Blockchain technology has found another implementation in decentralized finance: person-to-person Bitcoin loans. With interest rates above 20% in many parts of the world, P2P Bitcoin loans provide a needed alternative with two important features leading to their success: fiat independence and the ability for loans to easily be transacted over the Internet.
In order to obtain a Bitcoin loan, borrowers sign up and verify their identites and income through one of the many websites that offer to connect them with lenders; the most popular of these being BTCJam.com , BitLendingClub.com, and BitBond.com. Each of these sites assigns a credit rating, from A-F, depending on differing criteria such as personal income, PayPal account verification, eBay account verification, and personal references. Interest rates on these loans range from around 5% per annum to upwards of 500% per annum and with time frames of 7-365 days.
BTCJam.com lists its average lender return as 19.3% per year.