How Does Lending Work with Etherecash

1. How Does Lending Work withEtherecash? The benefits of peer-to-peer lending are only just starting to be realized in the fintech industry worldwide, but the issue with most of these innovations is they are still based on centralized management. This centralized management means there is a middleman who takes a small cut of every loan in compensation for their services. Etherecash was designed to solve that problem and bring a solution to the table that was not only better than conventional banking, but all fintech aswell. The LendingProcess The basic mechanics of the peer-to-peer lending on Etherecash involves using cryptocurrency in a new and special way. Borrowers use their cryptocurrency as collateral and are able to borrow 70–80% of this value in the form of fiat currency. Lenders then bring fiat currency to the table and declare the terms they are willing to lend at. Once an agreement is reached, the fiat currency is converted to Etherecash and transmitted to theborrower. The beauty of this method for the borrower is they are having their cryptocurrency returned to them, so they may still participate in the appreciation that would occur while also being able to accomplish their businessgoals.

2. As a lender, you can rest more easily knowing the terms of the loan which were mutually agreed upon have been recorded in a lawyer backed smart contract. This is secured by multiple signatures and smart contracts cannot be manipulated or falsified. Over the course of the loan, the interest on the loan is paid and reimbursed to the lender. The smart contract monitors all payments and eventually releases the cryptocurrency which was used as collateral when all of the interest and loan have beenrepaid. One huge benefit of this system is it can be done in a borderless manner. This means the interest and principal can be provided in any currency, since they are being converted to cryptocurrency, and the payments can be done from anywhere, to anywhere in the wholeworld. Benefits Over Conventional BankingIndustry The way the banking industry currently works, there are inefficiencies that make it harder for loans to be executed, as well as more expensive. Etherecash is working to democratize lending so anyone who needs a loan can obtain one, assuming they having some way of providing the collateral in the form ofcryptocurrency. Many borrowers who try to go through the traditional loan application process find they don’t check all the regular boxes for lenders, and as a result, can’t receive a loan. If they are able to receive the loan, the amount of perceived risk means the bank charges a much higher rate. By removing this middleman and using a novel form of putting up collateral, it becomes more feasible for all sorts of borrowers to achieve their capital raisegoals. Peer-to-peer lending comes with numerous benefits, but one of the top ones is transparency. Normally, cryptocurrency and crypto-backed applications are touted for their privacy, but there is always the option for transparency since the information is everyone’s. Etherecash makes it possible for you to know what the other side of the loan (either the lender or the borrower) is receiving or paying, which is never possible in traditional lendingsituations. Usually what occurs in traditional lending is the loan funds come from bank deposits which are paying the “lender” a miniscule amount of interest. The bank takes these funds and allocates them out to borrowers based on certain criteria, and collects a spread on the interest rate differential. The result is the borrower pays a much higher rate than the lender receives, and the bank ends up winning bigger thananyone. Conclusion

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