Everything You Need to Know About a P2P Loan

You’ve heard the term “P2P loan” thrown around at cocktail parties, and seen snippets about it online. Maybe you even have friends swearing by P2P investing. But you’re just not sure you’re ready to invest your own money until you find out more about what a P2P loan involves.

P2P loans have been around for years, long enough for savvy investors to have learned methods for earning the highest returns possible with them, and most importantly, for keeping investments secure. This rapidly growing lending platform doesn’t seem to be going away anytime soon either, with just two of the world’s top lending groups having facilitated more than 12 billion dollars in loans by March 2015. It’s no wonder so many global lending clubs have formed, and so many investors are interested in P2P lending.

Learn how the P2P loan works, how it compares with more conventional investments, and why the P2P is currently a hot ticket for investors eager for higher returns.

Just What Is a P2P Loan, Anyway?

A P2P loan is a peer-to-peer loan that involves one person or business borrowing money from another person or group of people. Today, club investors once solely comprised of individual lenders have expanded to see financial institutions and advisors jumping on board.

Why Would This Type of Loan Appeal to Borrowers?

Today’s borrowers overwrought with debt are typically looking for credit card refinancing or debt consolidation. P2P loans offer an appealing option for individuals looking to undercut much heftier interest rates offered by banks and credit card companies. Simply put, today’s borrowers are looking for more affordable credit. P2P lending groups like BTCjam provide it, following a mission to offer affordable and accessible credit to borrowers the world over.

How Does a P2P Loan Benefit the Investor?

The genius of the P2P loan is that both parties involved in the transaction win, with the borrower benefiting from lower interest rates and the investor enjoying higher returns than anything available behind a bank’s brick walls.

In fact, according to Forbes contributor David Prosser, investors in the industry in 2015 saw returns amounting to more than four times what they might have made through a leading bank or building society over the same 12-month period. Looking at these results, it’s no wonder investors have increasingly turned to P2P loans as an attractive option.

How Are Borrowers Approved for the P2P Loan?

When you hear about individuals sniffing around for alternative ways of borrowing, it’s natural to wonder about their reasons and, more importantly, their credit rating. Luckily, the requirements for borrowing from a lending club are typically as rigorous as any you’d find at a conventional bank.

BTCjam combs through a prospective borrower’s digital footprint, credit rating information, income, and personal references in order to obtain an accurate credit score. Depending on the credit risk obtained from this data, a fair interest rate is then assigned to the borrower, with BTCjam’s prediction capabilities for assessing the risk of individual loans outperforming industry standards.

What Is the Risk to Investors if Borrowers Default on Payments?

As in any lending situation, there is always the possibility that borrowers will default. And with a default on payment, returns will naturally be impacted. The very reason P2P lending pays such high yields is to compensate investors for that inherent default risk.

While some may fear this risk and the impact it might have on their overall portfolio, Forbes contributor Marc Prosser urges investors to stay the course, applying the simple solution of diversification.

By spreading out money over several hundred loans, Prosser says each individual loan represents just a tiny fraction of an investor’s overall portfolio. This means that even in the event of some defaults, the loss is very small, and the rate of return still high. As such, Prosser says the P2P still proves to be a good overall investment.

If you’re not that savvy about how to diversify your individual portfolio, BTCjam has a convenient AutoInvest tool that takes care of the process, selecting and investing on the site’s listings automatically.

Can Investors Really Expect Success With P2P Loans?

P2Ps have proven time and again to outperform savings accounts, certificates of deposit, and high-quality bonds. The expected yields are so high that everyone wants in.

Marc Prosser’s interviews with major financial advisors revealed that even their most “safe-playing” high net-worth clients buy into P2Ps for the diversification these loans add to their overall portfolios.

Time has shown these experienced investors that when the chips are down in other asset classes, such as the stocks and bonds markets, their P2P investments are not necessarily affected, continuing to provide a good rate of return. Overall, Prosser says this means lower volatility for an investor’s portfolio. And once again, it means that the P2P loan is a good investment.

By following the advice of industry experts who recommend doing your own research, and spreading your money out over several loans, as with BTCjam’s AutoInvest tool, you can indeed hope to have great success by buying into this ever-growing lending platform.

