- BTCpop offers the best default protection in the market – insurance up to 50% of the loan, a borrower’s collateral mechanism, and partnership with an international debt collection agency.
- Acquisition of Ardeva allows the outsourcing (insourcing?) of account verification, which is thoroughly done, while protecting borrower privacy.
- Internal flotation of shares allows for collateralization of debt
- APRs are very high for borrowers, which discourages the most quality profiles from using the platform.
- Third higest loan volume in the market and growing.
BTCpop has hit the bitcoin lending ground running, introducing a number of novel concepts that will must likely become standard in the wider market. Debt collateral, which had not made an appearance in the p2p bitcoin lending, is introduced utilizing a clever method of crowdfunding directly through the btcpop platform. And despite some of their previous controversies, the acquistion of Ardeva, a company that has been solely focused on account verifications, lends more professional airs to the process, though it does also make it a bit more intensive. We are also fond of the loan insurance concept, but its current form – in which this is a small premium added as a fixed fee to the borrower, adds to already high interest rates. We hope to see the introduction of an insurance fund instead, though we have no idea if there is actually any demand for it.
In any event, the product is very good, and the motivated team seems to be working on a number of enhancements that will improve it even further. The big question for btcpop is their ability to attract serious and sustained loan liquidity.
BTCpop is run out of Hastings, in Southeast England. The team of eight is led by CEO and founder Lee Bartholomew who has a background in development. This background shows — absent the relatively large financing secured by some of its competitors, BTCpop has depended on its product to compete, and compete it has, surpassing bitbond to become the third largest bitcoin lending company, and endearing itself, along with bitlendingclub, to the niche community.
btcpop acquired the private company Ardeva to manage their user verification process. Borrowers are redirected to a Ardeva’s site, where they link their account by entering their pop username. Each step of the verification process is given a score, and
|ID Verification||Government ID – front, back, picture holding ID as well as a paper with a four digit Ardeva reference number||+10|
|Home Address||Two recent utility bills||+10|
|Postal Verification||Post the four digit number written on post card sent to home address||+15|
|Income||Three different proofs of income: Tax statement, pay check stub, bank statement, etc||+10|
|Video Presentation||15 seconds on video, stating full name, 4 digit reference, which should also be written on a piece of paper||+15|
|Phone Confirmation||SMS verification||+5|
|Credit Card||Ardeva charges one pound to a user’s credit card (cheeky), and the user must input the 4 digit reference.||+15|
|Twitter, Facebook and/or linkedin||Link accounts||+5 each|
A full Ardeva verification provides users with 60-70 reputation points, which are used to determine a borrower’s credit rating. Reputation points are earned by building a record of successfully paidback loans on pop. Though subject to change, the following table shows the number of reputation points required for each particular credit level. Fees are determined by lenders, but will always start at a baseline of 5%- 4% going to pop, and a 1% contribution to the their default insurance fund.
|Reputational Points||Credit Level||Fee||Insurance Rate (Average)|
This system encourages a number of interesting dynamics. First, while pop takes fees upon disbursement which we are generally opposed to, in this case they are still very directly incentivized to ensure borrower quality to minimize their insurance payments. And, as opposed to bitlendingclub who also employs a dutch auction loan methodology, pop provides tangible benefit to securing a higher credit rating in the form of greater insurance coverage, thus encouraging lender confidence/lower interest rates. (BLC just provides guidance suggesting lower premiums for higher ranked borrowers, but nothing binding).
Pop boasts 20 different linked-currency loans. A linked loan maintains the value in the underlying fiat of the initial principle. Regardless of whether bitcoin moves up or down, the payback will be represented according to the initial investment value in the relevant fiat. For any loans meant for non-bitcoin related expenses, this is highly recommended to avoid bitcoin volatility undermining ability for loan payback.
BTCpop has a few different lending pools, known elsewhere as autoinvest, allowing diversification across all particular loans of a particular credit rating. Investors can divide funds between the different credit rating pools to diversify risk according to their particular appetite for risk. Additionally, there is a “trusted pool” which consists only of borrowers that a particular investor has marked as trusted previously.
Savings pools, are meant to be risk free, and offer a 5% APR, paid out at a daily rate of .0137% – but the interest is not compounded. Funds can be removed at any time.
Picking your loan
BTCpop’s loan listing interface has a look similar to many other products in the market, with an interesting difference being that some of the borrowing request are marked with a “lock” icon.
Expanding the specific loan request and clicking on more opens more details on the borrower, including feedback and borrowing record, location information and verification details from Ardeva.
Inquisitive investors can check out more detailed info with a click on the “view token” link under the Ardeva box, which opens up a screen showing all information collected – with personal contact details censored – of the borrower in question. Scrolling down reveals information about the loan, including the description, investors and comments.
A box on the right called “security”, details the amount of insurance covered by btcpop for the particular loan, as well as the collateral offered by the borrower. Collateral, at present time, are limited to shares in btcpop and ardeva, which are offered directly through the platform.
BTCpop is currently selling 10,000 non-dilutable “fee shares”, which entitles the owner to .001% of fees collected on the platform. Each share, at a cost of .03 btc, values the company at $720,000 – a not unreasonable valuation, considering that bitbond, a company with a good amount less trading volume, recently raised EU 800,000 in venture capital. Of course, shares entitle owners only to a percentage of fees collected, not to a percentage of the actual company. Dividends are paid out monthly.
Revenue shares representing 15% of Ardeva are also being sold on the platform, with each share it’s owner to .00015% of the revenue collected by Ardeva. This values Ardeva at $800,000, and represents the belief that Ardeva can provide disruptive presence in mainstream verification processes.
Not only is this an interesting concept as it allows users to get some skin in the game, and thus become more motivated ambassadors and users of btcpop, there is incentive on the part of borrowers to buy shares to use as collateral and boost their reputation. This creates a market for the shares and allows btcpop to offer a unique service, namely, borrowing collateral.
So lender’s might find borrowers with a considerable percentage of the loan request backed up by collateral in the form of shares. Additionally, as mentioned above, btcpop offers an additional risk hedge in the form of insurance should a loan go south.
And to top it off, btcpop has been taken a much more active stance towards default. They recently began working with an international debt collection agency who works to reclaim loans, or portions thereof, after a payment has been late for 21 days or more. Should a debt collector succeed, which is highly doubtful, the recovery minus fees are returned to the lenders.
We are very impressed with the support offered by btcpop. Chad, who runs their customer support lines, is extremely knowledgeable and exhibits a genuine enthusiasm for the product, a lovely change of pace when one is used to struggling to elicit an intelligible grunt from support staff elsewhere.
BTCjam offers a number of innovative features that have allowed for admirable growth in its first nine months of operation without the need for serious marketing. We hope to see some VC backing secured an used for greater customer acquisition alongside continued product development. But even without, Jam has become one of the favorite products amongst the bitcoin lending crowd, and it is worth checking out.