The relationship between financial micro-credits and cryptocurrencies

Written by Davies on / Reading time: 3 minutes.

The relationship between financial micro-credits and cryptocurrencies

There is a myriad of factors that threaten a changing reality in the financial universe. Among these, today we want to highlight the role of micro-credits. The cryptocurrency world is born from a disruption technology and change of mentality. Finances are suffering the effects of a revolution that has transformed the payment methods and find a way to a more efficient and unselfish act. The movement of this philosophy continues expanding incessantly from side to side in the world, so that we not speak only of Bitcoin, but also Etherum, Ripple, Davies, Dash, etc.

Today, we are ready to face this phenomenon from the side of financial micro-credits. Stay with us and don't miss it.


What is a financial micro-credit?

"Microcredit is a form of financing which is characterized by providing small amounts of capital to promote productive projects of SMEs in sectors of the economy." In other words, a micro-credit is a loan for a small amount of money with a high interest rate and a very short time of return. Let us take an example: a loan of €200 with an interest rate of 1% to return in 10 days.

Its main features include its possibility of being short or medium-term, the adjustment to the needs of each company and its adaptation to the number of employees. Companies often use it to make money on own costs or the purchase of fixed assets, such as technology. The ultimate goal is always the impulse of the organization towards a growth.


What happens to microcredits?

Small businesses and micro-enterprises are the main recipients of these financial assets. In general, however, banks are not interested in granting such minimal loans. So, what happens to these companies? According to Crypto Noticias (Crypto News), "the size of the microfinance market world was estimated at 87 billion dollars in 2014 and is currently growing around 10-15% per year."

In general, banks do not ask for guarantees for this type of loans and the risk of delinquency is amortized with a high rate interest. As a result, companies are facing a problem. Banks are monopolizing markets in a direct way, although they do not have shares of many of the companies, some of them do owe money to the bank. This is because they have had to ask for credit lines, loans in order to expand, etc.


A real alternative for companies

Cryptocurrecies can facilitate this phenomenon for companies, although not all of them can achieve it. Over the past year, smarter, more modern and anchored virtual currencies have emerged to present needs. Thanks to these advances it seems that the decentralization of this system and the immersion in the financial world of loans and microcredits between individuals is getting closer.

First, we could start doing it in circles of trust, just like between friends or family. Something as common as borrowing money when you are in any part of the world must have a universe of possibilities that does not find difficulty in its path.

Of course, this is not an easy road, but it marks the beginning of a change with which millions of people can be favored. The risks in companies' microcredits can disappear forever.

Why not start doing it by allowing anyone to lend money to another by applying the interest and return time you want?