BitLendingClub Deep Insight Series: How P2P Lending Helps Mainstream Bitcoin Adoption

Bitcoin Powers Global Lending!

Many within the Bitcoin community are still wondering what will be the next killer app that’s going to bring Bitcoin to the mainstream. I can’t say that marketplace lending will be that killer app, but it certainly looks like it has the potential to help a lot of people. Over the past year we’ve observed the risks associated with lending Bitcoin and it’s been an uphill battle. The community went from lending on, then a handful of marketplace lenders came in to help the community. VCs have backed some of those marketplaces and a number of others have sprung up in the process. But lenders are still trying to shake off the troubles of the early days, when scams were abundant and risk was difficult to manage. We’re now seeing an extremely promising pattern within marketplace lending, which will make lending a critical part of Bitcoin’s mainstream adoption.

Measure Success

So exactly how viable is marketplace lending? If we’re going to answer that question, then we have to have a solid basis for comparison and what’s more solid than Lending Club? Lending Club came on the scene in 2007 and it certainly didn’t start out as successful as it is today, quite the contrary.


Lending Club Since 2007

Vintage ROI Loss Loans Volume
2007 -3.44% 14.81% 603.00 $4,791,550.00
2008 -0.27% 11.83% 2,393.00 $19,975,025.00
2009 4.57% 7.40% 5,281.00 $51,814,750.00
2010 6.09% 5.86% 12,537.00 $126,351,175.00
2011 6.26% 6.65% 21,721.00 $257,363,650.00
2012 6.71% 7.40% 53,367.00 $717,942,625.00

BitLendingClub Since May 2014

Vintage ROI Loss Loans Volume
Last 12 Months -5.2% 15.68% 5840 $4,416,589.90
Last 3 Months -1.60% 7.07% 1455 $943,653.18

Data sources: and

It’s very important to note that we can be certain these statistics are accurate, because Bitcoin loans reach maturity a lot sooner than loans in the fiat marketplaces. The average term on a Bitcoin loan is 30 days, and all payments are due no later than 30 days after the loan is started. This means that each loan is guaranteed to reach first payment maturity within 30 days (even if it’s a 6 month loan). An estimated 80% of the loans have become delinquent on the first payment. Of the 20% that are have become delinquent after the first payment, about 60% are fully repaid eventually.

It took Lending Club over 3 years to bring down the default rate to 7%, to have over 5000 loans per year. Within the first year of operation, BitLendingClub was able to nearly match Lending Club’s first year volume and default rate. Within the last 3 months, we’ve been able to improve the loan performance to the same levels as Lending Club’s 3rd year. The above statistics point to three significant facts:

  1. Bitcoin makes it possible to service a larger number of loans in a shorter period of time.
  2. The increased number of loans provides more data points, which help bring down default rates quicker.
  3. The lack of obstructive regulation allows businesses to provide consumers, from over 120 countries, with the benefits of an efficient lending marketplace.

All of this has been happening, while the BitLenidngClub has grown from 35% market share to 40% market share. So there was no significant sacrifice of consumer safety or economic growth needed to achieve this success.

Prevention vs Collection

These statistics are significant, because the general view of marketplace lending amongst the incumbents is that it can only work if we have collection and reporting agencies to punish defaults. However, neither Lending Club, nor any of its competitors became successful, because they were able to collect on defaults. On the contrary, they became successful, because they were able to prevent defaults. Over 90% of the applicants that request a loan on Lending Club are actually rejected [1].

The marketplace lending space in Bitcoin works quite similarly. However, there are some differences: there are no credit rating agencies and with the borrowers coming from over 70 different countries, most of the data doesn’t even exist for them. The power of Bitcoin is that it allows the marketplace to become that credit rating agency. Borrowers are allowed to build up credit history over time and progressively get access to better credit opportunities.

Why Does it Matter?

A lot of people might be wondering why this matters and the most surprising reason is that despite what we’ve heard in the news, Bitcoin can offer more financial stability. Venezuela’s currency recently dropped in value by more than 50% [2], and in the face of such economic hardship, people from Venezuela are increasingly turning to Bitcoin. At BitLendingClub we’ve had first-hand experience with that fact: Venezuela is #5 by loan volume and it has one of the lowest default rates per any country[3]. The default rate, of 0.47%, is orders of magnitude lower than the average default rate of 7.07% on our platform. With over 373 loans totaling at $189,365.97 USD, the borrowers of Venezuela have shown that despite enduring harsh economic conditions within their country, they have managed to find resilience and economic stability through Bitocoin!

