dApps, or decentralized apps, are open-source applications built on top of a blockchain.But heres the thing users usually cant interact with these dApps unless they have tokens issued by these projects.For example, bothAugur, a decentralized prediction market and REXMLS, a free global listing network for real estate, require tokens to interact with.
But if you didnt participate in the dApps ICO, getting these tokens isnt easy.
While some tokens trade on exchanges, youd have to first buy Bitcoin or Ethereum (which still isnt necessarily easy), send it to an exchange, convert it to the token, then send to token to the dApp. Its a process, to say the least.
So, enter Dharma, a company part of this summers Y Combinator batch.
Dharma wants to let anyone get a small cryptocurrency loan in just a few minutes, so they can use a dApp without going through that long process to acquire a token.
Right now these loans are only denominated in ether (which some dApps accept), but eventually Dharma wants to be able to support the borrowing and lending of any crypto asset. All loans are denominated in USD so neither side is exposed to the volatility risk associated with cryptocurrencies.
Since Dharma is built as an open-source plugin, developers can essentially plug a line of credit directly into their dApp, so users can get tokens to use without ever leaving the platform. Dharmas protocol can also be accessed without going through a dApp at all, if someone just wanted to borrow a cryptocurrency to use for no specific purpose.
Of course its a little lotmore complicated than this on the backend.
The loans themselves are peer-to-peer, meaning Dharma isnt actually loaning you any money they are just building the open-source protocol to facilitate the borrowing and lending off cryptocurrency. And all loans are represented by Dharmas own newly issued ERC20-based token, which lives on the Ethereum blockchain.
So how does Dharma make money?
The startup is also handling the credit risk assessment / loan approval process which is the only aspect of the protocol that is not decentralized. At launch Dharma will collect basic KYC (know your customer) information from borrowers and decide if the borrower is likely to pay back the loan.
Since loans arent collateralized and there is no actual credit check, Dharma will likely limit first-time borrowers to small amounts of cryptocurrency. But over time as users generate solid repayment history they may increase the amount able to be borrowed, which is a model not so different from Affirm. In return for verifying a borrower, Dharma (the startup, not the protocol) will be allocated a certain portion of loan principal as a fee.
Right now Dharma is the only entity that is approved to decide a borrowers creditworthiness and approve a loan. But eventually they want to permission other entities to step in and approve borrowers for example, an African TelCo has a lot of information on its users that Dharma doesnt have, that could be used when deciding to approve them for a loan.
Dharma isnt totally live yet but you can try it out on Testnet, which is a faux version of Ethereums blockchain just used to test apps.On Testnet Dharma works withMetamask a chrome plugin that lets you run Ethereum dApps right in your browser and 0x a decentralized token exchange. But soon Dharma plans to launch on Ethereums live network and integrate with many more dApps.
If you want to learn more about Dharma, you can check out their White Paper right here.
