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NEW STRATEGY   Nft trading  · 09/04/21

How to Find the Right Bitcoin Peer to Peer Lending Platform

Altcoin Trading Blog
09/08/21 · Trading platforms

About This Blog Post

  1. Filed as Don't Get Scammed
  2. Uses ftx ( + more posts) 
  3. Look into the middlemen too
  4. If people are complaining about customer support, avoid
  5. Quick withdrawals are really important
  6. On the same topic: LeverJ Review: Non-custodial derivative trading
  7. On the same topic: Michael Foster of LocalCryptos: Venezuela could be start of a bigger movement
  8. On the same topic: Yield Farming Platforms in 2021 (And where to learn about every new DEX)
What are the tell-tale things to look for in a good P2P lending platform?
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Localcryptos non-custodial p2p market

Peer to peer lending has properly taken off in late 2020 as a way to circumvent banks and their sometimes-painful terms when it comes to getting small loans. One problem, however, is that cyber security is a factor.

Legacy online P2P platforms rely on cloud servers for all their transaction data storage. That is the standard, but it does have some issues security-wise and does leave some of them fairly vulnerable. A good solution to avoid this pitfall is to use blockchain because it is inherently a more secure storage of transactional data due to its immutable nature.

Of course, even Bitcoin based P2P lending platforms are not all created equal, some are better than others.

To choose the right one for you, you will need to

  • evaluate your priorities
  • decide on your acceptable and unacceptable risks

…and see which platforms fill your conditions the best

In this article, we will go over some of the general things to be on the lookout for so you can make an informed decision when making the move to a Bitcoin based P2P platform. These are just a few things that absolutely everyone should consider, regardless of their goals and priorities.

Your money is your responsibility though. Always do your own research and consider this guide as more of a primer.

Platform security in P2P lending

How secure the platform is should be your primary concern when choosing the right lending system. As secure as the blockchain is, there are some moments where there is a weak link in the system.

Bitcoin wallet purchases can be one of those weak links so you need to look into how the platform is keeping this part of the process safe.

In P2P lending, typically there will be a third party to handle the transaction. Make sure to do your due diligence on this middle man as well, not only on the P2P platform. Sometimes it will need a bit of digging to find out who your middleman is but do not let that stop you.

Once your Bitcoin lands in its final destination, that is on the lending platform, the high security should kick in. That is, if your platform has it.

Hackers are not able to hack the blockchain, but they have found ways to hack into third party servers.

All the movements of your deposit between your account and the borrowers will be registered on blockchain and cannot be changed.

So, look for things like two-factor authentication for secure sign in and the option to whitelist geolocations for login or indeed BTC addresses for withdrawals.

If the platform is insured, even better. In that case you should have some recourse if something did happen to your funds. Do not rely on that in case the businesses is located outside of your country though.

What are the lending platform fees?

One of the biggest benefits to using a Bitcoin P2P platform is the lower fees generally. But, there is some variance between platforms as to how much they charge for fees.

Usually there is going to be a fee for buying and selling. These fees are usually publicly disclosed so you can shop around. What isn't always so clear is if there are other fees for using the platform.

Most don't charge for deposits and withdrawals, for instance, but others do. Some platforms don’t explicitly charge for withdrawals, but their transaction fee is always way over the network fee at any moment. Some platforms will charge you for transactions below certain value, some will charge for large transactions.

Make sure you know what you are getting into and read the fine print on everything that will cost you money.

Quick processing of deposits and withdrawals

Another thing to look out for is how fast the transactions are, especially for movements to and from the platform.

There can be quite a difference in how long it takes to withdraw your money, for example.

Look for platforms that have greater user base or also offer professional services, like OTC. That makes it more likely they will have a lot of funds at their disposal at any time and you shouldn't have to wait more than a day to have your funds deposited into a bank account.

The same goes for buying a loan. Look to see how long it takes to get your loan funded. If there is a wait of several days, you could be going through the hassle of shorting a loan and then having to wait for it to be funded, which is a lot of time and effort.

What's the minimum amount to invest?

Another thing to be aware of is the minimum. With some platforms, the minimum is going to be as low as $50. This is great for those who only have a little bit of extra money to invest.

With others, the minimum may be as high as $1000 or even more. If you only have a few hundred dollars to invest, you may be better off looking elsewhere.

You also want to look at the maximum amount. Many platforms have a maximum of around $50,000. This may be large enough for you, but it may not in some cases.

In crypto, you can’t hide reputation

Reputation is also a very important thing to consider because you are entrusting your hard-earned Bitcoin with the site. The best way to get a good idea of how well they operate is to look at other reviews from people who have used the platform before and see what they say.

You should be looking for more than just a good reputation. You want to know that the people running the platform are reputable and that they have the right experience to run the site.

There are some P2P platforms that are owned by people who once were in the Bitcoin mining industry and are still active members of the community. While they are not necessarily the best choice to run P2P lending sites, they are still a good choice for those who are looking for an alternative to traditional banks.

Ease of Use

While a lot of the sites are fairly easy to use, there are some that are easier to use than others. This is something that you should be looking for because the easier it is to use the platform, the easier it is to get the loan that you need.

Also, look for a site that is easy to use for people who are not tech savvy. If you send money to a site that is hard to use, then you could be ripped off or the money could be stolen.

Customer Support

When you are dealing with money, you will find that customer support is important. You will need to be able to contact someone if there is a problem. The site is supposed to be secure, but that doesn't mean that there won't be any problems from time to time.

Make sure that you read comments from other people who have used the site and see how well their customer support is. If you have a problem, you should be able to contact the site so that you can get a resolution.

Conclusion

These are the most important things to take a look at when deciding on a P2P platform. There are other things that you can look at as well, but these are the top four.

These platforms are fairly new, but they are growing in popularity as people look for alternatives to traditional banks. It is a great way to get the cash that you need quickly and with a low hassle.

Once again, you should always do your due diligence before signing up for a loan from a P2P site.

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