Lending is a practice that has existed for thousands of years. It dates back to ancient civilisations, when farmers borrowed seeds and used the crops as repayment.
The way that economies were run in the past was transformed by the arrival of fiat currencies. You could even argue that we are witnessing such a shift now, as cryptocurrencies become an increasingly important part of the global financial ecosystem.
Crypto lending can help level the playing field and give consumers flexibility they might not have had otherwise. The rates offered by banks has been very low for many years. Even if the funds have been locked up for a long time, some savings accounts only pay 1% interest.
Inflation has been on the rise since the time that money was printed to combat the coronavirus pandemic. Signing up for these accounts will allow you to save more money and have less spending power.
Three powerful advantages are offered by crypto lending over the status quo. It is possible to find better deals that guarantee capital growth, with interest paid sometimes on a weekly basis or monthly basis. Many platforms provide lenders with a lot of flexibility. They don't have to keep their money locked up for long periods of times and can withdraw their funds whenever they want. It can be a powerful incentive for markets that are acting erratically.
This is before we even discuss the fact that crypto can be used as collateral to secure loans.
Lenders are not the only ones who can benefit
All of this sounds great for lenders, those with capital. It can also benefit borrowers. Crypto platforms are a lifeline in a financial system where one mistake on a credit report can prevent a responsible consumer from accessing the highest interest rates.
When it comes to granting credit, banks often have a long list of requirements. In a world with increasing numbers of self-employed consumers, creditworthy applicants may be excluded from the market simply for not having a traditional 9-to-5 job. This is regardless of whether or not they make more in their current arrangement.
While the crypto world can foster inclusion, there are still challenges. Many of the lenders in this sector are unregulated and offshore, which can make them less attractive to consumers. This limits the opportunities for crypto platforms to partner with fintech companies.
What is a new approach?
One platform that is aiming to shake up the world of lending is Baanx, a crypto-as-a-service fintech intending to bridge the worlds of crypto and fiat. Brands can offer secured lending without interest to their communities and customers, as well as high savings rates to those who stake their digital assets. All this is possible through APIs that are easily integrated into any website, DeFi, wallet, or exchange.
These are low-interest, low-cost secured loans that are available to people who own BXXX, the utility token associated with Baanx. The loan can then be transferred into crypto wallets, physical and virtual cards. Loan-to-value ratios up to 50% for those who use Bitcoin or Ether as collateral are possible. Approval can be done in just one click.
Baanx is temporarily registered with the FCA as a cryptoasset business and has a lending license. According to the whitepaper, it will lend against all digital assets, including cryptos, stocks and bonds, as well as emerging NFT asset classes.
The volume of tokens staked within the system will determine how much money can be offered as a loan.
Baanx has provided figures that show the platform has sold over 600,000 white-label accounts and cards around the globe. This is almost exclusively through branded corporate customers, such as Tezos Crypto Life, DeFi protocols and exchanges. It plans to launch in the U.S. with a major wallet provider during the fourth quarter 2021.
BXXX is now available on MEXC, Uniswap.