The Big Picture

While looking at the data is helpful, it’s also important to keep the big picture in mind. Yes, marketplace lending is quite small today, but we’ve been able to match and outperform the first-year achievements of the market leader in the space, Lending Club. There were $8.8 billion USD in loans originated in online platforms within the last year, but the global market opportunity is over $1 trillion. And while Bitcoin is the currency that allows us to facilitate these loans, we’re not just restricted to Bitcoin loans, so that $1 trillion dollar market is wide open for us. The borrowers can already request loans in over 10 different fiat currencies, not just Bitcoin. Indeed, future of Bitcoin-powered marketplace lending is a lot more mainstream, than just servicing the needs of the Bitcoin community. Bitcoin allows us to service any loan, in any country and in any currency which is publicly tradable for Bitcoin. This allows marketplaces to reach global mainstream users by using Bitcoin as the value transfer protocol, and providing a seamless experience for lenders from all over the world!

[1] “Rejected Loans on LendingClub – The Post-IPO Edition”

[2] “Currency tumbles as worried Venezuelans look to swap bolivars for dollars on black market”

[3] “BitLendingClub Deep Insight Series: Defaults By Country”

Best Practices for Borrowers

Being a good borrower is not that easy. There are a lot of variables that define your personal credit worthiness.

In this line of thought we recently launched our credit scoring model. Your score is like your financial reputation, and can give lenders an idea of how responsible and reliable you are with money. Having a low score indicates you are not responsible with credit or you are just new to the system and may be a risky bet for a lender (you may default on the loan or quit making payments). As a result, you’ll likely be hit with a higher interest rate. Having a high credit score provides a great reason for lenders to believe in your ability to handle your money and loans in your name. You’re likely to be granted a lower interest rate, since you are seen as likely to repay the loan.


Don’t give up if your credit score is less than great at the beginning. As with most things, knowledge is power, and understanding what lenders are looking for will help you get your loan funded and you credit score high. Here are some advices that may help you to improve your credit-worthiness:

Verify your actual income

If you can’t give lenders adequate, legitimate information that shows proof of income and assets that can be used to pay back the loan, the lender may decide not to venture with your listing at all. That is why we strongly recommend to keep the income information in your account up to date. All the documents you submit pass through a detailed inspection by our verification specialists and remain securely in our database.


Verify your identity with Lenddo

We’re working together with Lenddo in order to provide our borrowers with another easy way to verify their identity and demonstrate their creditworthiness. The only thing you need to do is to give Lenddo a permission to review your personal email information. Connecting Lenddo would take only 2 minuses but it may also cause a great impact on your credit score!


Link all your social and trusted connections

Most of the lenders take into account social media presence when determining a loan applicant’s eligibility, so make sure that you share as much information as you can.


We use social and trusted connections to get more information on borrowers while calculating their credit score as well. It would be good if your accounts are properly filled and all the personal information is correct. For example, adding education or marital status on Facebook or updating your professional experience on LinkedIn could have a good influence on your score.

Do not undervalue the description box

Writing is a great way to present your idea to our investors. The funding of your loan request depends on how well you present yourself and your financial needs to the lender. Be as clear and explicit as possible why you need the money. Explaining specifically what the funds will be used for and why they are needed will help our investors to decide whether they want to invest in this loan or not. Investors will also look for relevant information regarding your financial status or any other details that would expose your ability to repay the loan.


Reduce the amount of debt you owe

Having a lot of outstanding debt could indicate a greater risk of default and bring down your score. We advise to take one loan at a time and not to max your credit limits all the time.


Do not break your commitments

Possibly the most important step in building a trust is to not break your commitments. Make sure you chose the right term and payment cycle for your loan. Even if you are late with your payment by a few hours only, it could destroy the trust our investors have in you. It will affect your credit score as well.


Even a single late payment could have a bad influence on your credit score, but rather than worrying about it, be sure you cover all your due payments on time from now on. A one-time two or three days late payment will probably not drastically affect your credit score, but repeated late payments will definitely have a more significant effect, even if you are late by only a few hours each time. A pattern of lateness is worse than a one-time mistake.

