[2017-05-28] Bitcoin Lending Service BTCJam is Shutting Down For Good

[tyz]

Bitcoin Lending Service BTCJam is Shutting Down For Good

It is always sad to see bitcoin-related services shut down over time. Although BTCJam did not have the best of reputations, they introduced a new use case for cryptocurrency. Bitcoin lending is an interesting market, albeit there are a lot of risks associated with it. BTCJam will effectively shut down very soon. Customers have until July 1st, 2018 to withdraw any remaining funds.

http://www.newsbtc.com/2017/05/27/bitcoin-lending-service-btcjam-shutting-good/

[1715205310]

1715205310

[1715205310]

1715205310

[Nagadota]

Nice to see one of the rare cases when a Bitcoin company shuts down without obviously stealing everyone's funds.
IMO Bitcoin lending is a bad idea for any business which doesn't earn all its profit in Bitcoin.  The price fluctuations mean that the interest rate for any business dealing with fiat ends up having to keep up with the price, which is a good 100% or so that most companies can't keep up.

Bitcoin lending will be great when the liquidity and price are high enough for the price to stabilise, but for now it's going to be pretty tough, especially since even people who verify their ID on these services usually end up defaulting.

[1Referee]

Nice to see one of the rare cases when a Bitcoin company shuts down without obviously stealing everyone's funds.

That's indeed something that should be praised, but this service has turned into a scammers hole (from the user side), which obviously is very bad publicity. Especially if you also take into account that they (btcjam) could have done a better job when it comes to exterminating scammers, and preventing further abuse of their platform. In many cases they have been too lenient in that regard.

[Iranus]

Nice to see one of the rare cases when a Bitcoin company shuts down without obviously stealing everyone's funds.

That's indeed something that should be praised, but this service has turned into a scammers hole (from the user side), which obviously is very bad publicity. Especially if you also take into account that they (btcjam) could have done a better job when it comes to exterminating scammers, and preventing further abuse of their platform. In many cases they have been too lenient in that regard.

BTCJam is the ideal kind of platform to catch scammers.  On Bitcointalk, moderators avoid banning scammers due to potential bias and abuse, but in BTCJam you don't have that problem at all - the only information you have is whether they paid the loan. Here, I'll do it for them and practice my pseudocode.

trust = 0
if loanpaid = true:
    trust = trust + 1
elseif loanpaid = false:
    ban user
endif

[1Referee]

BTCJam is the ideal kind of platform to catch scammers.  On Bitcointalk, moderators avoid banning scammers due to potential bias and abuse, but in BTCJam you don't have that problem at all - the only information you have is whether they paid the loan. Here, I'll do it for them and practice my pseudocode.

trust = 0
if loanpaid = true:
    trust = trust + 1
elseif loanpaid = false:
    ban user
endif

If it according to you is the ideal platform to catch scammers, then explain how a fairly large number of people still got cheated on? It has been utterly easy to create fake accounts and to walk them through the poor level of btcjam's verification steps. If one account gets banned, then another one will pop up - piece of cake.

[BitDane]

BTCJam is the ideal kind of platform to catch scammers.  On Bitcointalk, moderators avoid banning scammers due to potential bias and abuse, but in BTCJam you don't have that problem at all - the only information you have is whether they paid the loan. Here, I'll do it for them and practice my pseudocode.

trust = 0
if loanpaid = true:
    trust = trust + 1
elseif loanpaid = false:
    ban user
endif

If it according to you is the ideal platform to catch scammers, then explain how a fairly large number of people still got cheated on? It has been utterly easy to create fake accounts and to walk them through the poor level of btcjam's verification steps. If one account gets banned, then another one will pop up - piece of cake.

This simply show how big is the flaw of BTCJam system.  Anyway, it is still a sad thing that this kind of service have to shutdown.  But still it is good to see a company shutting down without stealing their clients money unlike those Ponzi scam cloud mining.

[Iranus]

BTCJam is the ideal kind of platform to catch scammers.  On Bitcointalk, moderators avoid banning scammers due to potential bias and abuse, but in BTCJam you don't have that problem at all - the only information you have is whether they paid the loan. Here, I'll do it for them and practice my pseudocode.

trust = 0
if loanpaid = true:
    trust = trust + 1
elseif loanpaid = false:
    ban user
endif

If it according to you is the ideal platform to catch scammers, then explain how a fairly large number of people still got cheated on? It has been utterly easy to create fake accounts and to walk them through the poor level of btcjam's verification steps. If one account gets banned, then another one will pop up - piece of cake.

Because BTCJam never adopted these appropriate precautions.  I would argue that they were blinded by the concept of a P2P system, and therefore they ignored what somewhat centralised solutions were needed in order to catch scammers.

Verification processes need to be completed all the time - like compulsory 2fa to make the account selling market difficult, automatic limits on how much you can borrow for different levels of trust and more.

An important thing you can do is to ban a user from taking out any more loans until they have paid back the loan that they already have out.

[panju1]

Nice to see one of the rare cases when a Bitcoin company shuts down without obviously stealing everyone's funds.
IMO Bitcoin lending is a bad idea for any business which doesn't earn all its profit in Bitcoin.  The price fluctuations mean that the interest rate for any business dealing with fiat ends up having to keep up with the price, which is a good 100% or so that most companies can't keep up.

Bitcoin lending will be great when the liquidity and price are high enough for the price to stabilise, but for now it's going to be pretty tough, especially since even people who verify their ID on these services usually end up defaulting.

But what happens to the outstanding loans? And also, what is the incentive for people with outstanding loans to pay up?
They know that BTCJam is going to close down and their reputation there hardly matters.

[1Referee]

An important thing you can do is to ban a user from taking out any more loans until they have paid back the loan that they already have out.

You missed my entire point. Bans aren't working as people (scammers) can just set up another fake account, and continue harming the community. It's btcjam's account verification that lacks big time as scammers can easily walk fake accounts through the verification process.

But what happens to the outstanding loans? And also, what is the incentive for people with outstanding loans to pay up?
They know that BTCJam is going to close down and their reputation there hardly matters.

Honest people will continue paying off their debt, but I am fairly sure that a large portion of the people there will just leave and never come back. Especially when you consider that the funds are either used to trade with, to gamble with, or to pay bills. In order to pay back, these people will have to purchase Bitcoin at current levels, and that's obviously not something a lot people look forward to. Easiest and cheapest option is to default since there is nothing to lose anymore.