– Sam Reads, UK
In the United States, more than 543,000 new startups are propelled every month. More than half of all new businesses aren’t ready to run their operations open for over five years. Similarly, in third world countries like Kenya, Liberia, Yemen, Tunisia, Afghanistan and Bangladesh the availability of low-cost labor, natural resources and education among the young people are not contributing anything significant to the world economics. It is observed that the cause of this dilapidated condition is the lack of funding.
MICROLENDING FOR STARTUPS
Although the microlending industry has promised to short out the funding problem by offering low- cost interest loans to those startups struggling with low liquidity or anyone wants to start a new industry. Commercial banks, such as Citigroup Inc and Deutsche bank have established funds for microfinance and People in developed countries are lending money to farmers in Ecuador.
According to the critics, microfinance has not achieved what was it was invented for. The present microlending system has actually made poverty worse and produces more unemployment. In Mexico, micro-lending has been lambasted for creating debt based on complicated schemes for poor borrowers.
In another hand traditional micro-lending system customers are fed up with large overhead and operating costs, high fees to compensate for heavy operating costs, slow transaction capability, potential for corruption has created many hurdles for new startups consumers.
BLOCKCHAIN LOAN AN ALTERNATIVE TO COMMERCIAL BANK LOAN
Traditional financial institutions suffer from high operating costs and a long wait before profitability.But Blockchain based startups with the help the microlending space have fewer transaction costs encourages new startups with low maintenance cost.
The blockchain is normally managed by a decentralized authority in online systems.So Blockchain can deliver the money without any third party, in turn, will reduce the corruption.
Blockchain verification requires only that other network members sign off on a transaction. If a transaction has been sent, it cannot be sent again to spend the same money twice. By using this protocol to verify transactions, blockchain networks can verify transactions in minutes to seconds. Traditional banks may take days or even weeks.
A GAME CHANGER
The blockchain is pushing the limits of financial inclusion better than traditional banking institutions. so, resulting in a more aware and more involvement of citizens globally with cryptocurrency microlending.
By lowering the costs of cash transfer and doing business, blockchain could solve some of the main problems with microlending, allowing the new financial startup’s industry to blossom and start lifting people out of poverty at a world-changing rate.One company CEO, Alex Mashinsky of Celsius, sees Blockchain technology changing everything:
“The Blockchain is a global phenomenon that can not be easily stopped or regulated, and it represents a new paradigm shift for the financial industry. We see this as the third wave of the internet which will restructure and force the reinvention of almost every financial process we are used to today.”