Be honest

If you truly cannot meet the promised deadline, be decent enough to explain your investors the situation you are in. Telling the truth even when the truth isn’t perfectly pleasant will help you to become much more trustworthy.

Being mindful of what is takes to get debt today and attending to details related to your borrower profile can make the process of funding your loan easier. We hope you will find our advices as a good start for your future borrowing!

Profitable Lending 101

When you’re looking to invest, taking those first steps may seem a little challenging. That’s why we’ve created a short guide to investing. From how to handle risk, to developing your own diversified portfolio, we’ve covered some key points to help you make good investment choices.

What are the benefits of lending at BitLendingClub?

There are some real benefits to being a peer-to-peer lender, as well, if that is something you’re interested in:

You can earn a good interest rate: Since these loans are between individuals, you are able to make a solid return on your investment. You can enjoy returns that are several percentage points above those for a bank. Lending can deliver potentially higher returns than cash savings in the long run, but with this comes greater risk. Remember, you have the opportunity to choose the level of risk you’re happy with and the loans to invest in and how long you’d like your money tied up for.

It is important to be aware of the risks of investing. Always remember: If an investment looks too good to be true, then it probably is! Is somebody offering to pay 100% interest? If somebody is offering to pay amounts which are substantially higher than the suggested rates, then you should be alarmed.

A wide choice of borrowers to pick up from: Another benefit of lending is that you are able to choose only to invest in the borrowers that match your preferences.

No fees for our lenders:  There is no joining fee nor do we charge a transaction fee so when lenders invest. We do not charge our investors a single fee.

Making a profit is the most important— some might say the only objective of lending. Profit measures your lending success. As part of our risk management strategy, we will offer you a way to increase your returns:

Diversification is the “Golden Rule” of investing

When investing, you cannot totally avoid risk. The easiest way to manage and reduce overall risk of default is to spread your money between several loans. Diversification is most powerful way of spreading your risk and it’s the key to avoiding enormous losses. Diversification means investing in different types of loans, loans with different credit rating, term and different denomination, and may be even spreading your investments across several countries. While investing you need to remember that it takes a lot of good loans to pay for one bad loan. A balanced portfolio can shield you from huge losses. That way, if there are defaults, the hit won’t be as bad.

Achieving diversification involves following a rule: investing small amount in large number of loans. Ideally a lender should look at investing only about $50 on a single borrower at a time.  No matter how tempting it may be to put all your funds in one loan at high interest rate.  No matter how trustworthy you think the borrower is. Risking too much on one investment is a recipe for disaster, even for the sophisticated lender.

Will diversification guarantee that you’ll never lose? Certainly not, but it helps to minimize the amount of risk you face and you’re less exposed to the risk of one investment failing or performing badly. If, for example, you invest 2000 USD in one loan, your portfolio then becomes vulnerable to risk of default. If however, you distribute the same amount among several loans, you will increase your chances of obtaining a good overall return, regardless of the default probability. It’s almost guaranteed that diversification reduces losses in your portfolio and helps to provide a better overall investor experience.

We would like to ask you to take some time and read about important changes that will affect in the next release.

Spread out your risk and increase your returns
In order to boost your profits we would advise you to invest small amounts in many loans. When you make an investment, we will help you diversify and show you the maximum amount you should invest in a loan in order to diversify your risk and have higher returns on your investments. Your limit will be based on the number of your investments and your profit. To ensure diversification of the investment portfolio and reduce risk, the limits will be mandatory. The imposition of lending limits will help you spread out your risk and increase your overall returns. We’ve shown the amount you should invest in a loan in the handy table below:


If your profit is not enough and you need to make large investments, you can always request higher lending limit.

Risk-based pricing
After an extensive analysis of the loans within our system, we have come up with suggested rates based on the loan credit rating which will improve lenders’ investing performance. Moreover, borrowers with good credit histories would be rewarded with lower rates. The suggested interest rates are adjusted based on the risk and volatility. Complying with the risk-based pricing rules will help lenders achieve positive returns.

The table below shows the rates for the different credit ratings:


When will this change become effective?
These changes will be effective from May 27, 2015.

