Borrowing and lending cryptocurrencies is not a new business model. Several companies try their hand at such a service with varying degrees of success. Japanese exchange Bitbank aims to do things a bit differently with its native Bitcoin borrowing program.
The New Bitbank Lending Venture
Japanese exchanges play a critical role in the world of cryptocurrency, especially as Japan is one of the few countries to date to legalize Bitcoin. A number of exchanges are moving into the Bitcoin borrowing market, and Bitbank is one such exchange who is greatly interested in doing so.
Bitbank has started its own Bitcoin borrowing program, in which the firm lets users lend a minimum of 1 bitcoin to its native Virtual Currency Lending Service. In return, they will receive a fixed rate of interest. It removes the uncertain aspect from lending and borrowing cryptocurrency and aims to legitimize the business model as a whole.
Perhaps the most intriguing aspect is how it encompasses other cryptocurrencies as well. Bitbank made it clear they will offer a similar service for Ethereum, XRP, Litecoin, and Bitcoin Cash later this year. This should prove to be a popular decision as there is a lot more to cryptocurrency than just Bitcoin.
Some Factors to Keep in Mind
Engaging in a lending and borrowing agreement with Bitbank is subject to key aspects. First of all, the bitcoins will be borrowed from users for a minimum of twelve months. Moreover, the dividends to be paid out as in proportion to lent capital. As is to be expected, not everyone will be able to benefit from this solution either. Bitbank will “recruit” eligible users through extensive account checks. The company further adds:
The cryptocurrency remain locked during the entire loan period. So, the cryptocurrency cannot be sold or transferred. Only when the loan period is elapsed or returned by Bitbank, the customer will be able to sell or transfer the cryptocurrency.
This is not a get-rich-quick scheme by any means. Interest rates for Bitcoin loaned range anywhere from 3% to 5%. Not the most impressive amount, but still better than putting funds in a savings account. It is important to keep in mind there will be a “usage fee” for every loan as well. A remarkable venture by Bitbank, albeit one with a few drawbacks as well.
Would you lend your bitcoins to this new program by Bitbank? Let us know in the comments below.