A short digest to explain p2p lending

What is it?

Crypto P2P Lending is like any other traditional P2P Lending process, the only difference is that it is secured using cryptocurrency as collateral and the lending terms are executed on the Blockchain smart contracts. This means that the risk for the lender is substantially reduced, and the borrower can now have more and better access to funds, even if they don’t have a very good credit rating, since they are able to use their digital assets as a guarantee. Banks and other traditional financial institutions don’t yet recognize crypto assets as legitimate, hence can’t provide this collateral service. Therefore, Crypto P2P Lending can also bring wider acceptance and recognition to crypto assets.

It is Safe?

These platforms usually have digital distributed access management systems to eliminate hacks and wallet thefts. This basically means that the loan is executed using smart contracts, which can be accessed by anyone since the transactions are digitally recorded on a public ledger . Moreover, the loan details can easily be audited by anyone. On the other hand, the collateral is stored on our cold storage wallet with the highest level of security.

Img: Trezor wallet

Only a small fraction of funds are stored in hot wallets for the online access. Also the cold wallets have multisig key implementation so internal hacks are also distant.

How Does it make a difference?

P2P lending enables a secure and open marketplace, where people can request and access a loan with one click, while lenders can strive for more competitive interest rates while simultaneously reducing their risk. In effect we can imagine a very possible transaction in future where a businessman in an African country will be borrowing funds from a lender in Canada. The lender will not have to bother about anything of the borrower or the regulations. And the borrower does not have to wait for any authority permissions to get loans. Everything will be executed digitally and all data will be stored on public Blockchain.

To know more about the safety and scope of p2p lending, come chat with us on one of our social media platforms.