Who will be affected by the changes?
These changes will affect all BitLendingClub users and will be mandatory.

We understand that this is a fairly large change, so we would be happy to hear your feedback on these updates. Let us know your thoughts and we promise to continue improving our system based on your opinion.  We read everything, and your comments, ideas and reports really have a big influence on the further development of our platform.

If you have any questions feel free to contact our support at

Best regards,
The BitLendingClub Team

BitLendingClub Deep Insight Series: Defaults By Country

BitLendingClub was founded on two core values in mind: be as transparent as possible (resources permitting) and only collect fees from the loan repayments. These core values differentiate us from any other lending marketplace out there and we still abide by them today. The unique thing about BitLenidngClub is that when a borrower defaults on a loan, we don’t make money at the expense of our lenders. Having your incentives properly aligned is a strong driving force to lower defaults, and lowering defaults is always an ongoing effort at BitLendingClub.

Our efforts in underwriting have been extremely successful: we’ve managed to lower defaults by 50% in the past 2 months. Our defaults went from an average of 17% in the months before March to 7.7%:

However, there is always room for improvement. One of the areas our lenders have always wanted to explore is the detailed statistics on loan origination and defaults by country. In this post, we will explore what are some safe countries to invest in and what are some risky ones.

Loan Volume By Country

The loan volume by country is already available in our statistics page, but for reference purposes I’m going to include it again.

Default By Country

We calculated the defaults from the loan volumes: i.e. the total amount of loans in each country and the amount of defaulted loans. Please note we count late loans as defaults too. We feel like this is the most accurate way to calculate defaults, because it directly translates into the loss rate for the lenders. For those who want to calculate the loans by the number of loans which are currently late/default, we’ve conveniently included all of the detailed statistics for each country at the end of this blog post.

Please note that the sample size for Vietnam and Nigeria was too small (2 loans and 1 loan, respectively), so we didn’t include them in our default statistics. Both countries have a default rate of 100%, but the sample size was too small and it made the countries stand out, despite having almost no loan being originated there.

The Naughty List

The naughty list consists of the top 10 countries with the worst default rates:

Philippines 56.38%
Latvia 49.48%
Iran 39.85%
Ghana 39.32%
Moldova 37.25%
Lithuania 34.15%
Jamaica 31.23%
Colombia 31.18%
Indonesia 29.56%
Thailand 28.12%
Netherlands 27.81%
Singapore 27.50%

We have to say that the ones that stand out the most are Philippines, Indonesia, Thailand and Singapore. We’ve had a large number of loans from those countries and the default rate is quite high, this makes the statistics quite reliable. While there are good borrowers from those countries, it seems that there is a pretty high risk of default and our lenders should be very careful when lending there. Netherlands is a bit of an odd ball, because in the early days of BitLendingClub there was a scammer from there that was responsible for most of the defaults.  We don’t get many borrowers from the Netherlands, Ghana, Moldova, Lithuania and Jamaica, so we welcome any good borrowers from those countries to improve the reputation of their motherland!

The Good List

Ukraine 4.11%
South Africa 4.09%
Portugal 3.21%
Chile 3.10%
Australia 3.07%
Italy 0.97%
Venezuela 0.47%
Mexico 0.01%
Kuwait 0.00%
Switzerland 0.00%
Ecuador 0.00%

We tried to pick countries which are not at the very bottom of the list by loan volumes and at the same time they have low risks of default. While the loans from those countries are few and far in between, it does seem that at least for now they’ve been a relatively safe bet. Of course, all of this can change if some bad players end up defaulting on large loans. As always, invest with care and perform your due diligence carefully!

The Big Players

United States 22.84%
Brazil 8.26%
Australia 3.07%
New Zealand 22.14%
Venezuela 0.47%
United Kingdom 9.77%
India 7.25%
Canada 10.73%
Spain 15.26%
France 13.62%

These are the top 10 countries by loan volume and their respective default rates. As we can see, Brazil, Australia, Venezuela and India are the shining stars on the list: all of the countries have default rates below 10%. Kudos to the big boys!

Full Statistics

Finally, here are all of the statistics per country.