Find more information on P2P loans and start investing today by visiting https://btcjam.com/invest.

How to Get Out of Debt and Stay There

Being in debt can be a stressful experience. When creditors are calling every day and letters are arriving telling you how much you owe, your instinct might be to bury your head in the sand and try to forget about what seems like an unsolvable problem. However, this approach can only lead to more stress. Reclaim control over your situation by making a plan to get yourself out of debt and stay there. Follow these steps to take control of your debt and gradually shrink it away to nothing.

Know Your Situation

First, you need to face up to your debt. Find out exactly how much you owe to each creditor and the interest rates or charges that apply to each account. Your aim should be to pay off the debts with the highest interest rates or charges first.

Reduce Expenses

Next, make a list of your monthly income and expenses so you can see how much money you have to spend on debt repayments each month. Take a look at your regular expenses to see where you can cut back to free up some cash for paying off your debt. Could you cancel a TV subscription or gym membership that you rarely use? Or cut back on grocery bills by shopping at a less expensive store?

Consider Refinancing

If high interest rates are causing your debt to spiral out of control, refinancing could be a good option for you. Consolidate your debt by taking out a single low-interest loan, which you can use to pay off all your other debts. When shopping for a low-interest loan, it pays to consider nontraditional sources of credit, including peer-to-peer lending markets such as BTCjam. These markets can often provide better interest rates on unsecured personal loans than the typical bank.

Negotiate With Creditors

If refinancing is not an option, then you may be able to get a better deal by negotiating with each of your creditors individually. Phone creditors and explain that you are struggling to pay back the money you owe. You may be able to get them to agree to a new payment plan that reduces the amount you pay each month.

Keep Up Repayments

Once you have consolidated your debts or negotiated new payment terms with your creditors, it is important to stick to the agreement you have made. One of the advantages of consolidating debts is that you only have to make a single repayment each month. Note the repayment date prominently on your calendar and set an alert on your phone or computer to remind you to make the payment on time. If you forget to make payments, you may face additional fines or late-payment charges, so it is vital to keep up with them until your debts are fully paid off.

Stay Debt-Free

Climbing out of debt is tough, so you won’t want to fall back in. Stay out of debt by making a budget of your regular income and expenses and stick to it. Put some money into a savings account each month, so you have funds to draw on in an emergency, avoiding the need to borrow money. If you do need to borrow money in the future, use loans with a low interest rate, such as peer-to-peer unsecured loans, rather than turning to high-interest rate options such as credit cards. If you follow these tips, you can avoid falling back into the spiral of increasing debt.

Empréstimos em Datas Especiais: Compre o Que Você Quer e Precisa

O Natal e o Réveillon acabaram de passar e quem sentiu o drama de ter o bolso apertado na hora de presentear entes queridos, sabe bem o quanto isto é ruim. Mas a boa notícia é que há boas soluções para evitar isto nas próximas datas comemorativas que virão.


Como empréstimos em datas especiais podem ser ótimas soluções para você comprar o que quer e precisa sem preocupações? Confira nosso post a seguir e entenda!

Por que pensamos em empréstimos em datas especiais?

Todo mundo sempre espera ter condições para arcar com aquelas despesas anuais que vão além das contas simplesmente: ter dinheiro para presentear os entes queridos e amigos em aniversários, casamentos, formaturas, Natal, Páscoa e até no Ano Novo. Mas é fato que nem sempre o bolso está preparado para tudo o que gostaríamos de fazer.

Quando o orçamento aperta, pode ser necessário fazer empréstimos em datas especiais ou depois, para cobrir os gastos que excederam. Inclusive, há algumas ocasiões em que as próprias instituições financeiras criam produtos com este intuito, oferecendo crédito extra para férias e épocas de festividades. No entanto, nem sempre estas opções oferecem as melhores condições (em longo prazo, os juros podem ser altos, por exemplo).

Quando vale a pena fazê-los?

Contudo, não significa que não vale a pena fazer empréstimos em datas especiais. Significa apenas que você deve se atentar às melhores escolhas antes de fechar um acordo.

