According to Abhay Nayak of IndiaMicroFinance.com “The industry has been experiencing 40% growth [annually] in recent years and currently has a combined portfolio of outstanding loans estimated at roughly 6 billion dollars.” Indian bitcoin exchange, Unocoin, partnered with BTCJam on Friday, to bring the advantages of bitcoin loans to India. Unocoin customers will now be shown BTCjam ads and the lending company will be listed as one of the exchanges official partners.
These loans have an important impact in India’s emerging economy, especially for the countries poorest. Nayak explains, “They use it as working capital in petty shops, buying livestock, invest it in their business which could vary from producing handicrafts to food processing. Usually these are small family run enterprises. Most micro-loans are for livelihoods, though a few might be for consumption such as building a toilet, water pump etc.”
BTCjam, a peer to peer bitcoin lending website, sees a lot of promise for bitcoin loans in emerging markets.
“In emerging economies, like Mexico and India, it is very difficult for citizens to obtain an affordable loan. For example, in Brazil the interest rate for a personal loan can easily reach 200%. Simultaneously, the borrower has to jump through many ‘bureaucratic hoops’, making the application a lengthy process”
– BTCJam’s website.
BTCJam designed their website to be simple and effective. The average interest on a loan is under 20% and there is a new and innovative way of assessing loan suitability, “BTCJam has developed a unique online, peer-to-peer reputation system in lieu of traditional credit scores to qualify borrowers across the world and allow them to build a transparent credit profile on the platform.”
Instead of relying on a traditional credit history, something that the majority of Indians don’t have, BTCJam connects their Facebook, Twitter, LocalBitcoins, and PayPal accounts to give lenders an indication of their ability to repay loans.
According to the founder of Unocoin, Sathvik Vishwanath, BTCJam will help alleviate problems Indian lenders and borrowers face, “Peer to peer loan allows a common man to lend money and receive money. It is difficult for a common man in India to gauge the individual or business to lend loans and BTCjam is doing good job at this. The loans can be used by Indian individuals for setting credit card bills, small businesses and freelancing guys while the businesses may use it as working capital.”
Since regulatory guidance in 2013 India’s bitcoin scene has grown massively. Indian bitcoin meetup groups draw hundreds of people and there is enough volume to support several exchanges. Since its start in late 2013, Unocoin has aquired a large part of that market, and has grown to become India’s largest bitcoin exchange. In August of 2014 Bitcoin venture capitalist and founder of the Bitcoin Opportunity Trust, Barry Silbert invested $250k into the company.
BTCJam has been a successful in providing funding for small business owners in developing countries, one of these entrepreneurs was Kenyan, Samuel Shehi, who used a loan sourced on BTCJam to finance his metal fabrication workshop, based in the rural town of Mazeras.
“My loan has allowed my workman to buy a grinder to quicken his work timelines in delivering customer orders. Previously he has [had] to use a hacksaw to cut metal before welding pieces together.”
Shehi’s 60 day loan was funded by 17 lenders from 10 different countries and repaid in full.
BTCJam continues to bring accessible and cheap credit to underdeveloped markets. “The instability of the global financial system has created new avenues of affordable online financing. International bitcoin lending has picked up traction in the online community and BTCJam has been central in this financial revolution. Global peer-to-peer lending has enabled people in developing countries to become entrepreneurs and has allowed many of them access to fairly priced loans for the first time in their lives.”
Click on the bitcoin logo below to buy, use or accept bitcoin. Unocoin is India’s most popular bitcoin wallet.
To read the bitcoin white paper, visit: https://bitcoin.org/bitcoin.pdf