Bitcoin lending platforms have gained something of a bad name, because those who claimed to be lending, in fact, they were directly Ponzi systems.
Bitbond is based in Berlin and is a licensed, fully regulated financial institution. This is important because it means that they must adhere closely to German law when granting loans.
The platform is notable for the use of bitcoin as a technology and payment network as “first global marketplace lending platform for small business loans”.
As a platform for connecting lenders and borrowers, Bitbond facilitates lending in bitcoin by assessing the applicants’ credit rating while examining the purpose of the loan to determine the interest rate for the loan. In particular, the platform uses the Bitcoin block chain for payment processing to simplify cross-border lending.
Loans on the platform can be made in US dollars, euros or directly in bitcoin. To combat borrower fraud, the service only lends to registered companies that are subject to credit checks. Fraud is a problem for every company in the industry, including BTCJam. The risk management process also seems to help the platform stay on the right side of the regulators, a problem that BitLendingClub had to close at the end of last year.
If a borrower does not repay a loan, Bitbond has a routine that becomes harsher and harsher, ranging from gentle reminders through various platforms to transferring the loan to international debt collection agencies after 90 days.
Since its foundation in 2013, Berlin startup has enjoyed growing popularity among customers. Their office employs 24 people from 12 countries who handle loans worth around one million dollars for 100 clients monthly.
Most customers are small businesses or freelancers, says the founder Albrecht. Loans are fairly small and do not top $50,000. Bitbond was officially approved as a bank in 2016 and has attracted many investors since then.
In addition, Bitbond is planning new features such as exchange rate based loans, user communication tools and analysis resources for lenders as well as an improved mobile platform.