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Author Topic: Protecting Bitcoin Lenders (BTCLend)  (Read 1169 times)
bitprotection
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August 28, 2011, 10:50:06 PM
 #1

We like to introduce our new service called BTClend http://btclend.weebly.com/. We noticed all the lending going on this thread and what risk was involved in doing so but we feel we can negate it by offering a chance for more people to lend.

The goal of the service is to make anyone who has bitcoins into a "lender". We do this by giving them some sort of coverage against the lending side so they can freely lend to promising borrowers.

We offer 50 percent insurance against loan amounts up to 10 btc. It will go up as more people "transact" with our system.  We only ask for a small fee for which is "pooled" together to off-sent any non-paying borrowers.

Please let us know what questions you may have regarding this service.

Thank you! Grin

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indio007
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August 28, 2011, 11:07:10 PM
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You might want to read this thread
https://bitcointalk.org/index.php?topic=35117.0

Your going to need a lot of capital to cover losses or have a large pool of policy holders. My suggestion is to make sure any would be scammer has skin in the game to mitigate both of these.
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August 28, 2011, 11:25:50 PM
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You might want to read this thread
https://bitcointalk.org/index.php?topic=35117.0

Your going to need a lot of capital to cover losses or have a large pool of policy holders. My suggestion is to make sure any would be scammer has skin in the game to mitigate both of these.

great thread thanks!  yes, have the borrower have more skin in the game is a smart idea but of course that is the whole point they don't have any bitcoins to have any "skin" in the game ...maybe $$ ?

edit: I think we can off-set it by the sheer number of transactions plus keep in mind it's only 50 percent of the loan is covered... but reading over that thread now   Grin

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August 28, 2011, 11:28:39 PM
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The first thing you need to answer is why anyone should trust you in the first place.

Unless there's some really good reason to trust you then anyone using your service (as a lender) is now taking on two risks:

That the borrower will steal their funds.
That YOU will steal their funds.

That's one more risk than they presently have to take.

Then you need to explain what restrictions you'll place on borrowers - after all, you don't want a situation where someone with 2 accounts here can lend from one to the other via you and keep the loaned money plus get a 50% refund from you.  i.e. your system won't work if the lenders can decide who to lend to - as it makes scamming massively easy.
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August 28, 2011, 11:32:26 PM
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The first thing you need to answer is why anyone should trust you in the first place.

Unless there's some really good reason to trust you then anyone using your service (as a lender) is now taking on two risks:

That the borrower will steal their funds.
That YOU will steal their funds.

That's one more risk than they presently have to take.

Then you need to explain what restrictions you'll place on borrowers - after all, you don't want a situation where someone with 2 accounts here can lend from one to the other via you and keep the loaned money plus get a 50% refund from you.  i.e. your system won't work if the lenders can decide who to lend to - as it makes scamming massively easy.

I couldn't agree more  about trusting us. Obviously, there are people already taking the risk against lending 5 btc  so .25  btc isn't a big deal to them  I'm assuming you mean ALL fee's would be scammed and ran away with ... and no claims could be paid out I suppose that would make the service a moot point then and wouldn't be worth the trouble I don't think ?  (since the first claim wouldn't be fullfilled we would be out of business)

Yes, already thought about the 2 scammer part where they play out as 2 people but that is the risk we take as we'll be doing our homework on the people also Smiley

edit: we would probably follow the same guidelines as IBB bank  200 + posts ,etc., etc.      btw: would trust help if we had IBB bank behind us?

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August 28, 2011, 11:34:25 PM
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I thought of this scenario. Straw borrower. Using more than one Alias is trivial. Why not lend 10 BTC to my fake self , pay for the insurance and get a free 4.5 BTC? Would you also buying the right to recover from the defaulting borrower they caused the claim to be paid?

Insurance is not a simple endevour. Even the way  insurance is in the mainstream, it's rife with fraud. By the Ins. companies and policy holders .

I back the insurance idea 100%. Getting it right is the hard part.
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August 28, 2011, 11:37:19 PM
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I thought of this scenario. Straw borrower. Using more than one Alias is trivial. Why not lend 10 BTC to my fake self , pay for the insurance and get a free 4.5 BTC? Would you also buying the right to recover from the defaulting borrower they caused the claim to be paid?

Insurance is not a simple endevour. Even the way it insurance is in the mainstream, it's rife with fraud. By the Ins. companies and policy holders .

I back the insurance idea 100%. Getting it right is the hard part.

Right, it's the old let me kill my "fake friend" to get his life insurance policy trick.  At some point there is always going to be a risk it's just a matter of whom do you want it to fall upon. If we find 100 percent of lenders are making claims for fraudulent lending then we are out of business  I would think?


