What blockchain can do for p2p lending platforms?
Nov 04, 2017 Posted / 8684 Views
Blockchain Technology Benefit P2P Lending Industry in many ways. Here's how.
Peer-to-peer or called as P2P lending is a process of offering money to organizations or particular individuals through web-based services that directs towards linking lenders and borrowers. Surely stating, the money is provided on interest and lending companies have the chance to run lower overhead. The purpose of giving money to the organizations through internet wire ensures higher returns for them as opposed to savings and investment products. On the other hand, the borrowers are able to borrow money at lesser interest rates in comparison to private financial institutions. In the matter of finalizing interest rate, it becomes the duty of the lender to abide by the lower rates powered through reverse auction model. Apart from this, the interest might get fixed by an intermediary company on scrutinizing borrower’s credit history for sure.
Blockchain stands to be a database, which is shared over an open structure. In this regard, the blocks are meant to record transactions that get locked through the inevitable support of a particular code. An important factor to consider is that blocks are cryptographically linked, which allows the transactional history to be viewed by others accessible on the open infrastructure. The blockchain technology will guarantee that all trades are documented at the real time and in the sequential order. With the methodical use of blockchain technology, meddling with the database and tapping off funds will not be possible at all. This happens to generate transparency in the transactions by the companies and lenders. Another benefit to check out is that adoption of blockchain technology as managed to cut down on the time, cost and effort of both the parties.
Being a profitable concept for both the parties, it has established a mark over conventional lending platforms. Though, the transformation of P2P lending on the platforms of blockchain technology is at an adolescent stage; the acceptance of blockchain in P2P lending is in sync with private blockchain platforms allowing tokenization of a loan asset. This regulates the creditors in P2P lending network to trade their loans with other applicants. Such a well-directed process is meant to improvise the working modules and structural framework of existing P2P lending companies.
Certainly speaking, blockchain is witnessed as generating major impact over office developments and legacy architectures because they formed an active part of the age old industries. The purpose of adopting Blockchain technology in P2P lending industry is to drive down their monetary costs in a progressively modest landscape. Taking note of the possible improvements in the P2P industry, the inclusion of technology is seen effective in terms of initiating new procedures or companies than making modifications in the existing ones on the block. This tends to reap better profits and saves on time too.
As trading is accomplished directly amongst the pertinent parties without any intermediary through digitized mode, it holds benefit speeding up the transactions and performs satisfactorily on the base of criteria set.
With the purpose of maintaining audibility, the transactions are recorded in a sequential manner. It is meant to give an ineradicable audit track for the life of an asset within the parties to maintain its authenticity.
It is meant to track the goods in an effective manner and ensure the current positioning without much difficulty. This makes it easier for the parties to exchange information.
Since, everything is recorded and each transaction is put forward with detailed information; the inclusion of blockchain has initiated transparency in terms of lending money to organizations.
With each and every transaction verified through string network supporting certified complex cryptography, the authenticity level of the information cannot be questioned in any case. Certainly, there is no possibility of breaking the cryptographic code and information remains safe.
With the growing possibilities and effectual usage of blockchain in revolutionizing and safeguarding P2P lending industry, the investors are able to channelize their funds in a better manner and manage them wisely. Definitely, the permutation of blockchain technology with that of big data will modify the way loans are evaluated, expended and repaid in the years to come. It is the effective growth of technology that has created options for the P2P industry to strengthen security measures because there is a possibility of borrowers backing off in times of payment. Of course, the constant use of blockchain technology will keep the transactions in light and the lenders can be assured of payback from debtors. It is the most important developments in securing online cash transactions.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
Hottest Blockchain Newsletter
For updates and exclusive offers, enter your e-mail below.