With the rise of cryptocurrency and the popularity of decentralized networks, many people are looking for ways to enter the P2P lending market. While traditional banks offer a number of services, they also come with some downsides (e.g., high fees). In this article, we will explore how blockchain technology is changing P2P lending by bringing transparency to an otherwise opaque process.
Blockchain technology has enabled the emergence of a new type of P2P lending market where borrowers and lenders are able to enter into an agreement without the need for an intermediary. This is possible because blockchain transactions self execute with trustless smart contracts that provide proof once funds have been transferred. According to DeFi Pulse, which provides analytics on decentralized finance projects, as much as $29 billion worth of value was locked in such agreements at the time this article was written (September 2020).
With decentralized networks like Ethereum’s Smart Contracts platform powering loans between parties, many people are looking for ways to get involved in these types of financial services outside traditional banks. Decentralized networks may be more attractive than centralized ones due to the ability to maintain a private financial profile.
Lending Platforms with Blockchain Technology:
The SALT lending platform is trying to give people more options for accessing loans outside of traditional banks by allowing them to pledge cryptocurrency as collateral on their loan agreements. This allows borrowers who may not have access to credit cards or other forms of financing an opportunity when they might otherwise be unable create any sort of leverage in obtaining funds from a bank.
One potential downside that could arise out of this type of agreement between borrower and lender is the risk associated with fluctuating cryptocurrency prices, which can lead to defaulted payments if the value drops before repayment occurs. For those looking for ways around such risks, there are some decentralized exchanges that offer crypto-backed stable coins prices of cryptocurrency. Regardless, the SALT lending platform has a system in place to hedge against any potential negative outcomes associated with price fluctuation by keeping some percentage of the collateral value locked into their USD-backed crypto baskets.
Cryptocurrencies have changed how people transact and exchange goods on an international level, but what about within a local economy? Local economies will benefit from cryptocurrencies as well if they choose to accept them as payment for goods or services rendered. This gives those who may not be able to participate in global markets due to volatile shifts in currency prices access to wider pools of capital that are more readily available than traditional currencies.”
The post Cryptocurrency and the P2P Market: Bringing Transparency to Lending By Utilization Blockchain Technology appeared first on Crypto Disrupt. With the advent of cryptocurrency, the P2P market continues to evolve as decentralized networks and smart contracts present new avenues for accessing financial services outside of the traditional banking infrastructure. Utilizing blockchain technology, borrowers and lenders are able to enter a loan agreement without the need for an intermediary. Instead, self-executing smart contracts enable trustless transactions according to DeFi Pulse, a DeFi analytics and rankings publication $$$$billion of value was locked in the DeFi lending market as of September 2020 with price fluctuations.