“Será que o que tenho é o suficiente?”

Fazer empréstimos em datas especiais pode valer a pena não só para épocas em que estamos precisando totalmente de dinheiro para comprar um presente ou fazer uma comemoração de natal, ano novo e demais ocasiões para reunir amigos e chamar a família toda pra festa. Pode ser útil também para os casos em que até temos uma certa quantia, mas gostaríamos de fazer mais e esse dinheiro não é o suficiente para todos os planos.

Por isso, neste post, falaremos um pouco sobre os empréstimos em datas especiais para se conseguir um objetivo específico como estes. Que podem envolver não só finalidades de presentear, como também viajar, visitar amigos em feriados prolongados, passar o natal, o ano novo na companhia de familiares que nem sempre moram perto, comprando o que você quer e precisa sem maior limitação.

Como definir o melhor empréstimo?

A seguir, acompanhe algumas dicas valiosas para estes momentos em que, muitas vezes, as pessoas necessitam comprar um presente ou fazer compras grandes para si próprias. Em que o empréstimo pode ser uma ótima solução, desde que feito da melhor forma.

O melhor empréstimo é aquele que, desde que intermediado por uma empresa de confiança, ofereça as condições mais facilitadas e vantajosas. Tanto para aquisição quanto para pagamento da dívida.

Oferecendo, assim, oportunidades mais próximas de suas condições. De preferência, trabalhando com um sistema de juros que não seja proibitivo, como a maioria, infelizmente, costuma ser.

Em datas especiais vs. Para datas especiais

Embora tudo pareça o mesmo, pode haver problemas se não soubermos diferenciar algumas coisas. Empréstimos em datas especiais são ótimas soluções quando precisamos de crédito pessoal ou crédito extra para realizar algum projeto, sem necessariamente declarar ou justificar sempre para que vamos usá-lo.

Ainda que esta informação, em alguns casos, seja útil para definir condições de negociação ou valor do empréstimo, às vezes é dispensável, dependendo da empresa que concede ou viabiliza o empréstimo. Dentre as opções de empréstimo disponíveis, pode haver, muitas vezes, alguma específica, como “empréstimo para férias”.

Mas aqui nos referimos àquelas oportunidades esporádicas que podem fazer uma propaganda bastante atrativa, mas “esconder” algumas ciladas. É necessário ver se não estão trabalhando sob condições “oportunistas”.

“Juros abusivos. Sim eles existem!
E os bancos adoram se aproveitar de pessoas que precisam.”

Justamente por saber que se trata de um momento especial e único, em que você não vai querer nem deixar passar em branco de nenhuma forma, que algumas empresas podem trabalhar com juros abusivos ou mais altos do que você imaginava. Por isso, empréstimos em datas especiais devem ser muito bem analisados.

Analise criteriosamente os tipos de empréstimos disponíveis

O ideal é tentar recorrer a empréstimos em datas especiais neutros ou créditos que, ainda que especificados para viagens ou férias, por exemplo, obedeçam às mesmas condições “invariáveis”. Existem diversas opções tradicionais disponíveis.

Crédito pessoal no banco em que se tem conta corrente, empréstimo consignado (aquele que é descontado diretamente de quem é assalariado, no holerite) ou em financeiras, por exemplo. No entanto, a maior parte delas trabalha com juros altos e, em caso de atraso nas parcelas e demais condições específicas, podem acarretar em custos ainda maiores para quem toma o empréstimo. Por isso, é necessário avaliar cuidadosamente os tipos e as condições contratuais dos empréstimos em datas especiais antes de adquiri-los, para evitar “surpresas” desagradáveis depois de pagar e perceber que ainda deve mais do que pensava.

Escolha opções inovadoras com taxas de juros menores

Sabemos que a parte pior de fazer empréstimos em datas especiais é sempre esta: o montante de juros ao final do pagamento. Às vezes diluídos ao longo das parcelas, tornam a proposta atrativa, mas uma simples conta nos permite ver o quanto vamos desembolsar de juros em maior prazo, o que pode desencorajar e impedir a realização do empréstimo.

