The current trend and emphasis have been on the decentralized marketplaces. Aided by Blockchain technology, the decentralized marketing platform works the best in making the transactions effective and transparent. One of the excellent approaches used in a decentralized marketing platform is the use of peer to peer lending. How does this system impact and make easy the lending mechanism? Let us find it out in the following paragraphs.
The peer to peer lending system works on the basis of a decentralized and secure credit system. As we stated before, it works on the blockchain technology.
What makes it an interesting option is the closed nature that the technology works on. Only the members of the community have an access to the data and it is encrypted at each node. Thus, the technology does not allow data tampering without the knowledge of the other members.
What benefits does this unique peer to peer lending system enjoy? Well, there are many. We will make an attempt at understanding a couple of them here.
That should be the prime advantage that the service offers you. The peer to peer lending system involving the cryptocurrency would help increase the competition among the lenders and thus thanks to decentralization – equal playing ground ensues. This, in turn, will lead to the lowest interest rates that you would find anywhere.
The major advantage that a decentralized peer to peer lending system offers you is the lack of intermediaries. The complete transaction takes place between the borrower and lender. This can reduce all the malpractices and added expenses in a centralized system. Even the platform on which the transaction takes place cannot alter any of the transactions.
The transactions in a lending system involving peer to peer lending are secured. Most of them work on the Ethereum platform making use of ERC 20 tokens. Let us explain with the help of Bitto Coin which has been one of the popular Peer to Peer lending system. The ERC -20 tokens act as collateral security for the loan is obtained. The tokens have been evaluated to be at billions of US dollars. The rate has been growing at a tremendous rate.
Break Away From the Shackles of Terms and Conditions
The simplicity of the Bitto coins or other similar options has been able to persuade more borrowers to opt for the peer to peer lending system. The affordable system lets you stay clear of the terms and conditions put down by the banks and their exorbitant interest rates. There are no humiliating bank visits. You do not need to depend upon the credit history or any similar abstract concept to check your eligibility for the loan.
Well, explaining all the technology and concept involved in Peer to peer lending may not be easy to explain in this concise post. In any case, we assume we have been able to make you think of this as a bright future ahead for the new lending mechanism. This will indeed go a long way in making you interested the new concept.
The day is not far when it will form part of the mainstream lending system. We would definitely look forward to such a possibility quite soon, given the potential that the technology comes with.