Read the original post:
Dharma wants to let anyone borrow a small amount of cryptocurrency – TechCrunch
- Cryptojacking Lets Strangers Mine Cryptocurrency With Your ... - October 21st, 2017
- Introduction to Cryptocurrency - CryptoCurrency Facts - October 14th, 2017
- Cryptocurrency Flash Crash Is Said to Draw Scrutiny From CFTC ... - October 7th, 2017
- Cryptocurrency Alternatives to Bitcoin - due.com - October 7th, 2017
- Learn BitCoin and master the world of cryptocurrency - October 7th, 2017
- Almost Every Cryptocurrency Is Tanking Right Now | Time.com - September 7th, 2017
- Cryptocurrency boom stalls as regulators focus on ICOs ... - September 7th, 2017
- Why Marketers Need to Pay Attention to Cryptocurrency -- Now - Entrepreneur - September 7th, 2017
- Opinion: That Floyd Mayweather-backed cryptocurrency is another sign of a bursting bubble - MarketWatch - September 7th, 2017
- Putin-Backed Political Group Advances 'Green' Cryptocurrency Concept - CoinDesk - September 7th, 2017
- First He Beat Up His Girlfriend, Now He's Selling Cryptocurrency With Paris Hilton - Daily Beast - September 7th, 2017
- Cryptocurrencies have already recovered from last weekend's crash ... - TechCrunch - September 7th, 2017
- Venezuela Cracks Down On Cryptocurrency Mining - CryptoCoinsNews - September 4th, 2017
- Mobius Foresees Cryptocurrency Crackdown Sparking a Rush to Gold - Bloomberg - September 4th, 2017
- The Aggregate Cryptocurrency Market Cap Is Up 810% Year to Date - Motley Fool - September 4th, 2017
- How to make upwards of $1,000 a month by mining cryptocurrency - Mashable - September 2nd, 2017
- Chinese Officials Contemplate Suspending Cryptocurrency ICOs - The Merkle - September 2nd, 2017
- Cryptocurrency Investment Course 2017: Fund your ... - Udemy - September 2nd, 2017
- Six Banking Giants Just Decided to Partner to Create a New Cryptocurrency - Futurism - September 2nd, 2017
- 7 Cryptocurrency Predictions From the Experts - fortune.com - September 2nd, 2017
- Russia Could Pass Cryptocurrency Law This Year, Senior Lawmaker Says - CoinDesk - September 2nd, 2017
- AxionV: AI Cryptocurrency Fund Leading the Way in ICO Security - HuffPost - September 2nd, 2017
- PayThink Custom tokens are the future of cryptocurrency - PaymentsSource - September 1st, 2017
- Litecoin Prices Surge Above $70 as Crypto Market Tops $175 Billion - CoinDesk - September 1st, 2017
- PR: Archain Is Building an Uncensorable Internet Archive Inside a Cryptocurrency - Bitcoin News (press release) - August 31st, 2017
- Cryptocurrency Market Just Reached Total Value of $160 Billion - Futurism - August 31st, 2017
- Another banking trojan is trying to loot your cryptocurrency wallets - The Register - August 31st, 2017
- Cointal Revolutionizes P2P Cryptocurrency Trading - CryptoCoinsNews - August 31st, 2017
- $160 Billion: Cryptocurrency Market Sets New All-Time High ... - CoinDesk - August 30th, 2017
- Central Banks Can't Ignore the Cryptocurrency Boom - Bloomberg - August 30th, 2017
- Whoppercoin is a cryptocurrency you can eat or trade - The Verge - August 30th, 2017
- Learn about cryptocurrency mining with this interactive blockchain demo - TNW - August 30th, 2017
- Good Morning, Cryptocurrency! Vietnam To Create Legal Framework For Digital Assets - ETHNews - August 26th, 2017
- Cryptocurrency mining may void warranty on Inno3D GPUs - PC Gamer - August 26th, 2017
- Russian Deputy PM Says He Supports a State-Backed Cryptocurrency - CoinDesk - August 25th, 2017
- How to Learn About Cryptocurrency In The Bitcoin Era - Daily Beast - August 25th, 2017
- Bernanke to Give Keynote Speech at October Cryptocurrency Event - Bloomberg - August 25th, 2017
- Estonia wants to launch its own government-backed cryptocurrency called 'estcoin' - CNBC - August 25th, 2017
- Aimwise to Create Standards for Cryptocurrency Crowdsales - newsBTC - August 25th, 2017
- A Mysterious New Cryptocurrency Is Surging After Being ... - August 25th, 2017
