invested this much time I felt it was only right to invest my money at this point. I loaned to two different people. One was from the United Kingdom and the other was actually from my hometown. It was fun and rewarding to chat back and forth with these people. For the borrower from my hometown I was actually the last person to fully fund the loan.
She was so excited to reach her goal and I felt great to be part of that. It was almost like I was part of her business.
Obviously these types of loans are quite risky and you will need to practice good judgment. However, knowing that I am helping people from around the world be able to attempt to improve their situation or run their own business is more rewarding to me than the interest I may or may not earn.
For more information please see: Bitbond.