We want to bring the international loans market into the digital age, in a way that opens things up for individuals based in the most far-flung corners of the world and allows them easy access to loans.
Our hope is also to bring benefit to individuals in the western world who are under capitalised and therefore do not have sufficient means to establish positive credit history.
Easily transferable. Easily Liquidable.
The reason only a few organisations participate in delivering online loans is the ever present risk of non-repayment.
The internet makes non repayment a marvellously simple task for borrowers and as such; organisations such as the Funding Circle a peer to peer lending firm, are left wide open to have the profits of their retail investors depleted due to this lingering risk. Some Funding Circle lenders have reported enduring severe losses after using the platform.
Through the introduction of Meridian, we propose to tackle this problem directly — by removing a large portion of risk from the equation.
Traditional financial institutions have been able to maintain a fortress of checks and balances such as strict collateral requirements for both business and personal loans in order to provide themselves with a means of recourse should a borrower fail to repay his debt.
In this digital age in which peer to peer transactions are becoming the norm, this same form of protection must be made available to the average individual who wishes to loan his money out to borrowers in return for profit.
However, the question must be asked: how can a borrower pledge his house or farm as collateral via an online loans platform? Furthermore; a better question: what form of collateral can a borrower pledge — and a creditor accept — as collateral to secure a loan valued below a thousand dollars?
The answer is an asset that is easily liquidable, easily transferable and easily convertible via the internet.
Prior to the invention of the Blockchain, such an asset did not exist… and now that it does, the door has been opened to allow individuals based anywhere in the world to distribute and/or become the recipient of a secured micro-loan.
Meridian and Bitcoin. Correlation.
The loans that are distributed on platforms like the one mentioned above are unsecured, meaning defaults that occur in such an environment are allowed to force lenders to endure guaranteed losses.
Using a digital asset as collateral to secure a micro loan has several unique implications. The main thing is digital assets have the unique behavioural trait of undergoing extreme surges in value. The opposite is also true.
This is significant because it puts lenders in an uncommon position whereby they are potentially able to secure larger profits in the event of a default, then they’d procure from gaining full loan repayments.
Thus in the event of a default the loan warps to adopt the form of a short sell, provided overall market conditions are favourable.
With this being the case, it is important to note that an asset such as Meridian with its defined role as digital collateral will display a form of positive correlation with Bitcoin.
In simple terms a weakening in the price of Meridian creates an environment for cheap Bitcoin loans, as users can obtain Meridian tokens cheaply, and then use these tokens to secure a Bitcoin loan of higher value.
However, after noting that weaker prices in the Meridian market encourages buying — it is important to also note that increased buying causes higher prices. As such, a climate is established whereby the holders of Meridian tokens who are not seeking Bitcoin loans are also able to draw benefits from this correlation.
Bringing Peer to Peer Loans into the age of Blockchain.
We hope to use the capabilities of the Blockchain to provide online lenders with an increased sense of security when delivering loans.
For the reasons mentioned in this post, we believe that Meridian is a logical solution to the problems that exist in today’s online lending market.
Hopefully you’ll join us in attempting to bring the peer to peer loans industry into the age of the Blockchain.
