Biterest mechanism

Attention! Administration of the Biterest the right to make changes to the current mechanism of Biterest. The last change occurred on December 4, 2017.

Applying for a loan

To be able to receive a loan on Biterest, you must create a loan application. After creating the application, you become the Borrower.

In order to create an application, you must complete the following steps:

  • Go to the page titled Apply for Loan, where you can choose the currency, loan amount, loan term, and desired interest rate.
  • According to the parameters above, the exchange will automatically calculate the amount in BTC necessary for collateral for a loan. When assessing the required collateral amount, we account for discount of its current market value. A borrower can modify the discount rate of each loan application by themself. The discount rate can be varied from 1% to 99%. Modifying the discount rate affects the risk of Margin Call.
    • The minimum interest rate which may be specified while filling out the form is 0.01%. The maximum interest rate is 10000%.
    • The minimum amount in a loan application can have a collateral value of no less than 0.0025 BTC.
  • You must choose the method by which the Lender will transfer money to you. The available options are Payment systems (PayPal, WebMoney, QIWI, Yandex.Money) and Bank transfer.
  • The minimum loan term when receiving money through a Payment system is one day. For payments made through PayPal, you must receive only those payments which have been made through the "friends and family" payment type. Do not use any money received through other payment types but instead apply for Dispute Resolution. Such a payment may be fraudulent.
    • The minimum loan term when receiving money through a Bank payment is 14 days.
    • When choosing a loan term of under 14 days, the option of receiving money through Bank payment is not made available.
      • If you have indicated several methods of receiving money, the Lender reviewing your application has the right to choose and use one of the methods for transferring money to you.

On the page titled Access to Collateral, you must choose one of two methods for providing us with the public key. The two methods available are the simple and advanced.

  • With the help of a special script, the simple method allows you to create a public and private keys in your browser by pressing the button Generate Keys. We automatically save only the public key.
  • The advanced method allows you to indicate in the corresponding field your public key, which has been generated according to the BIP 32 format. Before downloading the public key, you must have a private key. This is created simultaneously by a third-party software.

You must remain on the Access to Collateral page until you are certain that you have successfully saved your public and private keys. You must keep them for the whole duration of the loan term.

In case you lose your private key, we cannot provide it to you as we do not keep it. The exchange only saves your public key, which is used for creating a MultiSig address.

On the page titled Secure a Collateral, you must transfer the specified BTC amount to the transit Bitcoin address indicated by us in order to secure a collateral for your loan application. Upon receiving the required amount, your loan application will be finalized and published on the Biterest.

How quickly your application will be accepted by a Lender depends only on attractiveness of loan terms specified by you.

The collateral BTC securing your loan application is saved on a transit Bitcoin address provided by Biterest until the application has been accepted by the Lender.

The Borrower can request a return of the collateral if the loan application has not been accepted by the Lender. A collateral will be returned during 24 hours.

In the case of the Lender accepting the loan application but not confirming a money transfer to the Borrower, the loan application is canceled and Biterest returns the collateral to the Borrower during 24 hours.

The Lender's Transaction fee balance

In order for a loan to be given, you must have a sufficient transaction fee balance equal to 2.5% of the loan amount requested by the Borrower. Each accepted loan application deducts the specified amount from your transaction fee balance. The deducted amount will not be returned.

The Security balance can be replenished in the finance section.

Granting a loan

The user who has accepted a loan application becomes the Lender with respect to the application.

Acceptance of a loan application starts by the Lender pressing the Give a Loan button on the page titled Application. After this is done, Biterest deducts the required amount from the Lender’s transaction balance. If the Borrower has indicated several methods for receiving the loan, the Lender must choose one of them.

On the page titled Access to Collateral, you must choose one of two methods for providing us with the public key. The methods available are the simple and advanced.

  • With the help of a special script, the simple method allows you to create a public and private key in your browser by pressing the button Generate Keys. We automatically save only the public key.
  • The advanced method allows you to indicate in the corresponding field your public key, which has been generated according to the BIP 32 format. Before downloading the public key, you must have a private key. This is created simultaneously by a third-party software.

You must remain on the Access to Collateral page until you are certain that you have successfully saved your public and private keys. You must keep them for the whole duration of the loan term.

In case of losing your private key, we cannot provide it to you as we do not keep it. The exchange only saves your public key which is used for creating a MultiSig address.