- Cryptocurrency Cyber Crime Has Cost Victims Millions This Year - Bloomberg - August 25th, 2017
- This European country may hold an ICO and issue its own ... - TechCrunch - August 23rd, 2017
- Bitcoin Skeptic Mark Cuban to Invest in Cryptocurrency ... - August 23rd, 2017
- $150 Billion: Total Cryptocurrency Market Cap Hits New All-Time ... - CoinDesk - August 23rd, 2017
- Cryptocurrency Market cap Sets a New All-time High of Over $150bn - newsBTC - August 23rd, 2017
- South Africa's Central Bank: It's 'Too Risky' to Launch a Cryptocurrency - CoinDesk - August 23rd, 2017
- Mark Cuban backs new $20 million cryptocurrency venture fund - CNBC - August 22nd, 2017
- VR World Decentraland Raises $25.5 Million In Cryptocurrency - UploadVR - August 21st, 2017
- AMD Releases Beta Graphics Driver for Better Cryptocurrency Mining - Bitcoin Magazine - August 21st, 2017
- Philippines Central Bank Grants First Cryptocurrency Exchange Licenses - CoinDesk - August 21st, 2017
- Media A-Listers Back eSports Betting Firm As It Dives Into Cryptocurrencies - Deadline - August 20th, 2017
- 10 Reasons Why Central Banks Will Miss the Cryptocurrency Renaissance - CoinDesk - August 20th, 2017
- Australia Weighs Jail Time for Cryptocurrency Exchange Offenders - CoinDesk - August 20th, 2017
- Cryptocurrency wallet Exodus adds OmiseGo in latest update - CryptoNinjas - August 20th, 2017
- SEC Statements Spur ShapeShift to Review Cryptocurrency Listings - CoinDesk - August 20th, 2017
- Australian money cops gain powers to regulate cryptocurrency - The Register - August 18th, 2017
- Could Cryptocurrencies Replace Cash? - Investopedia - August 18th, 2017
- NVIDIA CEO Believes Cryptocurrencies Have Longevity - Investopedia - August 18th, 2017
- Substratum Launches Substrate Cryptocurrency to Power the New Decentralized Web - The Merkle - August 18th, 2017
- More Evidence that Cryptocurrencies Are a Bubble? - Investopedia - August 16th, 2017
- Cryptocurrency Exchange ShapeShift Acquires Bitcoin Wallet Startup - CoinDesk - August 16th, 2017
- Canada Approves First Cryptocurrency Sale in Property Rights Shake-Up - Voice of America - August 16th, 2017
- From UFC To Fighting Fake News With Cryptocurrency - SportTechie - August 16th, 2017
- Will the Bitcoin Fork Continue to Boost the Cryptocurrency's Value? - TheStreet.com - August 16th, 2017
- 'Father of Financial Futures' Seeks Cryptocurrency Hardware Patent - CoinDesk - August 14th, 2017
- How Exactly Do You Get Rich Off The Hot New Cryptocurrency? - Gizmodo Australia - August 14th, 2017
- Ripple Price Forecast: Factors Suggest XRP Cryptocurrency ... - August 13th, 2017
- US Foreign Sanctions Bill Mandates That Governments Monitor Cryptocurrency - Bitcoin News (press release) - August 13th, 2017
- What Would Happen if Cryptocurrency Became More Popular Than Cash? - Futurism - August 13th, 2017
- $126 Billion: The Cryptocurrency Market Just Set a New All-Time High - CoinDesk - August 12th, 2017
- Ukraine's Central Bank Moves Closer to Cryptocurrency Regulation - CoinDesk - August 12th, 2017
- Nvidia shares fall on data center revenue but chips ride cryptocurrency boom - Reuters - August 12th, 2017
- For Cryptocurrencies, the Future is Now - Daily Reckoning - August 11th, 2017
- Nvidia more bullish on cryptocurrency than AMD - MarketWatch - August 11th, 2017
- Coinbase Becomes First Bitcoin 'Unicorn' - Fortune - August 11th, 2017
- Buoyant Bitcoin stirs fears of a crypto-currency bubble bursting - The Independent - August 10th, 2017
- At last, a kosher cryptocurrency: BitCoen - The Register - August 10th, 2017
- Bitstamp Will Add Ether Trading to Cryptocurrency Exchange ... - CoinDesk - August 10th, 2017
- Cryptocurrency Investment Fund Completes $1.8 Million ICO ... - CoinDesk - August 10th, 2017
- Russian social network VKontakte allows cryptocurrency advertising - FinanceFeeds (blog) - August 10th, 2017