Peer-to-Peer Lending — A New Frontier for Crypto?

Have you ever found yourself in a situation where you need to borrow money without the hassle of applying through a financial institution? With the internet, you can actually do so with Peer-to-Peer (P2P) lending platforms whereby you spare yourself the administrative fees and processing times of banks. While the fiat P2P has been around for awhile, with the recent greater adoption of cryptocurrencies, crypto P2Ps have sprung up.

What is Peer-to-Peer (P2P) lending?

Peer-to-peer lending is a way for people to obtain funding for projects or payments without the intervention of an official institutional intermediary. It works much like a kickstarter whereby the borrower puts up the amount to be borrowed and lenders chip in to help reach that amount. Except that the amount chipped in will have to be repaid. The repayment of the loan will occur over a 6 or 12 month period, with an interest rate between 2–4%.

How will it work in crypto P2P?

The borrower simply has to put up how much cryptocurrency assets he/she has and state the amount that he/she wishes to borrow. Due to the volatility of the cryptocurrency market, the borrower is only allowed to get a loan of a certain percentage of his total assets. The investors will then chip in the amount in cash. The repayment interest rate will be decided by the platform.

The Good

This is a good way to utilize your cryptocurrencies in the current bear market. This allows you the ability to encash a portion of your Crypto Currencies without liquidating it. Unlike in banks where they do not recognise Crypto as an asset.

As an investor you might lose your invested money completely in a traditional fiat P2P lending platform because nothing is held as collateral. But with crypto P2P, the rest of the borrower’s assets can be seized and then liquidated to compensate for your loan.

The Bad

For a borrower, if you default your loan, your cryptocurrency assets will be seized.

The amount loaned to you will also be dependent on the price of the cryptocurrency asset on that day.

Another risk that you might face would be the P2P website shutting down.

In this volatile cryptocurrency market, many are choosing to use their prior investment in different ways and P2P sharing is one way in which you can choose to utilise it.

Cryptocurrency is trying to match up to every service that can be done in cash and perhaps even improve the process. At Consentium, we are introducing our new P2P platform this March. Not only will you be able to trade on Exonium with the Consentium App, you will also be able to be an investor or borrower with Cryptonium. Most importantly, you will be able to access all three platforms with just one key. You won’t have to keep creating new accounts to work with the three financial tools, or lose any of your assets held on the different platforms.

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