All News Bitcoin Blockchain

German Bitbond Bank Will Use Bitcoin for International Loans

German digital bank called Bitbond announced it would execute transactions related to international loans using the blockchain technology. Bitbond digital bank offers Bitcoin loans to small and medium companies. This is a project that came up as an alternative for avoiding the international financial communication network called SWIFT.

According to Reuters, the digital bank from Germany will use the world’s most popular cryptocurrency, Bitcoin, only to transfer the loan quickly, but Bitcoin will not be the currency in which the loans are realized. This is because the price of Bitcoin is extremely volatile and the bank would like to avoid this potential problem, which means Bitcoin will only be used as a method for transmission of loans in fiduciary money. The banking authorities in Germany approved this business model that is functioning since 2013 and attracted Christian Vollmann, an angel investor from Germany. Vollmann participates in projects such as, Code University and Trivago.

Bitbond is still a small financial institution and it has around 100 clients, mainly small companies and independent workers. The loans that this bank provides usually do not go over 50,000 dollars and Bitbond manages around one million US dollars of loans each month.

This project not only offers microloans to entrepreneurs without banking record on a global level, but it also allows anyone to become an investor. The interested people can choose a project they would like to support manually or through AutoInvest. These options allow the creation of a portfolio of decentralized investments based on the cryptocurrencies.

The loan services with cryptocurrencies are developing their space within the cryptocurrency ecosystem. This type of loans can not only be found on the Bitcoin market, but there are also other initiatives, such as ETHLend, dedicated to providing loans in ethers and fiat money using blockchain platforms.

Nevertheless, this method of financing for micro companies and entrepreneurs is still not well known, mainly because of the current level of adoption of the cryptocurrencies. Moreover, the lack of clarity about the legal conditions for the lender that would like to provide loans in digital currencies does not help either.

Processing and receiving loans from a traditional banking institution is a process that could take weeks. It is a process that Radoslav Albrecht, the CEO and founder of Bitbond, decided to leave behind by creating a banking platform that would allow the small and medium companies to receive loans quickly and at low cost by using cryptocurrencies. This was a few years ago and now Albrecht would like to bring it on an international level. He said: “Traditional money transfers are relatively costly due to currency exchange fees, and can take up to a few days. With Bitbond, payments work independently of where customers are. Via internet it is very, very quick and the fees are low.”

Leave a Reply

Your email address will not be published. Required fields are marked *