BTCjam mentioned in CheapAir’s People of Bitcoin

People of Bitcoin  The Mad Maverick   CheapAir

Q: Can you share a bit about who inspires you in the Bitcoin space?

A: I’ve  recently been inspired by Celso Pitta, the CEO of BTCjam. Celso had credit problems in college and the credit system in his home country of Brazil is profoundly unfair, charging borrowers 200% interest for a standard loan. Celso was motivated by these troubles to found BTCjam, which is a new peer-to-peer bitcoin lending website that allows anyone on Earth to give or take a loan in Bitcoin. It’s a really exciting idea and I think using bitcoin to fund loans could really expand access to credit and improve the world. I believe in this so much so that I’ve recently joined BTCjam as their Community Manager. I’m very excited about BTCjam.

CheapAir, People of Bitcoin: The “Mad Maverick”

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
acctsettings 

2. Click Credit Rating
222 Settings   BTCJam   BTCJam
3. Click Wallets & Exchanges
Online_Wallets_-_BTCJam_-_BTCJam
4. Click Volabit

Online_Wallets_-_BTCJam_-_BTCJam 

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

 

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

 

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:

Dashboard_-_BTCJam_-_BTCJam

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.
Dashboard_-_BTCJam_-_BTCJam
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 named as one of the Sand Hill 25 Bitcoin Innovative Disrupters

The Sand Hill 25 Bitcoin Innovative Disrupters   Sandhill

SandHill — Bitcoin is about the birth of a new monetary ecosystem. Like any ecosystem, it will have its share of winners and losers. The Bitcoin “Innovative Disrupters” are those that have the best odds at being winners.

Today, venture capitalists have created the foundation for innovative disruption with an investment of $667 million in Bitcoin-related companies to date. Meanwhile, entrepreneurs from all over the world will create the new Bitcoin monetary ecosystem.

As a follow on to our article, “Bitcoin: Mad, Bad but not a Fad,” here are 25 companies we’ve dubbed the Sand Hill Bitcoin Innovative Disrupters. They represent the first wave of companies leveraging blockchain-related technologies that we believe will play a pivotal role in the future:

BTCJam – Peer-to-peer lending network using Bitcoin targeted at cross-border loans to individuals in third-world countries. Uses a reputation system to build credit profiles for borrowers.

Read More: The Sand Hill 25 Bitcoin Innovative Disrupters

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.

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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:

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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.

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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.

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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.

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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.

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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.

 

Untangling Peer-To-Peer Lending, Crowdfunding, and Microlending

In my previous post, I provided a short overview of the evolution of the lending space and the role of banks herein. Over the past years, especially as a result of the financial crisis and arising regulations, banks have pulled back from issuing loans. This has paved the way for alternative financing solutions like Peer-to-Peer lending, crowd-funding and micro-lending.

The most significant similarity between these three services is that there is no involvement of traditional financial institutions. In this post I will discuss their most important features, explain which markets they serve, and show what their key differences are.

Peer-to-Peer Lending

The core concept of Peer-to-Peer (P2P) Lending is a that a group of investors lend to one person or business without the interference of traditional financial institutions. Usually the investors are individuals who are not related to and do not know the borrower. The development of the internet has enabled this new form of lending: an online marketplace that completely facilitates the loan transaction.

An interesting trend in the P2P Lending space is the increased participation of institutional investors and banks. P2P Lending companies can operate more efficiently thanks to the use of new technologies and less overhead cost, thereby making these marketplaces very interesting for both borrowers and investors. According to Charles Moldow, a partner at Foundation Capital, P2P Lending Platforms have a 400 basis point advantage compared to traditional banks.

A notable player in the field in Europe is Zopa (located and operating in the UK). In the United States, LendingClub and Prosper are the first P2P lending platforms who service the US market. Funding Circle and OnDeck also facilitate small business loans through their marketplaces.

A new and truly unique P2P Lending platform is our company, BTCJam! By using bitcoin as a transaction protocol and a global credit-scoring model, BTCJam is the only P2P lending company that operates worldwide.

 

Crowdfunding

Crowd-funding is based on the same principle as P2P Lending: funding takes place by a group of investors. There are significant differences between the two:

First, crowd-funding is typically used for specific projects or ideas and not for personal loans. The second distinct difference is that investors who contribute to a project do not get interest–instead they’ll receive rewards, special perks, or gifts. For example, they may get the first release of an album or the product they supported.

A new development within the crowd-funding industry is the so-called “Equity-Based” crowd-funding: as a reward, investors receive unlisted shares of the company. Equity crowd-funding has been a popular way of raising capital for companies in Europe and Australia for several years. In the United States, equity crowd-funding is only accessible for accredited investors, but this could change soon based on the JOBS Act. The JOBS Act would let non-accredited investors gain access to equity crowd-funding which would dramatically expand the possibility for startups and entrepreneurs to raise capital. Seedrs is an Equity crowd-funding marketplace that operates only in Europe and has been very successful.

A well-known crowd-funding platform is Kickstarter; people have pledged over $1 billion, funding 65,000 projects. Kickstarter is not equity crowd-funded, which prohibits individuals from making long term equity on the products they invest in.

 

Microlending

The main goals of micro-lending are to financing poverty stricken areas of the world and reach underbanked communities. The loan amount is usually very small and the purpose of the loan is usually for personal use. Many of these loans help to finance medical bills, small businesses, education, and agricultural development.

In P2P lending and crowd-funding, there are multiple investors contributing to the loan, whereas in micro-lending, you often see that also the borrowers team up. Loans are provided to a group of people who will vouch for each other, thereby, minimizing the risk of default.

The first micro-lending initiatives did not have profitability as a driver, but over the years some micro-lending institutions have argued that doing good shouldn’t stand in the way of making profit. Opinions remain divided on the subject.

Grameen Bank is one of the first and leading Microcrediting organizations. Besides micro-lending it also offers other financial services. Kiva created an online marketplace to connect investors with borrowers in developing countries. Kiva works with local field partners who assess, distribute, and monitor the loans.

In the chart below I summarized the characteristics of the three financing solutions. The alternatives to traditional banking loans all serve different markets and it’s strongly recommended to research which solution suits your needs.

image – Isabelle de Clercq