On the page titled Access to Collateral and on the following page Transfer of Money, there is a single timer. You must provide us with the public key as well as transfer money to the Borrower before the timer runs out. The duration of the timer depends on the method of money transfer which has been chosen for the current loan application. For those applications where Bank payment has been chosen as the method of receiving money, 24 hours are given. For those where a Payment system has been chosen, four hours are given.

On the page titled Money Transfer to Borrower, you must transfer the money to the Borrower and press the button "I have transferred money to the borrower!" within given time on the timer, according to the published requisites. After the button has been pressed the loan will be considered issued to the Borrower and the loan term will start.

If you have accepted a loan application but have not provided Biterest with the public key or pressed the button "I have transferred money to the borrower!" before the end of the allotted time, then the loan application is automatically canceled.

We will transfer a collateral to a MultiSig address only after you have given us your public key to set a MultiSig address upon acceptance of the loan application. The period for transferring a collateral from a transit Bitcoin address to a MultiSig address is four hours.

Loan term

The loan term for the Borrower starts when the Lender has pressed the button "I have transferred money to the borrower!" on the page titled Money Transfer.

The loan term starts the moment the Lender has pressed the button "I have transferred money to the borrower!" during the issuing of the loan and ends the moment the Borrower has pressed the button "I have transferred money to the lender!" during the repayment of the loan.

The loan term cannot exceed the amount of days the Borrower has requested. For example, if the Borrower is given a loan for 30 days on April 1 at 12:00 UTC+2, then the Borrower must repay the loan no later than May 1 at 11:59 UTC+2.

The time of loan is based on UTC+2 (Eastern European Time). The local time of the Lender and Borrower are not taken into account.

Repayment of a loan

The Borrower must repay the loan before the end of the loan term.

In case of the money not being repaid to the Lender before the end of the loan term, the loan application is automatically closed and the Lender is given access to the collateral. The Borrower losses ownership of the collateral BTC.

When sending money to the Lender, the Borrower must immediately press the button "I have transferred money to the lender!" on the page titled Money Transfer to Lender.

When the Lender has received notice of money transferred to him, he must immediately verify receipt of money and notify Biterest administration by pressing the button "I have received payment!" After this, the loan application is considered successfully closed. The keys to the deposit are given to the Borrower.

In the case of the payment not going through, the Lender must immediately contact Dispute Resolution.

If the Lender, within 10 days since the Borrower's notification of the loan repayment, did not confirm receipt of money and did not apply to Dispute Resolution, we consider such the loan to be successfully returned and transfer the Borrower access to the collateral.

Appeal to Dispute Resolution

In case such situations occur where one party of the transaction has not fulfilled their obligations, the other party has the right to appeal to Dispute Resolution.

Dispute Resolution is center for resolving substandard situations, which is initiated by one side of the transaction. The hearings are held by Biterest administration.

The decision made by Dispute Resolution is necessary in order for the transaction to be completed by all participants and is not subject to appeal.

The ability to appeal to Dispute Resolution is made available for a limited period of time for one party of the transaction in the respective stage of the loan period.

Appeal to Dispute Resolution is possible by pressing the button Appeal to Dispute Resolution on the loan application page. The Dispute Resolution hearings are public for all members of the transaction.

Each side of a single loan application may appeal to Dispute Resolution only once during their stage of the application.

The Borrower may appeal to Dispute Resolution once the Lender has pressed the button "I have transferred money to the borrower!"

  • If the money is being transferred to the Borrower through a Bank payment, then the button Appeal to Dispute Resolution becomes available to the Borrower five days after the Lender has notified about completed payment, and it is available for a period of 10 days.
  • If the money is being transferred to the Borrower through a Payment system, then the button Appeal to Dispute Resolution becomes available to the Borrower immediately after the Lender has notified about money sent. It is available for a period of 10 days.

The Lender may appeal to Dispute Resolution once the Borrower has pressed the button "I have transferred money to the lender!"

  • If the money is sent to the Lender through a Bank payment, then the button Appeal to Dispute Resolution is made available to the Borrower five days after the Lender has notified about money sent. It is available for a period of five days.
  • If the money is sent to the Lender through a Payment system, then the button Appeal to Dispute Resolution becomes available to the Borrower immediately after the Lender has notified about money sent, and it is available for a period of 10 days.

