If there were life on Mars, Martians would request us about giving a loan.:) And most likely, they would take a loan via a peer-to-peer lending platform — the most convenient and quickest way of lending.
You will ask why? Because with a P2P lending network you can take a loan from another person or vice versa at much higher interest rates than a bank. If you have never heard about peer-to-peer lending before, you can learn about it from the article ‘Peer-to-Peer lending‘.
BTCJam is the world’s first and the largest Bitcoin lending network. It is a marketplace where people from around the world are connected to borrow and lend using Bitcoin. The platform was founded in late 2012 in order to help people have access to affordable credits.
The signup process is relatively simple. To verify your account you have to provide the following information: your income (Pay Stub), Picture ID, as well as proof of banking. The idea is to get as fully verified as possible. Of cause, you can choose not to verify fully (as I have seen many such accounts ) but it can hurt — decrease your overall rating.
The degree of verification determines your credit rating. BTCJam uses a grade average rating scale to evaluate borrowers — from 0 to 100. To make it more understandable, each level of rating is indicated with a certain letter, from A to E, so it’s easy to see who you are lending to and you can judge if the offered interest rate is worth the credit risk. It seems logical enough:
0-30 is E-, E, E +
31-55 is D-, D, D +
56-75 is C, C, C +
76-85 is B-, B, B +
86-100 is A-, A, A +
I don’t reveal a big secret by saying that people are much more interested in investing in you if you have a better rating. Maximum reliability is considered to be rated as A +.
In addition to rating, a borrower can be estimated by his reputation. A good reputation can be earned by timely repayment of a loan and positive feedbacks from investors. Overall, there is nothing new, such user evaluation methods exist on many e-commerce websites.
How it Works?
To take a loan via BTCJam is quite simple, so I will not go into details. The picture bellow shows this process.
Important Advice: BTCJam does’t guarantee return of investment, so you must carefully choose a borrower using BTCJam rating. Do not lend all your money to a single person, break your investment portfolio for several loan applications.
1. Acceptance and Storage Bitcoin
2. Borrower Verification and rating
3. Automatic selection of an investor or a borrower in pursuance of your request
4. Automatic calculation of profits and fees
The lending network offers such favorable credit conditions, that it could have a motto ‘Loans with a Human Face’.:) Make your own judgment:
1. Free for lenders! The service does not charge lenders any fees.
2. Borrowers Loans below 5 BTC are charged 4% closing from the amount funded. All other loans are charged 1% closing fee.
3. Late Payments If the borrower payment is late, a late fee will be charged after 5 days. The late payment fee amount is the greater value of 5% of the unpaid amount or the bitcoin equivalent of 15 USD.
BTCJam allows you not only to earn on investment or to take loans but to make money on an affiliate program. Invite friends to BTCJam and earn up to $20 worth of bitcoin when they take out a loan or make an investment. If you are an investor, you and an invited friend receive $5 in Bitcoin once a new user has more than $100 worth of investments in activated listings.
If you are a borrower, you will both receive $20 in Bitcoin when at least $250 worth loans has been repaid. To receive the award you both need to have identity verified, and either Facebook or Linkedin connected.
I would like to finish by giving advice for anyone who plans to borrow or invest in the BTCJam community:
• Be as transparent as possible, if you have fault in your listing, don’t be afraid to admit it and chalk it up as learning experience.
• When someone invests, follow them and invest back into their profiles, this is common courtesy and I feel it will help build a good reputation with that individual and they will not hesitate to invest in you next time.
• And lastly, use the money for what you promised you would use it for and provide proof of your purchase or investments to the investors. Like I said the more transparent you are – the more personable the investor may feel and they will build relationship with you and your listing and be more inclined to invest again.