I think BTCJam is really cool and I generally love P2P lending. So I did a simple experiment. I collected historical data from BTCjam and other Bitcoin P2P lending sites. Then I ran a simple simulation, where I invested into each loan on the platform and observed the outcome. Needless to say, I ended up with a huge loss.
How does that make any sense? You think it's cool... But, you ended up with a huge loss?
What did you do, invest in btcjam on like 3 shitty loans and they all defaulted?
If you're quoting me, at least learn the read. I said I ran a simulation. I did not invest into any loans personally, I just gathered data and a simulated investing and calculated how much I would have earned if had invested. You can do this, because for historical loans, you already know the outcome, that is whether the borrower ended up repaying or he defaulted.
Basically, when you run a simulation and invest into all historical loans, you must end up with a positive return. This validates the fact that BTC Jam does credit scoring properly, because the interest rates compensate for the probability of default. The fact that my simulation ended up with a huge loss means that BTC credit scoring does not work.
In addition, I think the idea is cool, but the implementation does not work. Is it clearer now?
Ah, I apologize, I was obviously not reading it that way, I was pretty tired, sorry!