Blockchain: A Great P2P Model for Lenders and Borrowers Alike

With trust broken, third parties, as well as intermediaries, were thrown into the equation. This meant they became go-between lenders and borrowers.

The very nature of But that’s not the case with blockchain. It is designed from a decentralized lending standpoint making it possible for individuals to share and transfer assets to one another – without the need of an intermediary or third party – think lending institutions – to oversee the transaction.

Imagine being a small business owner with quick access to credit. Wouldn’t that propel your business to new heights? However, that’s not possible today as small-to-medium enterprises have to go through numerous hoops before accessing credit from traditional lenders.

There are financing options such as ICOs and crowdfunding that have progressively embraced new forms of raising funds. Their rapid rise speaks of a willingness to seek as well as individuals.

Most traditional lenders such as banks would be rendered useless because a borrower only needs to directly connect with a willing lender without involving an intermediary (or bank). The upside of blockchain and its decentralized lending model is, a borrower can access a valuable financing option that meets their needs without constraints of location affects them.

The costs of lending and time it takes for the process to go through is greatly reduced thanks to smart contracts. These contracts allow a lender to quickly validate a transaction and confirm its legitimacy. It helps even perform quick administration account tasks enhancing the speed of the lending and borrowing process.

Remember all blockchain transactions are easy to audit. That means they are open. So if there’s any activity in an address that looks suspicious, it’s quickly picked up by a lender who can easily cut off links with a borrower and deny those services to them.

Banks Are Less Likely To Allow Peer-to-peer Lending Model to Take Flight

is the Credit Suisse and INGSo its true traditional lenders are incorporating blockchain to optimize and enhance their lending and borrowing operations. If more banks and lenders can utilize blockchain in every way, it will be easier to connect so many parties in the system. This would make it easier for customers to connect directly to a lending institution such as a bank.

These are costs that can be impacted on the borrower was the time consuming and costly by any chance. becomes easier to make on the part of a lender when everything is in the open including outstanding utility bills, cash flow in an account and all transactions in detail.

www.realisticloans.comCreating such an automated blockchain lending system would be greatly useful and beneficial in numerous ways including:

  • Digitizing contracts
  • Automating loan settlement processes
  • Reducing fraud
  • Minimizing errors
  • Increased efficiency

blockchain system can automate all the lending processesThen again, as an investor or regulator and an auditor, you can gain easy and safe access on user’s data. The system is simply transparent as earlier mentioned.

Blockchain Model Is a Work-In-Progress

Adopting this lending system will take a while. Because there are numerous hurdles on its way: How do you verify the user’s identity on the blockchain? How do you determine a customer’s creditworthiness? Then again, how will the system enforce “know-your-customer” (KYC) rules?

You could say the blockchain is a work-in-progress. It’s a child learning to walk before it can crawl, and that poses a huge problem. , but this does not make it legal in other countries as well. So it’ll be a while before people can experience peer-to-peer blockchain lending model as a valid way to lend and borrow money.

While blockchain can record any transactions taking place on its platform, it is challenging to enforce any laws on it or even evaluate and manage the risks involved.

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