Topic: How to create great BTC lending service? (Read 576 times)

There is no such program to prevent lender from running away if they would want to, well if a lender in this forum for example had a high rank and has a positive feedback from other users that is obviously a Lendee you want to have a transaction with, but lending from you would want him to run away and never give back the money for some reason well you are unlucky even if the lendee is a trustworthy person you can really never know if he's a scammer or not, it is pretty hard to make a lending services that are perfect there will always have a glitch in the system.

As previous poster have already mentioned, offering loans is already tricky even when not using cryptocurrency. Lending companies at least have the legal system to help them out, I don't believe we have anything like that for people lending bitcoins. That bitcoin is global make it even harder to for the lender to get back their money if the borrower defaults. And what can the borrower offer up as collateral that would be of higher value than the loan he got?

If ever I'll plan to use my bitcoins for lending I'd probably just convert it to fiat and lend it out to people I actually know. If I made them sign agreement I might be able to sue them. But then again I'd probably be better off just holding on to my btc, the only way I'd lose it is if I got hacked. Even credit card companies lose money on defaults and they have far more options when it comes to going after debtors than I would. No wonder loan-sharks charge high interests.

The best thing is to avoid any form of loan service whatsoever because there is absolutely no way to track debtors and since they all know thats a weakness on the part of bitcoin, then the exploitation is inevitable. I will say maybe bitcoin is not yet ripe to engage in that kind of service but I believe in due time when countries have legalized bitcoin where I can receive my salary in bitcoin, then I use use that as a collateral where my salary will be paid into my creditors wallet. Until then, every moves will be frustrated.

How come margin lending works great then? Several services which provide it have been quite successful. True, there re hacks here and there but I m not talking about that. I m talking about making a service which would prevent scammers from lending your money and running away.

Well Lending your own money online is a big gamble and here in this thread we had a lending section that needs an escrow to confirms the transaction made by both parties but in my opinion I would prefer knowing a slight information about the one that wants to lend from me and vice versa it is OK for me to give certain information to satisfy trust between the Lender and the Lendee I think this could make a lending service more successful and prevent to overcome scammers!

im more of a traditionalist.
if i cant afford something then i dont buy it. if i want something then i use my own savings to buy it.
ive never been into becoming a slave to a bank while making them profit

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i know how banks do it. because you need to nearly sign your life away first. they even create the money(money out of nowhere by signing a credit agreement) so that its still a no risk game, even if you do default. they never lose even if you default at day 1.
they even sell the agreement onto debt collectors so its no cost to them chasing you, and instead let a debt collector chase you. while the bank takes the agreement sale (pennies on the dollar) as their profit. they(debt collector) only chase you with a wet fish to take your house, as more of a deterrent to others aswell as to make sure they(debt collector) breaks even/gets profit.

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but in a decentralised world where your thousands of miles away, and costs to slap someone with a wet fish are higher. the scam risk is higher.
and if someone did have collateral.. the problem then becomes how to secure it.

which is where i was more thinking about stupid examples around the forum i have seen, where people use their forum username as collateral. or a picture of a car they say they own (i was facepalming reading those)

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yes altcoins are an option but you would need to ask for alot more altcoin value than the loan request is for. because (thinking about repayment) if the loanee took the loan but the altcoin he then wants to buy did not rise to sell for profit to repay you. you not only dont get repaid. but you also lose because the price did not rise.. meaning it fell so the collateral is worth less that the time of the agreement.

you can never have a great service.
because a lending service needs a way to be able to enforce the loan takers to pay back. in other words when lending money to others you either have to be a loan shark like Tony Soprano and be able to go there and break their knee caps if they didn't pay you back or be a bank and can go take their house and everything else they own through legal channels if they didn't pay you back.

using bitcoin you can not do neither of these.

Bitcoin has great potential as collateral for a loan. Putting a transaction with suitable signature restrictions on the blockchain could be a great base for a fiat loan.

Why would people want to borrow Bitcoin in the hope that the price will increase. If it goes up, then they have to repay the loan at the higher price, so they haven't gained anything.

People with alts collateral might need a loan cause they think that alt might go up in price. If they dont have collateral, they re not eligible for a loan. This is how financial sector works and operates for hundreds of years. Dont you think banks would find another way if there is any other way!

That's simply good to go with the collateral based loans is better than moving to margin lending gradually. These days everything is got on a go or on a simple click which is not possible with the lending services that's why most lending services gets failed, even though its been started with good capital investment. Few truthful users does it in the right way at least by using certain accounts or similar altcoins as collateral. If you need to be successful through lending make a list of collateral that's been accepted for particular sum of amount. If those said things were not with them just end up.

i don't know why people do not like to take loans by giving a acceptable collateral all they where looking nowadays is get loans instantly just by signing up and a simple selfy. Hm its taken the security to the middle of nowhere. i agree that those sites have done what they can do to secure their sites but they aren't looking through the users or on the pattern of how they are getting scammed, they should allow those collateral requirements if possible.

I wouldn't trust anyone who is ready to provide his real ID and residence against a loan which most of the time isn't a huge a amount , Its probably because he wants to proof that he is trustworthy while he is not and all information's provided are fake.
I personally started a loaning service a few days back and I'm doing it for the community and without interest. I know the risks involved and you should too. I can't tell you that Its impossible to get scammed 100% but Its really possible to avoid that by rejecting low ranks loans etc... , checking other loans threads wether this user already took a loan and paid back or not , his posts history (If he came only for a loan or he is actually active) , If he is wearing a signature campaign etc... All those factors matters and you should give the loan based on them.

1. if people had collateral. they wouldnt need a loan
2. if they had collateral. how would this collateral be held.
3. if they had collateral such as a car or house. how can they send it to you from india to EU
4. if they had collateral how can you be 100% sure the ID they used is legit for you to have an address to visit them to claim the collateral in person.

in short. if the value of a loan is less than a couple hundred euro. its not worth taking someone to court as the travel costs, let alone legal/admin costs would mount up. so the victim just takes it on the chin and moves on with their life.

if the value is higher, then the collateral item should be secured into a mutual location(escrow). where the collateral value exceeds the loan value to cover costs of loss and tempt a loanee to not default. as i said how such an item can be secured/escrowed is a risk. and if the loanee had such large value collateral to hand over. they might aswell just sell the item instead of asking for a loan.

lastly my main rule for internet trading is something everyone should think about
if you dont have enough real, guaranteed to be valid and correct info on another person you are handing funds over to. and if you dont have the capability to physically slap them with a wet fish/court order should they do you wrong.. dont give them your funds!

Hey guys,

I ve been going through all these BTC lending services which have failed mainly due to vast array of scammers taking advantage of the fact none of these services can provide collateral based loans with any kind of success. I do not understand why is this a problem? Setting aside potential regulatory issue which might arise, why is it a problem setting up a service where you cannot receive a loan unless you provide some form of liquid and acceptable collateral, highly liquid alt coins or similar.

All these current services just act as a information provider which matches lenders and providers and that s all. In case of default, it all comes down to the lending service providing info about potential scammer and we all know this means nothing. If I am in Europe and lending service provides me FB data and info about lender from India who defaulted on that loan, what am I going to with it?

So, what s the problem with establishing a decent lending service, start with collateral based loans, develop to margin lending and even futures.

Please share your opinion.