Fiat is not only an automobile from Italian comedies but also is a currency of your country

We recently tackled the question of why P2P lending market is growing and who benefits from that.

Let us now talk about P2P lending platforms. One can borrow money directly from the creditor both in fiat and in cryptocurrency. There are some advantages in both cases. The loans in fiat currency are more transparent from the point of view of law, while the loans in crypto are more convenient from the point of view of currency conversion and anonymity. Both schemes have their own internal verification mechanisms, but the level of their development can vary. If the first crypto lending platforms only checked the passport details and asked about the purpose of the loan, now, depending on the legislation, the platforms analyze income, social networks, PayPal, eBay and Amazon payments and credit histories of the borrowers.

P2P lending platforms which use cryptocurrencies came to the world almost instantly after Bitcoin price exceeded $1000. The pioneer in this area was the UK. Nowadays there are many such kind of platforms working all over the world. Among the most well known are Bitbond an BTCJam.

Bitbond, a P2P exchange, deals exclusively with Bitcoins and it was developed specially for investing in small and medium-sized businesses. The service is registered in Berlin and all the agreements are subject to German legislation. However, not only German startups are present at the platform; anyone can become a creditor at Bitbond. One of the advantages of the system is that it makes possible to diversify the portfolio for automatic investments allocation.

BTCJam is the first non-UK P2P marketplace which works all over the world. The project has its legal address in California. All the transactions at the platform are carried out in Bitcoins, but the loans are pegged to the currency of the particular country. This allows the creditors to obtain the fiat value of their investments and interest rates and protects them from high volatility risks. The advantage of BTCJam for Russian users is that the platform has a Russian-language interface.

The Russian project called SOFIN takes into consideration the experience of the above mentioned platforms, but unlike those platforms, it issues loans in fiat currency. First and foremost, it solves the problem of the legal transparency of the transactions. As the matter of fact, if we talk about the Russian market, where transactions in tokens are not recognized as legal and are not regulated at all, it is problematic to impose any liability on a debtor and there are many risks even with the most advanced scoring system.

SOFIN token is used internally inside the platform. The token will be bought back automatically from the exchange to cover the commissions for the transactions. The cashback for the transactions will be accrued in tokens. On top of that the creditor can issue up to 20% of the loan with the tokens. The tokens solve the problem of conversion from alternative currencies to fiat money. Using the currency of the country where the borrower is located, helps to conclude contracts in accordance with the legislation of the particular country and to make the contracts legally binding. This model allows to make the scoring system more advanced and to reduce the credit risks.

SOFIN platform is launched to issue loans for individuals, but it plans to expand after some time and to work with legal entities. The target countries for the project are Russia, African countries and Asian countries.

The contracts will be adjusted primarily to the legislation of these countries. Anyone can become an investor at the platform.