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When it comes to our money, more and more of us are using online capabilities to manage the funds that we have. Whether it’s contactless payments via our mobiles, utilising online banking to keep track of the funds we have available at any one time or applying for small loans, money has quickly become part of our online lives. With that in mind, would it really be such a jump to consider that Bitcoin could be the future of personal loans? With money already going digital, would a decentralised lending method be so hard to adapt to? Here, we’re exploring exactly that.

What Is A Personal Loan?

A personal loan is essentially an unsecured form of loan that means a bank or lender of some form provides you with the money you need without having to risk any assets or valuables. You will not have to secure the money against your home, car or anything similar and instead, the risk is usually carried by the lender. From here, you will repay the loan in fixed amounts usually over a specified period of time.

Peer To Peer Lending

Peer to peer lending is, in its simplest form, exactly what the name suggests. Peer-to-peer could essentially cut out the need for any third party like a bank or lender to approve or accommodate any applications or transactions and as a result, can often have lower interest rates and in some cases, no interest charge at all.

Add Bitcoin into the mix and you have a peer-to-peer loan on a peer-to-peer lending system that ensures fast transactions of any amount of money without the need for any third party interference. While a bitcoin transaction is approved to an extent, this can often be near-instant, or at least successful in a much shorter time period than with a traditional bank or lender loan. What’s more, some payment networks will allow you to set up smart contracts. Ethereum, for example, would allow you to loan the money, and then repay the set amount every month without having to lift a finger. Convenience and speed are key focuses here, but is it enough to flag Bitcoin up as a potential future for loans?

What Could The Benefits Be?

The benefits associated with Bitcoin lending are certainly worth considering when debating personal loan lending using the currency and we’ve got just a few of the benefits for you, below:

  • Overseas Lending

Receiving loans from overseas providers, particularly through a bank, would require not only a currency exchange but also the process of finding a lender willing to offer money abroad. This isn’t nearly as simple as it sounds but with the decentralised nature of Bitcoin, peer-to-peer lending this way could mean getting the money you need if you’re stranded abroad, or even when borrowing money from relatives overseas.

  • Fast Transactions

When in a financial emergency, the most frustrating part of applying for a small personal loan is just how long it can take for the application and the payment to process in some cases. While most lenders boast a 24-hour turnaround period, Bitcoin could cut this down to minutes at most.

  • Security

While Bitcoin has its security faults, improved regulation and further development could help build a safe, secure and instant payment method for lenders and borrowers across the world. With the potential for anonymity – or pseudo-anonymity in Bitcoin’s case – lending could be an entirely data-set process rather than a personalised one. Those already embarrassed about needing to borrow can do so without having to enter too many personal details, if any, crafting a business-like transaction instead.

While it’s unclear whether Bitcoin will actually be the future of personal loans, the potential for improvement is certainly there. From the speed in which borrowers could get the money they need, to the peer-to-peer nature of lending that might sit better with lenders and borrowers alike, bitcoin and other cryptocurrencies could change the way we borrow for the better.


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A Peer-to-Peer Electronic Cash System

The original Bitcoin paper by Satoshi Nakamoto

Bitcoin in the real world

Bitcoin in the real world