We often think P2P lending is something new. It is not.
When hunters would kill a large animal, they’d share some parts with the others. The reason for this was to eat the animal before it started to rot. But also to keep the other families in debt.
In fact, it has been argued that one of the reasons for the invention of money was to help people track these kinds of debt.
The exchange items were pieces of metal (gold, silver, etc). It is only much later that banks came up and then to some extent monopolized the issuance of credit both to businesses and individuals.
Now, technologies are making it possible for us to go back to lending money to one another directly. But this time it is with efficiency, convenience, and great user experience.
The platforms that facilitate this new age P2P lending are built online with high-level technologies such as blockchain, artificial intelligence, and big data. They instantly connect and facilitate transactions between those who have more money than they need right now and those who are short on cash at the moment and do not mind to pay a small fee to borrow.
But how exactly will the new form of P2P lending change how we borrow money?
Starting by lowering the cost of credit
The P2P lending platforms are opening up the space so that not only a few entities that have the monopoly is able to give loans and credits. The P2P lending projects like AssetStream provide the tools for anyone and everyone to safely and securely lend money to others.
This creates an open market with many types of offers and, in turn, lowers the borrowing costs.
The entire system is built on an open source solution or it is a software as a service, both of which have negligible costs. Some of the technologies that are turning out to be critical in P2P lending include blockchain and its applications such as smart contracts and digital tokenization.
By giving us more nuanced options
If you went through some financial tools and bank’s products you will realize they are more or less one-size-fits-all types.
With P2P lending platforms like AssetStream, there could be a million types of credit offerings, each unique as the individual behind it. Borrowers will have a wide range of options. In fact, billions, since every individual can get on the platform and become a lender.
By blurring the line between those who lend and borrow
The new system will also blur the line of who is usually the borrower and the lender, especially at the individual level. One person can be a borrower today and lender the next day, if they have paid off all the outstanding debts.
This is different from what we have in conventional banking where it is usually the institution that lends and only individuals and legal entities can borrow. Even though the bank takes depositors money to lend, the arrangement is never categorized as if the bank is borrowing from depositors.
Disregarding international borders
The new way of lending will disregard international borders. Someone in Africa will be able to borrow from someone in Europe or South America in a matter of minutes.
The new technologies make it possible to move value across international borders in seconds.
If you are wondering about how you can be a part of this innovative way of lending, head over to AssetStream, educate yourself and sign up.