Cryptocurrency enables you to “be your own bank,” and banks are more than just a place to put your money—they're also a place from which to borrow. Pure-Central launched in late 2014 and aims to connect lenders with borrowers for loans in multiple cryptocurrencies.
James Donavan, developer at Pure-Central, said:
"The key to Pure-Central's success is in the fact that we offer digital currency services for Bitcoin, Litecoin, Dogecoin, Namecoin, TheWLD, Peercoin, Darkcoin, and AuroraCoin—no one offers the variety that we do. ... We are confident that [the] cryptocurrency market is ready for what we have to offer.”
Pure-Central requires borrowers to submit a passport or state-issued ID, proof of income, and proof of residence. Investors (lenders), however, need not submit any such documentation.
Current loans on the site calculate interest by the week (between 10% and 15%). Loans are currently offered in Litecoin, Namecoin, and Peercoin.
Lenders choose the minimum credit score a credit applicant must possess to apply for their loan. Credit scores are assessed as letters (A, B, C, etc.), and presumably borrowers build their credit scores on the site by successfully paying back loans.
There are no fees for investors, but borrowers pay Pure-Central 0.75% per loan.
In Cases of Default
Should a borrower fail to repay a peer loan, Pure-Central reports that:
“The borrower get a 5 days without fee to make the payment needed.
If after 5 days the payment is still overdue, a one time fee of 5% will be added to the payment.
If after seven days the payment is still overdue interest rate are added to the payment amount, calculated per day.”
If the borrower outright defaults, Pure-Central claims that they'll sell the loan to a debt collection agency in the region where the borrower resides. Presumably they reimburse the lender with the proceeds of the loan sale.
The Beginnings of Peer-to-Peer Finance?
For some time, members of the crypto community have expressed their excitement that borrowing and lending could become available on the peer-to-peer (P2P) level.
If the decentralization of all the things continues, there may one day be P2P lending that involves no third party (like Pure-Central) whatsoever.
Would you consider taking out or investing in a crypto loan? Share your thoughts below.
Did you enjoy this article? You may also be interested in reading these ones:
- From Banks to Bitcoin: An Interview with Gregory Simon
- Bitbond’s Radoslav Albrecht: ‘Getting a Marketplace off the Ground is Always Hard’