Dharma Wants To Begin Micro Loans Using CryptocurrencySeptember 1, 2017 4:03 am
Decentralized apps, known as dApps, are open-source applications that are made on top of a blockchain but one can’t access the dApps unless they have tokens that were issued from the projects.
Many of those are turning to Bitcoin or Ethereum if people miss out on the dApp’s ICO, which makes one need to send money to an exchange, convert it to the token, and then send the token to the dApp.
However, Dharma wants to change that as part of this summer’s Y Combinator batch and allow people to get small cryptocurrency loans in just a few minutes so they can use a dApp without going through the lengthy process, according to TechCrunch.
Right now the loans are only denominated in ether (which only some dApps accept), but eventually, Dharma wants to support the borrowing and lending of any crypto asset with loans denominated in USD so neither side is exposed to the volatility that can go along with crytocurrencies.
Dharma is an open-source plugin which means developers can essentially plug a line of credit into their dApps so users can get tokens to use without leaving their platform, and can also be used without a dApp, by someone who wanted to borrow a cryptocurrency to use for no specific purpose.
The loans would be peer-to-peer which means Dharma isn’t loaning you the money, they are building the open-source protocol for facilitating the borrowing and lending of cryptocurrency and all loans are represented by Dharm’s new ERC20-based token which is from the Ethereum blockchain.
Dharma will likely limit first-time borrows to only small amounts, but over time users can build up a repayment history to increase the amount able to be borrowed.
Currently, Dharma is the only entity that is approved to decide a borrower’s credit value and approve the loan, but they hope to pass that on to other approved borrowers, like for an African Telecommunications company that would have access to more information about its user than Dharma could have.
–WN.com, Maureen Foody