When you need to finance your projects or a purchase that is not necessarily precise, and you don’t really have the necessary cash in your bank account, there are some solutions that are more than useful. This is particularly the case of the personal loan which belongs to the category of consumer loans.
To summarize simply, an approved organization will pay you the amount in euros decided upstream, and this credit will then be repayable according to a fixed schedule. There are also many financial players who have specialized in cheap personal loans, limiting interest rates, or eliminating management fees. The world of cryptocurrencies has been inspired for a few years by this specific credit by adapting it to digital currencies. Back to a new trend.
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The emergence of Bitcoin and cryptocurrencies as currencies
Unless you live in a cave, you may have noticed that cryptocurrencies have been booming since the start of the year. Bitcoin has thus almost doubled its unit value since January to approach the 12,000 euros mark in recent hours. *
For blockchain currencies, all the lights are therefore green: number of users, market cap, a technological breakthrough in the blockchain, acceptance as a means of payment and even partnership with huge companies like PayPal.
But this is another breakthrough, legal this time, which has notably enabled Bitcoin to achieve a new symbolic status: a currency. And the consequence is fundamental for everything related to Bitcoin credits which are possibly qualifiable as personal loans. A new use is thus opening up for Satoshi Nakamoto’s project and this could have consequences for other cryptocurrencies.
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The different personal loans on the blockchain
In recent months, many blockchain players have therefore worked hard to implement credible consumer credit solutions in Bitcoin. The mythical Blockchain.com has been allowing its users to take out loans since March. We are talking about a site that claims 40 million users on its wallets and which plays a major part in the blockchain ecosystem by investing in many startups in the sector.
After launching its payment card, the world’s most famous trading platform, Coinbase, will allow its customers to borrow cash (in FIAT currency) if they have cryptocurrencies on their service. A different and very interesting angle taken by the firm of Brian Armstrong makes it possible to link currencies that are now very distant in their uses.
For the moment alone, 17 US states are affected by this initiative, but like their payment card, other nations like France should follow. Note that Coinbase’s biggest competitor, Binance, has partnered with a lending platform to develop this type of credit.
Finally, let us also cite projects linked to Defi (decentralized finance) such as Maker Dao, which is beginning to break through on the subject. The latter, which is also a stable corner, aims to set up a functional protocol for decentralized loans. Based on Ethereum, the second-biggest project in the blockchain, it will be exciting to follow its evolution.
Because if France and other countries are starting to really consider Bitcoin and its successors to be currencies, other points remain unclear. What about insurance on these loans, the interests gleaned in the event of a boom for each token, the applicable taxation, etc.
It is up to the legislator and public institutions to give a little more clarity. The next few years will be crucial to see more clearly for crypto-currency loans.
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