Bitbond launch offers cryptocurrency loans to small businesses globally

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  • German company launches internationally using bitcoin
  • Platform circumvents SWIFT system for faster, cheaper transfers

Bitbond, a new German international money transfers platform specialising in small business loans around the globe using bitcoin, has launched officially.

The first global marketplace lending platform for small businesses, Bitbond was founded in 2013 and was licensed as a bank in 2016. It has since gained a multitude of new investors.

CEO and founder Radoslav Albrecht explained that Bitbond uses cryptocurrencies such as bitcoin to circumvent the SWIFT international transfer system, thereby lending money far more quickly than traditional banks and at substantially lower costs.

Speaking to Reuters TV from his office in Berlin’s trendy neighbourhood, Prenzlauer Berg, Albrecht 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.”

Bitbond’s clients receive the loans in the form of digital tokens. Within a few seconds, they’re exchanged again into the local currency of the country where the business is receiving the credit – a devilishly clever and innovative feature that avoids the notorious fluctuations in the value of cryptocurrencies.

The vast majority of Bitbond’s clients are small business proprietors and freelancers who are seeking loans below USD $50,000. As Reuters noted, it comes as little surprise to find a German startup leveraging blockchain technology for loans, as the uptake of cryptocurrencies in Germany has been faster than that of any other country besides the United States.

The timing of the launch coincides with pressure for bitcoin in the wake of the raid on South Korea’s biggest cryptocurrency exchange, UPbit, by authorities following allegations of fraud. On its website, UPbit announced the raid by explaining that it was “currently under investigation by prosecution, and we are [cooperating] diligently. UPbit services, such as all transactions and withdrawals, are operating normally. Your assets are kept securely in your account.”

However, Bitbond appears undaunted and explains its approach to loans concisely on the company website:

“By innovating in the fields of payments and credit scoring, Bitbond makes financial inclusion a reality around the world. All payment transactions on Bitbond are conducted via the bitcoin blockchain. Therefore, our service is available worldwide via the internet and is independent of banks.”

Despite the fact that the conventional view of bitcoin from currency watchers and even veteran cryptocurrency traders is that it represents a speculative asset, Bitbond seems to have come up with an intriguing business model that allows digital currencies to compete with more traditional systems.

Albrecht is currently exploring the viability of replacing the creaking and unwieldy SWIFT payments system with a bitcoin alternative. And he could be on to something: everyone who has used SWIFT knows that it’s slow, cumbersome and very pricey, so if someone can reliably devise a digital currency money transfers system for loans across the globe, there could be some handsome advantages.

There are uphill struggles ahead, principal amongst which is the volatility factor already mentioned. But by switching from bitcoin to fiat currencies virtually instantaneously, Bitbond may have substantially remedied that problem.

The company is certainly one to watch. Since 2013, it’s grown steadily in popularity and now boasts 24 employees in 12 countries, along with more than 100 clients with transactions amounting to circa USD $1m each month.

Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO at FXcompared and has numerous years of experience in the international finance world, especially within the media, technology and property sectors. Daniel is passionate… Read more

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