In today’s modern world, crypto currency has become the new norm. With companies and organizations allowing a person to pay in E-cash Like Bit coin. One may ask themselves “what the process of sharing or lending E-cash would be like” The technology behind crypto currency has the ability to be lent or shared among peers. This is a trending topic in the vast world of crypto currency. It is referred to as “On-Chain Technology”.
The idea behind this isn’t mainly about focusing on lending or sharing, it could solve the main problem of issuing credit, while also helping bank with the applicability of legal measures.
The technology is still in development and has a couple of issues that are holding it back from hitting the mainstream. There are many frequent questions asked by the community, some of which are answered down below:
Are These Operations Safe?
Security and credit are the two most important factors to consider for lenders or borrowers but because the blockchain technology hasn’t been in the market long enough to leave a mark, investors and organizations often look for alternatives which leads them back to questioning the safety and legitimacy of a smart contract and what authority legalizes the contract while making sure it remains the same?
How Are Borrowing And Lending Operations Carried Out?
As this is quite an important process, it’s time consuming. There’s a lot of paperwork and signing to be done. This excludes the KYC or the AML work, that’s done for general background check and to ensure the transfer goes through, without dealing with any legality hurdles. An important factor to take into account at this point in time is that on-chain processing is time consuming and the fact that the slow KYC process is mandatory, makes the entire chain of processes very hard to manage and deal with.
How Fast Can a Trade Deal Be Completed?
This is the most asked question in the crypto market. At this point in time, the average trade margin managed by the majority of computers, is 25 minutes. 25 mins can be a lot of time in the world of crypto currency where prices can skyrocket or plummet in a matter of minutes. This lag is a cause of concern, mainly due to the high wastage of both time and resources.
With these main questions answered, people can now be aware of the challenges to be faced. To create a fully viable on-chain loan environment, there needs to be a well trusted liquidity provider, which would result in smaller trade margins and overall time reduction.
A factor most organizations would fail to take into consideration, is that with better liquidity, comes a comprehensive management process. It would drastically help peers when they’re given better incentives on the process of borrowing and lending, while also helping them and the avid investors, attain confidence and place their trust into the On-Chain technology.
If all mentioned courses of action are implemented, On-Chain loans will hit the mainstream inevitably.