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German Online Bank Bitbond Uses Bitcoin To Handle International Loans


German online bank Bitbond has launched a global marketplace lending platform for small business loans, that leverages blockchain technology to connect creditworthy borrowers with individual and institutional investors.

The Bitbond website says, "Borrow and invest without borders". The platform allows users to transfer loans anywhere in the world using bitcoin and other cryptocurrencies.

All payment transactions across the world on Bitbond are conducted via the bitcoin blockchain, and are independent of banks. Bitbond converts fiat currency to bitcoin and then converts it back to equivalent fiat currency of the borrower's country immediately after transfer.

The payment transfers are made globally at a lower cost and in a faster time frame compared to traditional money transfers, which are relatively costly due to currency exchange fees.

The platform enables borrowers to receive small business loans quickly at affordable interest rates, and lenders gain higher interest rates compared to the conventional banking system, because of the platform's peer-to-peer system. Either party does not get to know the identity of each other.

A customer can borrow up to 50,000 euros within just a few days at fixed interest rates starting at 1 percent per month. Meanwhile, a lender can invest in small business loans and earn up to 25 percent in interest per annum.

An investor can either pick the loans to fund manually or use Bitbond's AutoInvest tool, which lets the investor create a diversified portfolio of loans according to their preferences in an automated way. They can also create a portfolio of loans that is diversified across many different countries.

This move by Bitbond could see the rapid adoption of blockchain technologies within the banking eco-space to save huge amount of money. It will help in reducing the documentation and several days of loan processing.

Bitbond uses alternative data for credit scoring. This includes transactions of small business owners from accounts like eBay, Amazon, Etsy, MercadoLibre, Shopify, PayPal, bank accounts and many others. The data gets evaluated with its proprietary machine learning algorithm.

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