Today in my xcoins review, I talk about this new peer to peer lending platform that just got launch. You’ll find out how does xcoins work, who is behind it and should you use it?
How does xcoins works?
You start to signup on xcoins.io and transfer some bitcoin on the platform. Once your account is loaded, you can start lending your bitcoin to other users. You start earning “interest” everytime you do a trade and xcoin makes a cut of your profits.
Here is an example when lending 0.5 BTC
In this scenario you are lending .5 BTC. You would make 15% profit, xcoins would make 10% profits.
Traditional exchange only allow customer to use bank transfer to buy bitcoin because charge back are practically impossible with bank transfer. But there would be way too much fraud if exchange were using paypal and credit card. If a Credit Card company decided to do a charge back, the exchange would have no recourses and they’d have to stomach the BTC and the money lost.
So why xcoins do it? Because they put the risk of the transaction on the greedy lender that want to make money from the premium. There is currently a 15% premium on the bitcoin lending as seen above. So as long as you’d get fraudulent customer for less than 15% of the time, you’d end up with a profit.
xcoins say that they screen throughly all the people that want to buy Bitocins to reduce the amount of fraud. Also, new users can only withdraw a limited amount of bitcoin and the limit increase overtime for users with good history.
What I don’t like is that xcoins keep using the word lending and this is where it start getting confusing. I don’t think that people buying bitcoin with credit card and paypal are really planning on returning the bitcoins.
If they would say openly “We let people buy bitcoin with credit cards and paypal. Because there is a high risk of fraud and the lender take all the risk, the lender receive a premium and this is how you make money.” But I guess that is not a very attractive sales pitch. It might be also for legal purposes but im pretty sure it is for the first reason.
Who is behind the project?
Sergey Nikitin is the owner of the domain. I couldn’t find much information on him but xcoins have a facebook group and they also have a forum here.
It is definitely risky to sell bitcoins on the platform but if xcoins find a way to screen very well there buyers, the service might very well take off. I have seen an increase of interest in the platform for the past few weeks.
How long it has been around?
Xcoins is relatively new. It was in beta test over the summer and they launch in august based on the different press release i read online.
What are the benefits?
The main benefit for a seller obviousy is to earn around 15% interest when selling bitcoin on the platform.
For the buyer, the advantage is that you don’t need to wire money to an exchange. You can get bitcoin instantly through paypal or credit card but you need to pay a higher premium.
What are the risk?
The risk are very real for a seller. Once you turn over your bitcoin to a buyer, they can decide to challenge the paypal transaction and Paypal almost always side with the buyer. So the buyer would end up with the money and the Bitcoin and you’d be left with nothing else than remorse. Now this is why you get paid a premium, because there is a lot of risk.
Should you use it?
I have been looking through the forum and it seems that seller are regularly getting fraud but it seems that some of them at least still find a way to make a profit.
Keep in mind that the only person that has zero risk in this situation is xcoins. The lender is taking all the risk. So if you are the type of person that like extreme sports, this might interest you. But if you are like me and are quite happy with the double digits return of Bitcoin and other altcoins, you might want to watch from a distance.
If you used the platform in the past, we would love to ear from you. let us know how was your experience in the comment below.
Morden Harker says
Useful information, but why would you say the lender is greedy? They’re just trying to make a profit off a service. Everyone needs to make money somehow, and, like you said, there risk is huge. They aren’t greedy.
This will fly when the “borrower” (really a buyer) cannot charge back. The “lender” (really a seller) has no control over the release of BTC from their xCoin wallet (escrow). So the appropriate risk sharing profile is for the “borrower” not to have chargeback ability.
1) In Kenya and other countries where the mobile money transfer platform MPesa is used, the concept would be accommodated by the platform.
2) Alternatively, perhaps Paypal can create a special payment option with no charge back capacity where the purchase is Bitcoin (altcoin).
I am in need of buying bit coins but everywhere I go its an outrageous fee for them anymore I ran across this site. The offer was one of those too good to be true…i prefer not buying through my bank account and they accept PayPal…does anyone have any other Bitcoin sites they reccomend for buying being able to use PayPal MasterCard etc and at least escrow that I don’t have to wait days to receive my bit coins?
Jake Belvins says
xCoins is probably the best Platform right now for getting Bitcoin Instantly imho
It may be good for the buyer but for investors or lenders its not so good. You are exposed to risk. The software has loopholes that can allow users to exploit the lender and receive bitcoin without paying. (I am not referring to chargebacks) there is another much more sinister and really simple way to game the system. I have taken a loss due to this exploit. The coin is gone, no payment. As for customer service, yeah.. right.. Your On Your Own. I would recommend investors look elsewhere to turn their coin as lower risk.
SCAM! They charged me 76% to withdraw my Bitcoins! I could only take 24%, as they (with sarcaasm over the email) said it was the ‘miners fee’. Avoid this website!