Opções inovadoras, como empréstimos em datas especiais realizados pela BTCjam em Bitcoins (leia mais aqui) podem oferecer taxas de juros mais baixas e vantagens extras. Menos burocracia para conseguir seu empréstimo, rapidez (o que pode vir a calhar nestas datas específicas em que temos de arranjar dinheiro de última hora para presentear em dia ou não perder ocasiões especiais) e facilidade para pagar. Como se simplesmente fosse fazer isto dando o dinheiro diretamente para quem emprestou, sem a intervenção de bancos ou pagamentos de taxas administrativas a mais por este serviço.

Já conhece ou experimentou uma opção diferente assim? Já pensou em fazer empréstimos em datas especiais, para poder aproveitar melhor estes momentos? Sabe qual é a melhor forma de fazê-los, com ótima relação custo x benefício? Comente sua opinião e sua experiência abaixo e até o próximo post!

Need a new PC for Video Editing?  Get a Bitcoin Loan on BTCjam!

shutterstock_184631579John heard of BTCjam way back when he got started with Bitcoin, but he’d never tried it.  At one point he and his business partner even considered using the platform to purchase mining equipment, but never got around to getting the loan.  But in December, John got into Cloud Mining in a big way, this led him back… to BTCjam.

John needed a loan to purchase a new PC for video editing.  John makes educational webinars, but needed to reduce his videos from 3 hour seminars to short 3-5 minute clips and to do that he was gonna need a new PC.  To get a loan for the new PC, John turned to BTCjam.

John was experienced in Bitcoin, but he’d never taken out a loan in Bitcoin before.  His first attempt was unsuccessful.  He created a 365 day loan with monthly payments and an interest rate of 2%. As John freely admits, “That was a mistake on my part, because the payment terms weren’t very enticing to investors.”  Not one to be easily discouraged, John tried again, this time creating a six month loan with weekly payments and an interest rate of 1%.  He knew the rate might shutterstock_185325812be low, but he wanted to achieve a balance between rewarding investors and keeping his own rates low.  It took about a week or so, but John’s loan funded successfully.

John received his Bitcoin almost instantly after the loan funded and purchased a new PC and video camera for his business.  He hasn’t edited the videos yet, but he says that his new PC is “pretty amazing” and he’s already had inquiries from customers about additional video work.  When asked if he would use BTCjam again, John said that “BTCjam is my favorite P2P site for borrowing money and I would definitely use shutterstock_14557777BTCjam again.”

Thanks John and thank you to the investors, we couldn’t do this without you.

Until Next Time….

Keep on Jamming!

If you need a bitcoin loan, borrow on BTCjam!  If you want to invest, invest on BTCjam!

BTCjam partners with Volabit to bring bitcoin loans to Mexico


Hola Jammers! We’ve got great news this morning… BTCjam is partnering with the leading Mexican Bitcoin exchange Volabit to bring our users from Mexico a superior Bitcoin experience.  Volabit users can now transfer funds and activate automatic payments all from BTCjam.com!  Lending bitcoin and gaining returns has never been easier, and Volabit users can now transfer their bitcoins to BTCjam without ever leaving the site. Together Volabit and BTCjam make borrowing and investing bitcoin in Mexico simple!

  • You can withdraw bitcoin seamlessly from Volabit without leaving BTCjam
  • Your automatic payments can withdraw from your Volabit wallet to make a payment

BTCjam and Volabit have partnered to make borrowing bitcoin in Mexico easier than ever.

BTCjam CEO Celso Pitta said, “I’m thrilled about our Volabit partnership.  Volabit integration will make BTCjam much easier to use for our customers in Mexico.”  Hannah Kim, Co-Founder of Volabit agrees, saying “BTCjam is one of the most exciting companies in Bitcoin and we’re delighted for how our new partnership makes bitcoin borrowing and lending easier for our customers.”

“Volabit integration will make BTCjam much easier to use for our customers in Mexico.” – BTCjam CEO, Celso Pitta

Get detailed instructions on how to connect your Volabit Wallet to BTCjam on the BTCjam Blog!  Once you have connected your Volabit wallet, you can easily transfer bitcoin to BTCjam and make automatic payments on your loan.  It’s just that easy.

