P2P Lending on Blockchain Series (Pt I)

This is the beginning of a series of succinct blog posts detailing the value, opportunity, and innovation blockchain brings to P2P lending.


After the 2008 financial crisis, global lending was dramatically tightened compared to pre-crisis. As a result, online lending has become an important component in the financial services markets. Allowing borrowers to obtain credit when bank financing would’ve denied.


Online peer-to-peer (P2P) lending emerged as the market’s response to the crisis. P2P lending platforms make new investment opportunities available to the public by enabling investors to purchase interest in a loan.

P2P lending is one of the fastest growing segments within the Fintech industry.

Traditional P2P lending requires a third-party to manage risk, service, and administer loans. This process is capital intensive and inherently slows the process down.

P2P lending is well positioned to utilize blockchain because of its little commitment to traditional recordkeeping and transaction processing systems.


P2P marketplaces can leverage blockchain as a settlement system, this allows for the tokenization of underlying loans and rights attached to tokens are transferred and settled instantly.

P2P marketplaces integrating blockchain

  • Gain efficiencies by eliminating third-party operations.
  • Would be assured secure and tamper-proof transactions with immutability.


Regulatory & legal uncertainty

As one would expect, blockchain raises many legal questions. Marketplace lenders who employ blockchain may need to consider whether the tokens created are “securities”.

Other areas:

  • Liability for smart contract errors or in execution
  • KYC / AML
  • Consumer privacy

Industry Cooperation

Most people in the crypto industry talk about achieving mass adoption, before that we’ll need “mass cooperation” from major players in the industry. It seems only natural that an innovation-driven industry like Fintech would be one to embrace new technology to speed transactions, reduce costs, complexity, and enhance security.

More on this in the next post.