Country Default Rate Num Loans USD Total Num LnD Loans USD LnD
Vietnam 100.00% 2 $232.72 2 $232.72
Nigeria 100.00% 1 $11.24 1 $11.24
Philippines 56.38% 19 $4,213.18 5 $2,375.38
Latvia 49.48% 23 $5,367.28 5 $2,655.84
Iran 39.85% 30 $11,034.92 4 $4,396.87
Ghana 39.32% 10 $1,191.12 1 $468.38
Moldova 37.25% 16 $16,009.23 3 $5,964.08
Lithuania 34.15% 5 $665.10 1 $227.12
Jamaica 31.23% 10 $993.32 1 $310.19
Colombia 31.18% 66 $13,224.57 8 $4,122.76
Indonesia 29.56% 197 $34,310.58 24 $10,143.73
Thailand 28.12% 56 $54,516.82 6 $15,327.61
Netherlands 27.81% 26 $6,602.10 3 $1,835.84
Singapore 27.50% 36 $22,656.11 1 $6,230.60
Argentina 24.68% 39 $83,874.49 6 $20,704.06
Romania 23.53% 115 $50,406.43 15 $11,858.22
Hungary 23.02% 126 $60,784.13 12 $13,990.31
United States 22.84% 1451 $1,276,190.19 137 $291,512.52
New Zealand 22.14% 125 $314,147.31 19 $69,549.94
Russian Federation 18.39% 34 $13,598.76 5 $2,501.38
Morocco 17.64% 8 $3,864.39 1 $681.59
Croatia 16.04% 25 $11,885.78 3 $1,906.05
Spain 15.26% 66 $101,597.30 10 $15,504.97
Estonia 13.77% 5 $1,671.89 1 $230.28
France 13.62% 122 $92,384.59 5 $12,582.90
Ireland 13.18% 37 $51,328.73 9 $6,763.13
Turkey 12.55% 195 $73,594.05 17 $9,239.37
Belgium 11.99% 15 $3,661.56 3 $439.15
Canada 10.73% 206 $129,717.24 11 $13,912.21
Greece 10.39% 47 $77,751.28 2 $8,074.63
United Kingdom 9.77% 376 $169,934.69 32 $16,610.87
Malaysia 9.27% 23 $4,344.76 2 $402.56
Poland 9.13% 16 $4,629.59 3 $422.80
Czech Republic 8.80% 74 $24,505.37 2 $2,157.36
Serbia 8.41% 15 $4,134.00 1 $347.68
Kenya 8.36% 31 $4,820.74 3 $403.18
Brazil 8.26% 324 $411,754.90 29 $33,993.05
Finland 7.43% 12 $1,670.41 1 $124.15
India 7.25% 288 $133,334.49 11 $9,665.04
Sweden 6.90% 24 $9,773.14 1 $674.32
Hong Kong 5.08% 10 $6,903.73 1 $350.71
Denmark 5.03% 12 $3,985.93 1 $200.31
Germany 4.13% 71 $28,741.06 3 $1,187.29
Ukraine 4.11% 20 $11,559.51 2 $475.14
South Africa 4.09% 19 $14,459.97 1 $591.58
Bulgaria 3.22% 151 $7,819.26 1 $251.52
Portugal 3.21% 20 $10,459.26 1 $336.25
Chile 3.10% 11 $7,110.02 1 $220.20
Australia 3.07% 180 $359,403.71 7 $11,022.66
Italy 0.97% 54 $69,319.98 2 $670.30
Venezuela 0.47% 373 $189,365.97 2 $889.38
Mexico 0.01% 23 $44,831.27 1 $6.36
Kuwait 0.00% 19 $43,241.49 0 $0.00
Switzerland 0.00% 88 $21,518.47 0 $0.00
Ecuador 0.00% 33 $16,491.25 0 $0.00
Panama 0.00% 18 $10,717.10 0 $0.00
Slovenia 0.00% 5 $6,040.94 0 $0.00
Bolivia 0.00% 7 $3,627.58 0 $0.00
Norway 0.00% 4 $2,738.70 0 $0.00
Paraguay 0.00% 18 $2,626.60 0 $0.00
Luxembourg 0.00% 8 $1,030.58 0 $0.00
Cayman Islands 0.00% 3 $650.87 0 $0.00
United Arab Emirates 0.00% 3 $611.91 0 $0.00
Pakistan 0.00% 7 $393.88 0 $0.00
Japan 0.00% 2 $368.60 0 $0.00
Belarus 0.00% 2 $209.84 0 $0.00
Bosnia and Herzegovina 0.00% 8 $193.71 0 $0.00
Saudi Arabia 0.00% 2 $100.91 0 $0.00
Albania 0.00% 2 $96.86 0 $0.00
Peru 0.00% 2 $67.55 0 $0.00
Gibraltar 0.00% 1 $23.98 0 $0.00
Sri Lanka 0.00% 4 $0.64 0 $0.00
Dominican Republic 0.00% 1 $0.23 0 $0.00