Attention Bitcoin Wallet providers, we are looking to integrate additional wallets! Please contact us at partner@btcjam.com if you would like to partner with BTCjam.

About BTCjam BTCjam is the global leader in peer-to-peer lending using Bitcoin, and the first to offer a proprietary credit score to its users.  BTCjam’s disruptive credit model is changing the way borrowers and investors connect, providing a new path to financial freedom for users from more than 200 countries around the world. BTCjam promotes lending without borders, where people can borrow and lend bitcoins, without having to worry about banks and other intermediaries. Transactions are instantaneous, hassle free, and supported by an engaged, trusting global community.

About Volabit Volabit is the fastest and safest way to buy and sell Bitcoin in Mexico.  Founded in 2014, Volabit has more than 4,000 users and they have converted more than 24,000,000 pesos into Bitcoin. Volabit received venture funding from the Bitcoin Opportunity Corp and has been described as the “Coinbase of Mexico”. Check out Volabit at https://www.volabit.com

How to Link your Volabit Wallet to BTCjam

At BTCjam, we are very excited about our new partnership with Mexican bitcoin exchange, Volabit.  Here are some simple instructions on how to link your BTCjam account to your Volabit wallet:

Log in to the BTCjam website at https://btcjam.com/

1. Navigate to the arrow by your user name, in the upper right hand corner, click Settings

2. Click Credit Rating
222 Settings   BTCJam   BTCJam
3. Click Wallets & Exchanges
4. Click Volabit


5. Click Authorize to allow BTCjam to use your account.
That’s it!  Your Volabit account is now linked with your BTCjam account.


To add funds from your connected Volabit wallet
1. Click on the arrow at the top center of the page near your Bitcoin balance.


2. then click Add Funds
3. From the Add Funds popup window, simply click the
“Add funds from Volabit” button at the bottom of the window:


4. Simply enter how much you would like to transfer from Volabit, enter your 2FA code (if you have 2FA enabled) and click “Transfer from Volabit” to transfer your funds.
And you’re all set! Thank you for reading BTCjam’s tutorial on how to link your Volabit Wallet to BTCjam.  Remember you can now use your linked wallet for transferring funds or even making automatic payments on your BTCjam loan.  Thanks to Volabit for partnering with BTCjam.
If you need a bitcoin loan, borrow on BTCjam!  If you want to invest, invest on BTCjam!

BTCjam improves Loan Listing Process

Bienvenido Jammers!

We’ve got great news today from the BTCjam Anti-Fraud Department.  We have enhanced our loan review process to focus on providing higher quality loans and keeping our loan marketplace streamlined.  To accomplish this, all loans are now being reviewed by an Anti-Fraud Specialist before they are posted on BTCjam.com.  Don’t worry, this loan review will be integrated in a way so that the loan process remains efficient.

Our goal at BTCjam is to provide investors with the best loans and borrowers with the best possible chance to have their loan funded at a competitive rate and these changes will help us continue doing that.

Until Next Time… Keep on Jamming!

If you need a bitcoin loan, borrow on BTCJam!  If you want high returns, invest on BTCJam!

BTCJam Introduces Risk Based Pricing (Interest Rates Set Automatically by Credit Score)


BTCJam is changing the way interest rates are set in order to improve the experience for both borrowers and investors. Starting today, BTCJam will set the borrower’s interest rate automatically based upon their credit score. The higher the borrower’s credit score, the lower their interest rate.

Automatically calculating the interest rate based upon credit scoring is known as risk-based pricing and is a well known and time proven methodology within the financial services industry. Interest rates are set by a combination of the borrower’s credit rating (using BTCJam’s proprietary credit rating system) and the duration of the loan. Borrowers who are less likely to default will receive lower interest rates.  Since BTCJam has all of the information about the borrowers, we are in a better position to determine the likelihood of the borrower paying back the loan and will adjust the interest rate accordingly. Risk-based pricing makes investing easier because when a lender invests in an A-rated loan, they know that the borrower will be paying an A-level interest rate.