Decisions made by Biterest administration during dispute resolution hearings take effect immediately.

Each participant of the dispute resolution must answer within 24 hours any question Biterest administration may have about the current dispute resolution hearing.

Biterest administration has the right to request documents confirming the timeliness and completeness of money transfers between the members of the transaction.

Answers from all sides during the dispute resolution hearing must be respectful, detailed, and justify their position.

Rudeness, lack of information, delayed answers (i.e., given after 24 hours), or refusal to provide necessary information to the exchange administration can all negatively impact the decision making with respect to the responsible party.

Dispute Resolution Logic

During the transfer of money from Lender to Borrower, three possible situations in the Dispute Resolution hearing are:

  • The Lender did not send money to the Borrower - The keys to the deposit will be given to the Borrower.
  • The Borrower received money, but has not acknowledged it - The Borrower must repay the loan before the end of the agreed upon loan term.
  • The Lender sent money but it did not reach the Borrower; however, as a result of the Dispute Resolution hearing the money was sent - The decision is to restart the loan term (the loan term starts the moment the decision has been made during Dispute Resolution).

The procedure of the loan repayment does not begin until the Dispute Resolution hearing has closed. During the repayment period from the Borrower to the Lender, three possible situations in the Dispute Resolution hearing are:

  • The Borrower did not send money to the Lender - The keys to the deposit are given to the Lender.
  • The Lender received the money but did not acknowledge it - The transaction is considered successfully closed. The keys to the deposit are given to the Borrower.
  • The Borrower sent the money but it did not reach the Lender; however, as a result of the Dispute Resolution hearing, the money was sent and reached the Lender - The credit transaction is considered successfully closed. The keys to the deposit are given to the Borrower.

Payment details and their modification

Requisites for money transfers must be specified in full, without mistakes or misprints.

Money transfers must always go according to the payment details specified in the loan application.

The Borrower’s payment details are available for the Lender on the page for confirming money transfers. The Lender’s payment details for repayment are available for the Borrower on the page informing about the end of the loan term. If necessary, payment details of active applications may be modified. Depending on the user's role (borrower/lender), there are different possibilities for editing payment details.

  • The Borrower can edit the payment details only in the time starting from when the application is created to when it is accepted by the Lender.
  • The Lender can change the payment details up until the Borrower's loan term has finished and the Borrower has pressed the button "I have transferred money to the lender!" It is not possible to change payment details for applications for which the loan term has ended.

Payment details which have been modified by the Lender to the application and are within the loan term become binding to the Borrower only 24 hours after editing. Repayment by the Borrower according to the old payment details before the new payment details have taken effect is seen by the Dispute Resolution as correct. The Lender may change his payment details once every 24 hours. If either party needs to change the payment details outside the specified mechanism, then this can done through Dispute Resolution.

The method of receiving money (Payment system or Bank payment) cannot be changed.

Margin call

Margin call is a situation in which the market value of the collateral securing the loan application has decreased and reached the margin call rate. In this situation the loan application is automatically closed and the keys to the collateral are given to the Lender.

Margin call can only apply during loan period.

Margin calls cannot be triggered in the following cases:

  • If the application is under review in Dispute Resolution (the Borrower has complained of fraud on the side of the Lender);
  • In the first five days of the case if the money has been sent by Bank payment.

Margin Call occurs when the initial market value of collateral decreases by the discount rate.

The cases in which margin call can be triggered are shown on the loan application page and are displayed for the members of the transaction at the time of the loan term.

The currency for the margin call rate is the US dollar.

Changes in the market value of the collateral from the moment of placing the loan application are displayed in the column titled Value of Collateral in the list of applications on the page titled Application.

If the market value of the collateral for the loan application has fallen to the margin call before the start of the loan term, then the loan application becomes unavailable for lenders. In this case, the Borrower must create the loan application again or wait until Bitcoin rate rises.

Transfer of money to Biterest

If the full amount was not transferred to Biterest when the transaction fee balance was credited or the balance replenished, it is necessary to send the missing amount using the same payment details.

In case of being unable to send the missing amount according to the old requisites, it is necessary to inform the support service.

When transferring BTC amounts to Biterest, three confirmations of the transaction in blockchain Bitcoin are needed before the amount will be considered credited.

Do you have a problem or a question?

If you have a technical problem or other questions, please contact Support.

We are in social media