Quote from: Vod on January 17, 2014, 02:54:01 AM

Quote from: drewster on January 17, 2014, 02:50:36 AM

My day job is the business of lending

Which raises a giant red flag. If you actually are a professional lender, why are you paying out 15%-20% on these one week loans?

A professional would go purchase the coins himself and save 20%. But you keep paying out 20% over and over again. Roll Eyes

I can see a legit user needing one loan, maybe two if they handle their money poorly. But a professional lender who keeps borrowing over and over and paying interest?

I'm trying to figure out if there's an opportunity there, and if it's scalable at all. Specifically, if it's possible to borrower longer term and lend out short. This market is exactly backwards from the standard lending markets. In most lending markets -- treasuries, mortgages, auto loans, corporate bonds, shorter terms have lower interest rates than longer terms do. That's how banks make most of their money -- borrow short and lend long.

But on this Btcjam it does not seem to be like that -- the longer term loans -- not the loan REQUESTS, but the ones that are actually funded -- tend to have cheaper rates than the shorter ones. I think the reason for this is that only those who have established a solid repayment history are the only ones that ever get funded on the longer terms, regardless of what the rate is.

So for example it seems common to be able to borrow at 15% for a month (astronomically high by any normal standards) but then lend several times at 10-15% or higher in a week. This is even more exaggerated because many borrowers will do stupid little loans at high rates and then repay them immediately to build rep -- so many times a 7-day loan will be repaid in a day but with full interest. From that point of view there is appears to be a profit opportunity, but the question is if the defaults can be made low enough to have it net positive. And if all that works out, can it be scaled up enough to be worthwhile of the time spent.