One online bank in Germany is now using bitcoins for loan transfers.
Founded by German Radoslav Albrecht, Bitbond is an online bank which now affords its customers the ability to transfer loans internationally — specifically, by using Bitcoin.
The platform uses Bitcoin and other cryptocurrencies to subvert SWIFT — the self-proclaimed world’s leading provider of secure financial messaging services — by lending money around the world instantly and at virtually no cost. Albrecht explained to Reuters TV:
Traditional money transfers are relatively costly due to currency exchange fees, and can take up to a few days. With Bitbond, payments work independently of where customers are. Via internet it is very, very quick and the fees are low.
What makes this service even more remarkable is the fact that Bitbond became an officially licensed bank in 2016.
How it Works
Bitbond works by letting clients hold their loans in Bitcoin or other cryptocurrencies for extremely short periods of time before they are exchanged back into the receiving countries’ native fiat currency. This method keeps exchange rates relatively fixed and prevents the cryptocurrency market’s infamous volatility from undermining the process.
As noted by Reuters, this isn’t the first time Bitcoin has been used as loan collateral. However, Bitbond is reportedly the first to offer the transfer of credit in currency internationally. As such, the company has become increasingly popular since it originally launched in 2013 — currently managing 100 clients’ loans for a rough total of $1 million each month.
The majority of said clients, Albrecht told Reuters, are small business owners or freelance workers, while the loans are less than $50,000 each.
Germany Loves Bitcoin
As a side note, Germans have been particularly keen on adopting Bitcoin. According to Bitnodes, Germany has the second most Bitcoin nodes in the world — behind only the U.S.
However, authorities in the European country haven’t historically been too keen on cryptocurrency. In February, interim German Finance Minister Peter Altmaier signed a letter to fellow G20 finance ministers, in which he claimed cryptocurrencies are not only risky for investors but also threaten long-term global financial stability.
Nevertheless, Germany did join 21 of its European neighbors in signing a Declaration on the Establishment of a European Blockchain Partnership on April 10.
What do you think about a certified online bank subverting SWIFT by sending loans internationally with Bitcoin and other cryptocurrencies? Let us know in the comments below!
Images courtesy of SWIFT, Shutterstock