Borrowers Per Country

Country Num Total Borrowers Num Default Borrowers Percent
United States 295 94 31.86%
United Kingdom 75 28 37.33%
Venezuela 72 2 2.78%
Brazil 54 18 33.33%
Indonesia 45 22 48.89%
Canada 36 7 19.44%
India 36 10 27.78%
Australia 27 7 25.93%
Hungary 16 7 43.75%
Colombia 14 6 42.86%
Germany 14 2 14.29%
Romania 14 8 57.14%
Russian Federation 12 5 41.67%
Spain 11 7 63.64%
Bulgaria 11 1 9.09%
Kenya 10 3 30.00%
Argentina 9 4 44.44%
Czech Republic 9 2 22.22%
Netherlands 8 3 37.50%
Philippines 8 5 62.50%
Ireland 8 5 62.50%
Turkey 8 5 62.50%
Italy 8 2 25.00%
Sweden 8 1 12.50%
France 7 3 42.86%
Latvia 6 3 50.00%
New Zealand 6 3 50.00%
Poland 6 3 50.00%
Malaysia 6 2 33.33%
Belgium 6 3 50.00%
Croatia 5 3 60.00%
Portugal 5 1 20.00%
Mexico 5 1 20.00%
Slovenia 4 0 0.00%
South Africa 4 1 25.00%
Ukraine 4 2 50.00%
Panama 4 0 0.00%
Switzerland 4 0 0.00%
Morocco 4 1 25.00%
Singapore 4 1 25.00%
Thailand 3 2 66.67%
Denmark 3 1 33.33%
Hong Kong 3 1 33.33%
Jamaica 3 1 33.33%
Greece 3 2 66.67%
Ecuador 3 0 0.00%
Moldova 3 2 66.67%
Serbia 3 1 33.33%
Chile 3 1 33.33%
Finland 3 1 33.33%
Luxembourg 2 0 0.00%
Norway 2 0 0.00%
Paraguay 2 0 0.00%
Estonia 2 1 50.00%
Vietnam 2 2 100.00%
Iran 1 1 100.00%
Bolivia 1 0 0.00%
Lithuania 1 1 100.00%
Bosnia and Herzegovina 1 0 0.00%
Nigeria 1 1 100.00%
Albania 1 0 0.00%
Ghana 1 1 100.00%
Sri Lanka 1 0 0.00%
United Arab Emirates 1 0 0.00%
Gibraltar 1 0 0.00%
Pakistan 1 0 0.00%
Belarus 1 0 0.00%
Dominican Republic 1 0 0.00%
Japan 1 0 0.00%
Saudi Arabia 1 0 0.00%
Cayman Islands 1 0 0.00%
Kuwait 1 0 0.00%
Peru 1 0 0.00%

It’s also important to get an idea of how many borrowers are defaulting in those countries, so we’ve included those statistics as well.

Kiril Gantchev | CEO of BitLendingClub | @kgantchev

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Launching a risk-based approach to setting fees

As we informed you at the beginning of the week, today we are officially launching a risk-based approach to setting BitLendingClub fees. With the risk-based fees system we attempt to adjust the price of the loan to each borrower’s probability of default. The fees described in the tables below represent BitLendingClub’s terms for a new loan based upon the credit rating and the loan amount.

BitLendingClub Fees

The release also includes the following updates:

  • When you are looking at your dashboard, you will notice that we have added a new statistic: Profit. It shows the difference between the amount earned and the amount invested, the overall profit from repaid loans ( including loss from late and default ).
  • New restrictions are placed on users with late or default loans. Borrowers who are behind on their payments are not allowed to invest or withdraw funds until their late or default loans are repaid.

Best regards, 
The BitLendingClub Team