The initial coin offering ecosystem has recently seen an increase in the amount of “lending platforms” launching offering investors the opportunity to purchase tokens. These platforms can be somewhat confusing, as despite their name, they don’t have much to do with the traditional lending and finance industry.
There have been a number of extremely successful initial coin offerings that have used blockchain technology to create platforms via which users are able to lend funds to one another via smart contracts regardless of geographic location, which could potentially become seriously disruptive to the incumbent lending industry.
Lending platforms, however, don't have anything to do with peer-to-peer lending whatsoever. These platforms instead offer investors the opportunity to “lend” their capital to the platform itself, which is then used to fund speculative ventures into the crypto currency market. In effect these funds work in a similar manner to managed funds or index funds.
These platforms typically offer extremely high returns on a monthly basis, which technically makes them high yield investment programs, or HYIPs. High yield investment programs, in some cases, are able to generate profits for investors, but have a history of collapsing due to the mismanagement of investor funds.
When investing in a high yield investment program or a lending platform, it’s important to keep in mind that you’re essentially providing your funds to a platform that will then use them to fund aggressive investment strategies. If you’re considering investing in a lending platform, it’s best to have an understanding of how the platform will use your funds to generate profits.
In this article, we’ll take a look at BitLending, which appears to be a fairly straightforward lending platform. BitLending is about to launch an initial coin offering that will allow investors to purchase tokens on their platform, so we’ll take a close look at this ICO and assess it from a critical perspective to help you make an informed decision on whether it’s worth investing in.
What is BitLending?
BitLending is a new lending platform that launching via an initial coin offering at the end of 2017. The basic principle of the BitLending platform is fairly easy to understand- by purchasing BitLending crypto tokens, investors will be provided with a monthly return on their investment in a similar manner to a traditional high yield investment program.
BitLending demonstrates both positive and negative indicators in the construction of their initial coin offering. One of the most important elements of any ICO is the white paper, which is available for the BitLending ICO via their website.
Importantly, BitLending doesn’t obfuscate the fact that it is essentially a managed index fund, and makes several references to this fact in the BitLending white paper. According to BitLending, investor capital will be used to invest in the binary options and cryptocurrency markets, which will be performed by professional traders.
The BitLending platform also explains the nature of the tokens that they are issuing- based on the Ethereum network, BitLending tokens adhere to ERC20 standards. Interestingly, BitLending has also created its on external exchange, and actually facilitates peer-to-peer lending, which is uncommon when it comes to lending platforms.
Peer-to-peer lending on the BitLending platform is executed via smart contracts, and is facilitated via an advance escrow system. The BitLending white paper does not go into any further detail about this feature, however.
The negative aspects of the BitLending ICO are common in the lending platform ecosystem. There is no public face to the BitLending platform, nor any information on the developers, which is a red flag for any ICO. The platform WHOIS information is also protected, meaning there’s no information regarding the creators at all.
This biggest red flag of the BitLending platform, however, is that it’s based in Zimbabwe, and appears to target the Zimbabwe Bitcoin market. Make of that what you will.
The BitLending ICO
The BitLending ICO will generate 28,000,000 BLD tokens, of which 9,000,000 will be available during the initial coin offering. The maximum price of each BLD during the ICO will be $1.20 USD.
The BitLending Verdict
BitLending is a fairly standard lending platform, although it does provide a larger amount of transparency than most. Ultimately, investing in lending ICOs is risky, especially if you’re not sure who will be handing your crypto to invest it. If you’re willing to absorb the risk associated with these ventures, however, BitLending is worth consideration.