Fintech Tokenized P2P Lending Needs Credit Guarantees to Ensure Growth Nov 2022

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peer 2 peer lending

Tokenized Peer-To-Peer Lending

Despite the recent growth of Tokenized Peer-to-Peer lending, there is still a lot of uncertainty. For example, is there still a need for credit guarantee schemes? And what about P2P lending platforms in China?

BankSocial to Build Social Credit Scoring System

Using the Ethereum blockchain, BankSocial is building a peer-to-peer social consensus lending platform. Credit scoring will allow members to lend to one another and receive proportional interest payments. BankSocial also plans to develop its own proprietary BLOCKSCORE social credit scoring system. It will be the first social consensus lending platform secured by the blockchain.

BankSocial is also planning to build a mobile app to help users manage and track their assets more efficiently. The company has already made a splash by launching its ERC20 token and announcing the launch of its wallet.

BankSocial is planning to issue loans by 2022. These loans will allow for a first-of-its-kind transactional experience. To build a social consensus lending pool, the company has selected Polygon to develop its sidechain solution.

Also Read: Earn with P2P

Bitfinex Borrow Accepts Free Deposits

Using Bitfinex Borrow, you can lend your crypto to other users. This feature provides a fast, reliable, and transparent experience. You can also choose from a range of loan terms and interest rates. However, before borrowing, you need to meet specific requirements.

Firstly, you must register and verify your account. Bitfinex requires two-factor authentication. Also, you will need to deposit a minimum of $25 to start using the service. Users can deposit via a bank wire transfer or their Bitfinex account. The platform also accepts free deposits.

Once you’ve signed up, you can set up a margin wallet. This wallet is designed to hold and lend fiat currencies and cryptocurrencies. The amount you can borrow depends on the quality and liquidity of the collateral you provide. Collateral can be a fiat currency or cryptocurrencies, or a combination. Collateral may also be opened in a long or short position.

Lendy Smart Contracts Reduce Costs

Even though peer-to-peer lending is a newer term than “crowdsourcing,” it has significantly impacted lenders and borrowers. The decentralized networks, which use smart contracts, present new avenues for accessing financial services outside the traditional banking infrastructure.

P2P lending sites allow lenders and borrowers to interact directly. These companies match borrowers with lenders based on an algorithm and often provide a price for the service. These companies also provide lenders with detailed information on individual loans. Borrowers can also transfer loans to others.

The decentralized networks that facilitate peer-to-peer lending also enable trustless transactions. These networks are built on the Ethereum blockchain and include self-executing smart contracts. Smart contracts help borrowers and lenders enter loan agreements without intermediaries. They are reducing costs, shortening the settlement period, and increasing the diversity of the lending market.

Fintech Lenders Need Access to Credit Guarantee Schemes

Providing access to credit is a critical aspect of financial inclusion. The use of digital finance is increasingly being recognized as an effective means of providing this service. However, the adoption of this technology may be limited by regulatory and other constraints.

One of the most critical functions of fintech is the creation of new products and services that address consumer needs. Traditionally, financial services have been delivered by traditional banks and microfinance institutions. However, the advent of fintech has created competition between traditional and nontraditional providers. Using fintech technology has also raised concerns about potential predatory lending practices.

Several fintech lenders are targeting underserved borrowers, particularly in advanced economies. These firms use data analytics to provide pointed technical solutions in niche areas. They often collaborate with traditional money lenders.

P2P Lending Platforms in China

Until late 2016, Chinese peer-to-peer lending platforms operated in a regulatory vacuum. These companies solicited investors and borrowers without formal regulation from the central bank.

The Chinese government introduced stricter regulations to curb the risks associated with the P2P industry. It has issued new asset management regulations, which limit leverage levels and ban implicit guarantees. In addition, it has introduced a general risk reserve of 3% of the lending volume.

Eventually, the biggest P2P platforms will consolidate. Stricter licensing and registration procedures are planned for the remaining P2P platforms in China. These procedures will categorize P2P platforms into regional and national sectors, clarify business boundaries, and establish registration thresholds.

The Chinese government issued a list of 10 policy measures to reduce risks in the P2P industry. Some of these measures restrict illegal fundraising, while others address the risk of borrowers defaulting on loans.

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