Blockchain Technology: A Game Changer for Challenging Credit Markets

• Blockchain technology can eliminate modern barriers to lending and borrowing.
• With continuous advancements, Creditcoin is bridging the gap between lenders and borrowers.

The credit market can be challenging at times, making it difficult for lenders and borrowers to transact money. However, blockchain technology is capable of taking lending and borrowing to the next level.

How can Blockchain Improve Crypto Market Conditions?

Ever-rising interest rates have made it burdensome for individuals and businesses to borrow funds. Individuals with a lack of accounts with lending bodies such as financial institutions, often find it bothersome to apply for loans, largely due to their credit rating. This results in lenders increasing the interest rates while lending credit to risky borrowers.

On the other hand, borrowing money for business owners is not as easy, this is largely due to the inconsistent flow of their income, which varies month-to-month. In some countries, the application process can be a drag with multiple complicated forms to be filled out. Moreover, it may take days to clear funds due to slow decisions.

Blockchain technology has been advertised as the magical wand that can change the current situation. Blockchain technology can connect potential buyers and lenders based on the terms offered. Moreover, the transaction data can be saved securely by encrypting it on an immutable ledger.

Since everyone can now own a crypto wallet, borrowing and lending have become smoother with unrivalled levels of security and transparency.

However, to adopt the blockchain-based model of lending, first, the downsides attached to it must be addressed. To lend credit, DeFi protocols often ask for over-collateralization, meaning, if an individual has to borrow 500 DAI, they must put up $750 worth of different currency as collateral. 

Although this drawback is understandable due to the volatile nature of digital assets, it’s completely unrealistic for most borrowers, and completely incongruent with current models.

Changing the Outlook

Creditcoin is a layer 1 blockchain developed to record credit transactions, the credit histories of transacting individuals and their loan preferences. The primary aim of the blockchain is to cater to the financial needs of deprived individuals and businesses. For instance, there are numerous small and medium-sized enterprises in Africa that do not have free access to credit borrowing, which is one of the major restraints on their growth. 

Recently, the company announced its publicly incentivized testnet called Creditcoin 2.0, switching its consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS) to enhance the safety of data. 

Creditcoin has started sending invitations to users to test this infrastructure and get rewarded for it. Since its launch, the project has already documented more than 3 million loan transactions with an accumulated value of $70 million. Creditcoin states that it wants people throughout the world to use its data and change the scenario of lending and borrowing.

The project has soaring ambitions for the future. With the launch of  Creditcoin 3.0, the company aims to add smart contracts as a top-tier feature. Anticipations are being made to bring a knockdown of layer-1 blockchains together, giving way to multi-chain entry to real-world assets.

To quote Creditcoin’s founder Tae Oh, “As per Leonardo da Vinci, “art is never finished, only abandoned”. Creditcoin is taking it to “A protocol is never finished, only evolved”. He further says, if the community continues to support it as it has until now, the company will reach new heights with its heart beating as strong as ever.

Conclusion

Blockchain technology is revolutionising credit markets by facilitating lending and borrowing processes, eliminating barriers, and ensuring security and transparency. Creditcoin, with its innovative blockchain infrastructure, aims to bridge the gap between lenders and borrowers, particularly benefiting underserved individuals and businesses. With continuous advancements, Creditcoin is poised to evolve and transform the lending and borrowing landscape, creating new opportunities worldwide.