Interest rates are set by a combination of the borrower’s credit rating and the duration of the loan. Borrowers who are less likely to default will receive lower interest rates.

When borrowers are allowed to set their own interest rates, it is far too tempting for them to set a low interest rate and see if investors will accept lower returns.  While a borrower who receives a very low interest rate usually pays back their loan, it does not provide the investor any cushion against possible defaults.  With risk-based pricing, the interest rates for all loans will be standardized, ensuring that investors are able to offset possible losses from defaults.

We are confident that this change will improve BTCJam and allow us to continue to maintain the highest repayment rates in peer-to-peer lending (as high as 98% for A-rated borrowers), as well as increase overall returns to investors.

Check out the changes and start investing with BTCJam.  Get a loan with a reasonable rate with BTCJam.

Risk Based Pricing (automatic interest rates) Q&A

Q: What will happen to loans that were created before the change to Risk Based Pricing?

A: Loans created prior to the adoption of Risk Based Pricing (automatic interest rates) will continue until they have either been funded or have expired. BTCJam will identify the old loans and will separate them so they will be only be accessible using filters.

Q: The system sets a rate that is too high for me and I won’t be able to repay it. What should I do?

A: If the interest rate on your loan is too high you should verify more documents and add more information to your profile. By verifying more information, you will increase your credit score and receive a lower interest rate.

Q: Do I still have the option of doing a loan tied to a local currency?

A: Yes you will still be able to choose between a Bitcoin loan and a loan tied to local currencies. Learn more about currency types.

Q: Why did BTCJam choose to change the way that interest rates are determined?

A: BTCJam changed to risk-based pricing for a number of reasons. One reason being investor and borrower security. By setting the interest rates automatically it simplifies the risk assessment for both borrowers and lenders. Learn more about risk-based pricing.

Q: Will there be a set standard for interest rates based upon credit rating? For example, will all C rated borrowers have loans set at a standard 5.5% interest regardless of profile completeness?

A: Yes, every credit score grade will now come with a set interest rate that is the same for all borrowers that have the same credit score. However, rates will change also according to the loan term. That means, a C loan for 30 days will have lower rates than a 1 year loan for a C rated  borrower.

Q: Can I pay more than the recommended interest rate?

A: No. The interest rates are now automatically linked to your credit rating.  This change protects our investors from loans that are “too good to be true” and that the borrower never intends to repay.  We took into consideration both borrowers and investors when making this change.

The Stats Page

BTCJam is proud to release the first edition of the stats page!

Feel free to take a gander and play around. The keys at the bottom of each chart are filters!

Here is an in depth explanation:
We begin with the overview map of all loans that have been serviced on BTCJam by location.


Top 5 Countries or Regions:

  • United States: 3,900
  • United Kingdom: 632
  • Brazil: 383
  • Canada: 350
  • Australia: 281

Honorable Mentions:

  • Kenya: 83
  • Indonesia: 211
  • India: 161
  • Argentina: 102
  • Turkey: 72

Below the map is a graph displaying the loan volume per month beginning January 2013 to August 2014.

The blue line shows the growth by loan amount in USD, please note that each loan is indexed to the current market rate of bitcoin at its activation.

The green bars reflect the total amount of loans per month.


Total Investor Returns reflects the return on investment (ROI) from January 2014. If an investor had invested in every loan since then, this would the ROI by credit score.

The ROIs are broken down by the borrower’s credit score and include the defaults.

Here is an explanation for BitstampUSD loan types vs. Bitcoin loans.


Loans by Credit Score shows the percentile of all active loans by credit score of each month starting January 2014. When you hover over, you can see the loan amount in USD (indexed to market rate of Bitcoin at loan’s activation).


The Loan Purposes chart is a pie graph displaying all the different loan types.


Thank you to all our borrowers and investors for making BTCJam the leading P2P Bitcoin lending platform!

Stay tuned for more updates and additions to the stats page 🙂

5 Ways Peer-to-Peer Lending Creates ROI for Investors

Peer-to-peer lending is a relatively new concept that helps borrowers find great deals on loans. In order to finance these types of loans, peer-to-peer lending relies on individual investors who fund each loan in small amounts.


