Adoption of blockchain technologies in the financial sector is gaining momentum. Banks are continuing to explore new ways for enabling seamless and real-time money transfers across borders. German online bank, Bitbond, is the latest to leverage blockchain technology to enhance its product line and service delivery.
Bitbond Blockchain Lending Platform
The bank has launched what it calls a global marketplace lending platform. Leveraging blockchain technology, it connects credit borrowers with institutional investors and also other individuals. The “Borrow and invest without borders” platform will allow users to transfer loans anywhere worldwide using Bitcoin and other cryptocurrencies.
Furthermore, platform transactions will be on the bitcoin blockchain. These transactions will be quicker and at a lower cost when comparing them to other online fund transferring methods. The platform will also allow users to convert fiat currencies to bitcoin for transfer and then back to the fiat currencies of the borrower’s country upon transfer.
Bitbond’s new blockchain powered platform is designed to make it easy for borrowers to receive small loans quickly and at affordable interest rates. Lenders, on the other hand, will enjoy higher interest rates compared to those in the conventional banking system. Platform privacy is also of great importance. Nobody will be able to identify the other person in a transaction.
Borrowers using the platform will be able to borrow up to 50,000 euros at fixed interest rates starting at 1% per month. Lenders will be able to invest an unlimited amount of capital through small business loans. They will earn up to 25% in interest rates per annum.
Also, investors will pick loans of their choice to finance in addition to being able to use Bitbond’s “Auto Invest” tool. This device will help create a diversified portfolio of investments. The loans will be available to multiple different countries.
Blockchain Technology Synergies
Bitbond leveraging blockchain technology underscores the kind of impact the technology could have in the larger financial sector moving forward. Currently, banking institutions rely on the SWIFT network to facilitate international transactions. The system comes with a lot of shortcomings including long wait times, as well as high transaction fees.
Blockchain technology promises to address all these shortcomings with ease. Ripple Transaction Protocol, which is based on blockchain technology, has already provided a glimpse of how cross borders payments could be in future in terms of speed and transaction costs.
The fact that transactions can be made in seconds without colossal transaction fees, is seen as one of the reasons why blockchain technology could soon be part of the mainstream banking system.