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August 29, 2011, 12:43:10 AM
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I thought of this scenario. Straw borrower. Using more than one Alias is trivial. Why not lend 10 BTC to my fake self , pay for the insurance and get a free 4.5 BTC? Would you also buying the right to recover from the defaulting borrower they caused the claim to be paid?

Insurance is not a simple endevour. Even the way it insurance is in the mainstream, it's rife with fraud. By the Ins. companies and policy holders .

I back the insurance idea 100%. Getting it right is the hard part.

Right, it's the old let me kill my "fake friend" to get his life insurance policy trick.  At some point there is always going to be a risk it's just a matter of whom do you want it to fall upon. If we find 100 percent of lenders are making claims for fraudulent lending then we are out of business  I would think?



It doesn't need 100% of lenders to claim for you to be out of business.  Just needs a percentage where the 50% refunds exceed your total refunds you have to give.

so if your average loan was 5BTC then you'd be repaying 2.5btc per claim.  With your fee being 0.25BTC that means you make a loss if more than 10% of loans end up in claims.

I'm really not getting the impression you've put too much thought into this.  E.g. things you haven't covered:

1. Your website has no rules on criteria borrowers must meet.
2. You appear to be charging a fixed fee of 0.25.  So if I loan someone 1000 BTC you'll give me back 500 if they steal for a fee of 0.25?  i.e. you're saying there's a 1/2000 chance you'd have to pay out?
3. You've given no statement about or proof of your liquidity.  i.e. if the FIRST loan you insure gets stolen do you even have the BTC to give the insurance payout?
4.  You've not indicated how you decide whether a loan has been stolen.  Do you pay out 1 week after they haven't repaid? 1 month? 1 year?

You seem to have just put up a web-form and then hoped people will send you 0.25BTC with no details provided.  The only people who will take you up on that are scammers.
bitprotection
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August 29, 2011, 05:33:27 PM
 #9

I thought of this scenario. Straw borrower. Using more than one Alias is trivial. Why not lend 10 BTC to my fake self , pay for the insurance and get a free 4.5 BTC? Would you also buying the right to recover from the defaulting borrower they caused the claim to be paid?

Insurance is not a simple endevour. Even the way it insurance is in the mainstream, it's rife with fraud. By the Ins. companies and policy holders .

I back the insurance idea 100%. Getting it right is the hard part.

Right, it's the old let me kill my "fake friend" to get his life insurance policy trick.  At some point there is always going to be a risk it's just a matter of whom do you want it to fall upon. If we find 100 percent of lenders are making claims for fraudulent lending then we are out of business  I would think?



It doesn't need 100% of lenders to claim for you to be out of business.  Just needs a percentage where the 50% refunds exceed your total refunds you have to give.

so if your average loan was 5BTC then you'd be repaying 2.5btc per claim.  With your fee being 0.25BTC that means you make a loss if more than 10% of loans end up in claims.

I'm really not getting the impression you've put too much thought into this.  E.g. things you haven't covered:

1. Your website has no rules on criteria borrowers must meet.
2. You appear to be charging a fixed fee of 0.25.  So if I loan someone 1000 BTC you'll give me back 500 if they steal for a fee of 0.25?  i.e. you're saying there's a 1/2000 chance you'd have to pay out?
3. You've given no statement about or proof of your liquidity.  i.e. if the FIRST loan you insure gets stolen do you even have the BTC to give the insurance payout?
4.  You've not indicated how you decide whether a loan has been stolen.  Do you pay out 1 week after they haven't repaid? 1 month? 1 year?

You seem to have just put up a web-form and then hoped people will send you 0.25BTC with no details provided.  The only people who will take you up on that are scammers.

Right, where claims exceed 50 percent then the business would be in trouble.  Answers to your questions:

1. Your website has no rules on criteria borrowers must meet.
I mentioned they are the same as IBB criteria.
2. You appear to be charging a fixed fee of 0.25.  So if I loan someone 1000 BTC you'll give me back 500 if they steal for a fee of 0.25?  i.e. you're saying there's a 1/2000 chance you'd have to pay out?
No, there is a limit up to 10 btc.
3. You've given no statement about or proof of your liquidity.  i.e. if the FIRST loan you insure gets stolen do you even have the BTC to give the insurance payout?
Yes, for the first go around we have the amount of btc necessary to back-up any claims.
4.  You've not indicated how you decide whether a loan has been stolen.  Do you pay out 1 week after they haven't repaid? 1 month? 1 year?
We would do an initial investigation and determine if the claim is a valid one. However long that takes.

All good questions that will be added to a F.A.Q shortly!

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