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by flavio87
4430 days ago
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We are serving investors who don't want to expose themselves to bitcoin price. The current bitcoin price reflects pretty exactly the aggregated sum of expectations (wisdom of the crowds style) of what the likelihood is that bitcoin will go such astronomic levels. We allow investors who think and breathe in USD (or other fiat currencies, for that matter) to invest all around the world 'using btc', without exposing them to btc. The returns we generate are so high because we have borrowers whose only alternatives are pay-day loans with 3000% APR (checkout wonga.com) or credit-card interest (checkout brazil's crazy 120-200% APR on outstanding credit card debt)
If we provide 30-40% APR interest for them, that is a huge win, they can refinance their high interest debt and repay at a much lower rate. At the same time, that is how investors can make 19% a year after some defaults. |
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You had said: "The bitcoin price doesn't matter for the linked loans" - well, sure, for USD loans by people who arne't using up their BTC investment holdings.
In this sense you can use anything that has a spot price, including rice, pork bellies, or gold, to make a 'loan' that is really denominated in USD.
Presumably, nobody is actually borrowing the pork bellies for some investment purposes qua pork bellies. It's just a medium of exchange.
On the other hand, even if you denominate a bank loan in USD and have to make it in pork bellies, to be received back in pork bellies at a future price, - this raises the problem of actually having to source those pork bellies.
It may not be a problem if it is possible/easy to buy BTC. On the other hand, hoarding behavior may make the purchase of the BTC a bit more difficult to acquire so that, like pork bellies, it's a rather poor medium of exchange for actually making the USD loan.
Regarding my suggestion that you look at whether some BTC loans are ponzi schemes (relying on previous investors being paid off and happy, to secure ever larger loans and reputatoins by the same party), what did you find personally (not speaking as an employee or on behalf of your company of course)?
I'd be interested in your thoughts.