Bitcoin Lending Service BTCJam is Shutting Down For Good

It is always sad to see bitcoin-related services shut down over time. Although BTCJam did not have the best of reputations, they introduced a new use case for cryptocurrency. Bitcoin lending is an interesting market, albeit there are a lot of risks associated with it. BTCJam will effectively shut down very soon. Customers have until July 1st, 2018 to withdraw any remaining funds.

Curtain Call for BTCJam Not Entirely Unexpected

Ever since BTCJam launched a few years ago, the goal was relatively simple. This company aimed to provide people all over the world with access to fair credit. To make that happen, the team banked big on the success of Bitcoin. Since Bitcoin is the only global currency in existence today, it seemed like a bright idea at the time.

It has to be said, the company had no shortage of business either. Over 20,000 loans have been extended to 122 countries. In total, over 64,000 BTC has been loaned through BTCJam, which is quite impressive. However, not all of the loans are paid back. Over the years, the company got a bit of a negative reputation because of this. Then again, that is to be somewhat expected.

The decision to shut down the Bitcoin lending service was a difficult one. Regulatory challenges regarding Bitcoin remain a very large roadblock. Introducing cryptocurrency to poor communities is not an easy feat by any means either. BTCJam will no longer allow users to issue new loans. All funds on the platform need to be withdrawn by July 1, 2018. It is doubtful any of the outstanding loans will be paid back either, though.

Those who wish to continue paying off their loans can continue to do so without a problem. All functionality remains available until the loan is repaid in full. That is, unless said loan defaults, which is the more likely outcome. On paper, Bitcoin lending makes a lot of sense. It is unfortunate to see this company shut down because they couldn’t capitalize on it. It is unclear if the BTCJam team will explore a different business venture in the future.

Header image courtesy of Shutterstock

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BTCJam is one of those companies who have tried to mix traditional finance with the decentralized aspect of Bitcoin and digital currency. By offering personal loans to consumers all over the world, the company saw an opportunity presented by Bitcoin very few businesses were willing to explore at that time. But by the look of things, BTCJam is making some significant changes, and they will no longer be offering their services in the United States.

also read: Bitcoin Price Watch; Profit Target Hit!

BTCJam Will No Longer Accept Investments from US Customers

At the time of writing, there was no clear indication as to why BTCJam is withdrawing their services from the United States. Speculation is running wild as this could be due to impending regulation, not enough personal loan volume generated by US Bitcoin enthusiasts, or bigger problems brewing behind the scenes at BTCJam. The cryptic message posted on their website is not helping matters much either.

BTCJam commented on the situation as follows:

“BTCJam’s vision has always been to make credit affordable and accessible in emerging markets. We are deeply committed to this vision, and in order to fulfil it, we have made the difficult decision to discontinue offering the marketplace to borrowers located within the United States.”

Granted, the United States can no longer be labeled as an “emerging market’ in the Bitcoin world, although there is still an apparent demand for personal loans. Whether or not this means BTCjam will be focusing their attention on new emerging markets, or just reduce the number of regions they operate in, remains unknown.

What BTCJam does well is provide consumers with cheaper access to money when they need it. Users can determine the amount of funds they need, and the time duration they expect it will take to pay back the money plus interest. Lenders can then determine whether or not this person is creditworthy and issue them [part of] the loan.

There is a thorough verification procedure associated with using the BTCJam platform, although various users have questioned how much that matters. Based on some sources, BTCJam does not help out those who have issued a loan and never saw their money back [in full], despite having all of the information on the borrower.

Despite the company exiting the US market for the time being, there is no indication BTCJam will withdraw its services from other regions as well. Speculation on Reddit seems to indicate this is good news for US Bitcoin enthusiasts, though, as the company does – allegedly – not have the best of reputations.

Another big question is how BTCJam will handle any outstanding loans active in the US market today. There has been no official announcement of the company withdrawing their services from the US market on their Twitter or blog, which only adds to the overall confusion. If existing loans have to be cut off, there could be a huge amount of paperwork and legal expense involved to settle all transactions. Some Reddit users made a mention of how existing loans will continue to be serviced until repaid, but no further investments can be made by US customers.