Source: Shutterstock

This method of lending is fast, efficient, and often lowers the cost of a loan for borrowers; at the same time, it provides a stable rate of return for investors.

Why does peer-to-peer lending offer a higher ROI compared to other investment methods? Let’s take a look at 5 compelling reasons why this form of lending is beneficial not just for borrowers but also for the investors who back these loans.

A Proven Model

Ever since Lending Club and Prosper were founded in the United States in 2006, the industry for peer-to-peer lending has been booming.

These stalwarts have been originating more loans than ever before. Here is the US market’s performance over time:


Source: Crowdfundinsider

Peer-to-peer lending is now producing over $500 million in loans per month through Lending Club. That’s impressive for an industry founded only eight years ago. It is clear that demand is on the rise and there are no sign of slowing down.

An Avenue for Specific Borrowing

Whether it’s paying down debt or financing bitcoin miners, peer-to-peer lending allows borrowers to obtain loans for things traditional lenders might be wary of.

According to Prosper, debt consolidation loans are one of the most popular peer-to-peer lending loans.


Source: CreditCards.com

For a bitcoin miner, trying to get a loan from a bank or other traditional lender would be very difficult unless the borrower could provide a specific business case for doing so.

The bottom line is that peer-to-peer lending allows individual investors to be creative in deciding what types of loans to fund for borrowers.

Spreading out the Risk

Those who invest in peer-to-peer loans are able to diversify, therefore, spreading out risk by funding many different loans.

It’s important to understand that borrowers sometimes don’t pay back loans, known as a default. It’s something that cannot be avoided in the peer-to-peer lending industry and even in regular banks. If investors diversify their investments through many different loans, overall investor risk can be reduced.


Source: LendingMemo

Data pulled from Lending Club shows that when investors diversify their funds through many different loans, they are able to obtain returns that are much better than a high yield savings account. Frequently, these peer-to-peer funds outperform mutual funds and other money management funds.

Helping Borrowers with Not So Perfect Credit

Many borrowers on peer-to-peer lending sites are looking for access to low interest rates while often not having a perfect credit score.

This is one of the reasons peer-to-peer lending has become so popular: it can be easier to get a loan on a peer-to-peer marketplace than going to a bank. For some borrowers, alternatives such as payday loans may levy interest rates at 15%+ p.m, plus fees.


Prosper credit scores in 2013. Source: Orchard

The average credit scores in the 660-670 range on Prosper’s lending marketplace constitute what credit scoring systems would consider “good” borrowers. This is in between the lower-end “fair” and the upper “excellent” tier of borrowers through the FICO scoring system.

Cheaper for Borrowers, Good for Investors

Large corporate banks are complex organizations. During the process of a loan approval, the loan goes through many different channels which leads to very high overhead in operating costs.  Banks have to comply with more regulations than peer-to-peer marketplaces, therefore, interest rates and overall APR can be extremely costly.

Banks pass the cost of running their banks onto borrowers in the form of pricey fees, high standards for loan approval, and long lead times.


Source: Foundation Capital

Peer-to-peer lending marketplaces are a faster and less expensive for everyone involved. The whole process is simpler in comparison to what the banking industry must do to lend people money. Due to the lending process being entirely online, peer-to-peer lending market places create an easy and user friendly way to apply for loans.


Where BTCJam Stands

BTCJam is a unique peer-to-peer lender in several different ways:

  • By utilizing our unique in-house credit scoring system, borrowers can instantly create a credit profile when they supply us with certain information. As they complete more of their profile, their credit score becomes more accurate and generally improves. A full profile also has the benefit of creating more trust for investors.
  • We are able to leverage the low costs of capital in the developed world with the high costs of borrowing in many countries. Because of this global advantage, we can return to investors a better rate of return and provide more affordable loans for people in developing countries.
  • Because we use the digital currency bitcoin as a transaction protocol, we can connect borrowers and investors globally – a borrower can convert a loan and investors can convert their profit into local currency whenever necessary.

These factors are key reasons why we are able to provide investors great returns.

Here’s how to learn more about investing in bitcoin loans on BTCJam’s marketplace.