Things to Keep In Mind for a Crypto Loan!
February 26, 2019
Cryptocurrencies are bringing a lot of platforms back in action that claim that money acquisitions will be more successful once everyone combines cryptocurrencies with Peer-to-Peer (P2P) lending. Although there has been much heavy debate about this unpopular subject, it is only right to understand what is true and what is not for everything crypto.
Making sense of Peer-to-Peer (P2P) lending
Peer-to-peer lending is basically a money exchange scheme that allows people to trade money using decentralized technology that eliminates the overhead regulation by third parties. If a trader uses the P2P scheme to exchange money then lenders have the upper hand as they can acquire higher interest rates as compared to dealing with a savings account.
Online platforms such as LendingClub and Zopa adopt P2P lending schemes and simply connect borrowers with lenders for more reliable Cryptocurrency Exchanges.
Involvement of Blockchain purveyors
Most of the P2P lending platforms that have taken shape in the course of the last year have been envisioned on Blockchain's technology.
Platforms such as Celsius Network and Inspeer have given a new face to P2P lending by bringing about Blockchain's brilliant schemes to its system and made money exchanges more protected as well as transparent at the same time. And the best part is that people from anywhere in the world can come aboard and participate in P2P lending.
A popular P2P cryptocurrency lending platform, ETHLend sanctions the debtors to avail loan process that is justifiable and debtor-compliant.
The backlash over crypto's P2P lending scheme
Recently, a lot of critics have been commenting on the P2P lending scheme, they believe it comes with a lot of risks and could possibly fall in trouble over it someday. A lot of them have warned debtors against it and said that a lot of people will end up losing twice than what they had borrowed.
Further, a lot of them also believe that even Blockchain will not be able to stand the brunt of P2P and even if they do, there's no Blockchain that will be able to unravel the risks.
Some of them even suggested that many regulated P2P lending platforms should first see to it that the debtor has verified details to easily transfer money. Also, in case a risk creeps up, the process of litigation should be quick and clean.
Understanding if the critic calls are right or not
In argument, P2P lending platforms have revolted claims that state although the platforms are volatile, no problems arise as the platforms always deal in US dollars instead of cryptocurrency being used as collateral.
Moreover, when it comes to cryptocurrencies loans availed for bigger purchases such as car and home then there should be collaterals of selling away coins so as to score a lesser interest on the crypto loan.
This ensures that loan payoff is quicker and in the long run more profitable.
P2P protection for lenders and debtors
What certain platforms have done is that they demand debtors to submit only about 100%-150% collateral with a promise that soon oracles will take over the system. The oracles are basically tools that showcase the overall market performance of a crypto coin.
This idea will steady the volatility of fiat currency and make online cryptocurrency exchanges much simpler to process.
Once geographical location is mobilized as well, most lenders and debtors will fall back in sync and loan processing will become effortless.
Main aim of P2P platforms
Currently, P2P platforms are in major use by professional crypto traders and digitally sound people who love everything crypto. But as it is still a relatively newer concept, household loans and business loans still need to be managed well.
However, the best part about P2P platforms is that it operates 24/7 and crypto's loan competencies are limitless and vivid. All you need is a tiny crypto push to get crypto-going!