Just recently, for the very first time in history, Bitcoin exceeded $8,000. Similarly, Bitcoin alternative Ethereum, which is the second most popular cryptocurrency, has experienced an over 3,000 percent growth this year.
In what has surprised most analysts and financial experts, the cryptocurrency market cap has exceeded $227 billion, with bitcoin having a 58.2 percent market share. In fact, experts are predicting a $1 trillion market cap in no distant future. Every 24 hours, about $5.6 billion worth of bitcoin is transacted. Every 24 hours, about $834 million worth of Ether is transacted. Combined, over $13 billion worth of cryptocurrency is transacted every 24 hours. This is not small!
When you look at the above facts, and also consider the fact that cryptocurrency like bitcoin can be used in over 90 countries without restrictions, then it is clear that cryptocurrencies have staying power. However, there is another trend to watch out for: cryptocurrency lending networks.
As cryptocurrencies continue to rise, lending networks that allow peer-to-peer lending and borrowing of cryptocurrencies are springing up. Even more interesting is the fact that many of these lending networks are promising a platform that offer immediate access to liquidity without the hassles and headaches of traditional financial institutions. One such startup is Nebeus, a three-year-old fintech business that operates a peer-to-peer exchange of products and financial services and that also facilitates bitcoin loans between customers -- they have an upcoming ICO. The fintech business that boasts of facilitating bitcoin loan between over 20,000 customers has raised $2 million in private funding already and is planning to expand and launch its own cryptocurrency bank. The startup is aiming to raise $30 million towards this goal. Among a series of moves being made to realize this goal include welcoming Brett King as a shareholder and lead adviser.
“We are honoured to have Brett as a member of the team. His vision and ideas on banking evolution have inspired a generation of fintech startups, so having him on board and having access to his visionary ideas is paramount to our development,” said Sergey Romanovsky, Nebeus co-founder.
King was voted “Innovator of the Year” by American Banker and was named the “King of Disruptors” by Banking Exchange magazine. Explaining the role he plans to play in the evolvement of Nebeus.
“I am excited to help guide Nebeus as it rapidly evolves past its live lending businesses into a crypto financial services supermarket platform, and augments this platform by launching its own bank on it,” says King.
The allure of these bitcoin lending networks is that loans are usually instant, often facilitated by peer-to-peer exchange. In fact, lending services like Nebeus claim that you can start using their services as soon as you confirm your phone number. The major selling point of these services to lenders is that lenders get high interest rates.
A major question would-be lenders have with the rise of cryptocurrency lending networks, though, is about the security of their funds. How do you guarantee that you get back money you lend? Services like Nebeus automatically “rank” members to indicate their solvency and creditworthiness, and how much loan a member is able to access is dependent on the member’s rank. For Nebeus, rank is calculated based on steps members take to verify their identity (this includes confirming their ID and residence address) as well as steps taken to repay previous loans. If a member defaults on a loan, penalties start to accrue -- and the lender is eventually able to send a claim. Other cryptocurrency lending networks, like Ripio, require a co-signer before a loan is allowed -- if the borrower defaults on paying a loan, the co-signer will have to pay.