The German digital bank Bitbond is a financial institution that handles approximately 100 clients, mainly small businesses and independent workers, which usually do not exceed $ 50,000. A number of loans that reach one million dollars each month. Bitbond has grown in popularity. The company has been mentioned in Forbes and Lend Academy. Bitbond employs 24 people from 12 countries. The Lean team deals with the bank’s 100 clients, who contribute USD $ 1 million each month. Founded in 2013 by Radoslav Albrecht in Germany, he has found an innovative use case for Bitcoin’s borderless nature: international loan payments.
In this sense, Reuters has indicated “that the German digital bank Bitbond, will use the main cryptocurrency of the ecosystem, Bitcoin, only to transfer the credit funds quickly, because Bitcoin is not the currency in which the loans will be made; this with the objective of not compromising the amount of the credits before the volatility of BTC “. This means that they are using Bitcoin as a method of transmitting credit in fiat currency; a business scheme that was approved by the banking authority of Germany, which attracted the German angel investor Christian Vollmann, who participates in projects such as Trivago, nebenan.de and Code University.
In such a way, that the process of processing and receiving credits in a traditional banking institution is a process that can take weeks; a process that Radoslav Albrecht, CEO and Founder of Bitbond, decided to leave behind when creating, a banking platform that would allow small and medium enterprises to receive loans quickly and at low cost using cryptocurrencies. And now, bet to carry it out with international transactions.
In this way, the bank is a peer-to-peer lending platform that aims to serve people with less financial resources through loans for small businesses. The platform works in a similar way to most Bitcoin loan services, where capital is lent to a business for commercial purposes without either party knowing the identity of the other.
Seen in this way, the Bitbond proposal not only includes cryptocurrencies, but also implements artificial intelligence to qualify borrowers. The “patented machine learning algorithm” uses “alternative data” to generate the applicant’s credit profile, including transactions and / or sales on eBay, Amazon, MercadoLibre, Paypal and other payment services.
The system of international loans of the platform consists in that BitBond converts all the fiduciary currencies of the lender to Bitcoin, and then transfers in its equivalent to the fiat currency used by the person who receives the loan. This helps the platform reduce currency exchange costs, which, under normal circumstances, would be paid by the end user. The Bitcoin would not be stored locally by Bitbond, but would be changed from immediately to fiat.
This project not only offers microcredits to entrepreneurs without a banking record worldwide, but allows anyone who wishes to become an investor. A role they can fulfill by choosing the project to support manually or with AutoInvest, options that aim at the creation of a portfolio of decentralized investments based on cryptocurrencies.
It should be noted that companies are reluctant to accept Bitcoin as payment due to their extremely fluctuating exchange rates. Bitbond avoids this problem because customers only have the tokens of their loans for a few seconds or minutes until they are ready to be changed to the national currency they prefer.
However, the basic premises of Bitcoin are that it offers cheap transfers and low rates, which can boost the success of this business.
In this sense, BitBond avoids the high costs and times of international transactions by converting the lender’s fiat currency into Bitcoin and transferring them to the borrower’s digital portfolio, no matter where it is located on the planet. In the case of Venezuela, the platform offers a credit service resistant to hyperinflation, because the capital received is not affected by the economic crisis in the country.
In the case of Venezuela, the BitBond page highlights that one of the problems experienced by the country, and that makes it a special loan case, is the high level of inflation it faces. “It is true that banks increasingly give more loans in Venezuela, but it is also true that, due to inflation, with the same money each time you can buy less things,” explains the platform.
The option offered by BitBond, as explained on the page, avoids the inflationary problem because the loan is made in cryptocurrencies, and not in fiat currency, which translates into a credit resistant to the economic crisis, which maintains its value over time:
In Bitbond we grant (to Venezuelans) up to 10,000 dollars in the equivalent in bitcoins. If there has been a season of inflation, this means that with those same $ 10,000 you can get many more bolivars than the previous year, but in the end, the purchasing power you will have will be the same or very similar to what you would have had a year ago ” . The German platform ensures that, of the 1,300 loans made in cryptocurrencies, “many” have been granted to Venezuelans.
To apply for a loan from the platform, the requirements that BitBond requests are the registration on the page and filling out the loan form under the “borrower” category. “Once you have registered, we will contact you to let you know if your application has been approved and, if so, provide your credit rating and debt capacity,” explains the bank’s platform.
From this perspective, the services of loans with cryptocurrencies are developing their space within the ecosystem of digital currencies. While many see Bitcoin as just a highly speculative asset, Bitbond has found a business model that competes with traditional systems. According to the entrepreneur, using Bitcoin was a smart move.
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