German Lending Company Switches to Bitcoin, Abandons SWIFT
A long-awaited change is finally coming to the international world of finance. Turns out, Ripple is no longer the only cryptocurrency project to be utilized by banks. Bitbond, an online lending platform from Germany that is only 5 years old, is using Bitcoins to provide international loan payments. The bank is currently processing payments worth approximately $1 million in a month. The majority of clients are small businesses with loans of $50,000 or less. Germany is a global leader in cryptocurrency adoption, second only to the United States. Although not a major bank, Bitbond can set a precedent for the other, even more conservative establishments in the banking industry.
The official website of the company states:
“By innovating in the fields of payments and credit scoring, Bitbond makes financial inclusion a reality around the world. All payment transactions on Bitbond are conducted via the bitcoin blockchain. Therefore, our service is available worldwide via the internet and is independent of banks.”
SWIFT, an international bank transfer system, is slower and more expensive than transactions carried out in Bitcoins. Thanks to low transaction fees (when compared to those of regular banks) Bitcoin is no longer treated only as a high risk/high reward investment opportunity. The world’s most popular cryptocurrency is finally working as intended (by Satoshi Nakamoto), offering international money transfer to those in need. Nowadays Bitcoin is used as a modern alternative to outdated banking practices.
Currency exchange fees turn the traditional money transfer procedure into a costly operation. Transactions may take up to several business days to complete. Radoslav Albrecht, the owner of Bitbond, claims that when using Bitcoin as a mean of exchange transactions work independently and from any place with an internet connection.
Price volatility of Bitcoin, on the other hand, is a risk to be reckoned with. Major price swings can eliminate any advantages related to the use of cryptocurrency, triggering massive losses on both sides. Small business owners are reluctant to accept BTC, as it can greatly depreciate in price at any given moment. Luckily, when transactions (as in case of this German company) take only a few seconds to be made, the risk becomes much lower. Low fees — that result in lower costs — help the business compete with traditional banks.
Only the time will tell whether cryptocurrencies will catch up with traditional (more conservative) money transfer technologies or whether they are doomed to remain a niche product with Ripple being a notable exception. Still, Bitcoin is already being used to make financial services more available to people all over the world.
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