Source: Reddit

newsBTC has contacted BTCJam for comments. Kindly check back to read the modified article.

Online bitcoin loans marketplace BitLendingClub has announced via a blog post that it has officially become the world’s biggest bitcoin lending marketplace by servicing more than $430,000 worth of loans in June. With this, the company defeated its closest competitor BTCJam which served $415,000 for the same time period.

However, the success didn’t come to the company overnight, and they had been working hard for the past several months. The blog post reiterates company’s commitment to improve in various areas namely,

  1. Loss Rates – The Company focused on bringing down the loss rates and since March 2015, it has reduced it by more than 50%.
  2. Loan Voting – Since users vote up for the best loans, the best ones come to the front-page and attract more lenders.
  3. User Referrals – The new referral program launched by BitLendingClub was a huge success. User referrals brought in 30% of the new customers, which contributed to 40% of new user loan volume in June. Statistically speaking, each referrer brought in 4 new users for BLC.

Association with Boost VC benefited BLC

BLC recognizes that its association with startup accelerator Boost VC has helped them in more ways than one. The team now focuses on one task at a time instead of dissipating energy into different projects. They also listen more carefully to customers’ feedback and always ensure that customers receive the best service that they rightfully deserve.

Future Growth

The bitcoin loans company sees “a massive opportunity in bringing affordable lending to the countries where the banking system is failing them.” With crises now emerging in Eurozone and South America, the company may make inroads into these regions as well. For a nation such as Greece, which is running out of cash and faces an uncertain future, affordable loans could provide temporary comfort.

As interest rates across the world plunge to record lows, some even in the negative territory, savers are left with insignificant or no returns on their bank deposits. Other investment classes such as stocks and real estate are already kissing stratospheric levels, which makes them more risky comparative to the returns intended.

But, savers need not lose heart, for there is another way to earn great returns, and yes, it is completely legal.

The digital currency Bitcoin can also be borrowed and lent as loans at rather attractive rates, both for borrowers and lenders.

For Borrowers

The complete process of applying for a Bitcoin loan is pretty simple.

Just like in a bank, where to apply for a loan, an account is needed, similarly, while applying for a Bitcoin loan, the borrower has to set up an online account at a website which facilitates Bitcoin loans. Users will then be asked to verify their details before proceeding to the next step.

The next step requires the borrowers to enter the amount of loan, the time period of the loan, and the interest rate which he is willing to pay on the loan. If there is a lender who is ready to lend at the suggested terms and conditions, the loan process is completed.

It goes without saying that those seeking loans should maintain the highest level of integrity and make timely interest payments, in order to keep the account in good standing. Having a good online repayment history also helps in securing more loans.

For Lenders

Holders of Bitcoin who are ready to share their Bitcoins for some extra profit can consider lending to the loan seekers.

A great aspect of lending is that the high volatility risk has been eliminated. Bitcoin and other cryptocurrencies, including Litecoin and Dogecoin, are high-risk currencies, and investors with a low-risk appetite may find lending a great way to earn returns.

But, it must not be forgotten that the borrower might miss out on payments or never pay back. One way to mitigate this risk is by lending only a small number of Bitcoins and doing a background check on the borrower.

Bitcoin Loan Websites

Commercial financing backed by Bitcoin and other altcoins has gained a lot of traction in recent times, with websites providing such services mushrooming in conjunction with the expanding Bitcoin ecosystem.

Some of the prominent Bitcoin loan websites are:

BTCjam and BitLendingClub provide updated information on the loan listings, which includes amount, interest rate, percentage of amount funded, the remaining time period, expected annual percentage return (APR), ratings (or reputation), and others.

Bitbond is another well-renowned name in the Bitcoin loans industry and has catered to over 500 loans with parties from over 120 countries.

A non-commercial player, Kiva also assists in Bitcoin financing to underprivileged communities to help them with the purchase of equipments, higher education, and other basic needs.

For those who are looking to loan or borrow Bitcoins, the above sites could prove to be immensely helpful.