If you’ve ever been in a situation where you needed a personal loan, you know that it can be extremely difficult. Companies that offer personal loans (even corporate-level banking institutions) charge exorbitant fees and often require you to “blood-sign” the loan. In fact, most of the consumer credit The market is held by only a few large banking institutions.
Nowhere is this situation more critical than below millennia. Often young people turn to friends or peers to find the loan they need, or even friends of friends who can help. The reason? she trust technology like bitcoin more than they trust banking institutions.
This lack of trust has led to a sort of thriving underground or hard money lending world where interest rates can be very high but there is no centralized institution to take profits and drive regulation.
Blockchain cannot be stopped by banks
According to a recent article In Forbes the answer for this system seems to come Blockchain Technology. Already revitalizing banking industry, and threatens to change the way we think about investing, blockchain technology could also have the answer to personal lending instruments. One company CEO, Celsius’ Alex Mashinsky, sees that blockchain technology is changing everything:
“Blockchain is a global phenomenon that cannot be easily stopped or regulated, and it represents a new paradigm shift for the financial industry. We see this as the third wave of the internet, which will require the restructuring and reinvention of almost every financial process that we are involved in are accustomed to today will enforce.”
Blockchain technology allows for the removal of centralized banking institutions and puts lending in the hands of a peer-to-peer network, replacing the manager with a technological solution and allowing for far more competitive lending rates.
Against Jamie, Ken?
There is a general consensus that blockchain technology is moving towards a bigger role in the banking world. That feeling is shared by the likes of Chase CEO Jamie Dimonwho recently called Bitcoin a “scam” and Ken Rogoff who said Bitcoin would collapse. Nevertheless, both are committed to blockchain technology. They see a future for blockchain without a future for bitcoin.
However, peer-to-peer lending systems as they emerge are really tied to the foundation of what has kept bitcoin moving. The nature of the asset being fully decentralized means peer-to-peer activity is possible without the need for centralized systems like the institutional banks. It may be that these emerging technological changes will put people like Jamie and Ken out of work.