P2P lending platform for crypto-backed loans
The most private, safe and fast way of lending secured with bitcoin collateral

Biterest mechanism

Attention! Biterest administration has the right to make changes to the current mechanism of Biterest. The last change occurred on March 12, 2019

1. Ways of getting loans on Biterest

On Biterest, there are two markets that differ in lending methods:

  • Lender’s Market allows Lenders to submit loan offers. The Borrower who accepts an offer needs to clarify the information on their loan and transfer the collateral. After that, the loan offer will be transformed into a new loan application. The Lender must transfer the money to the Borrower within the time specified in the payment window.
  • The Borrower’s market is used for loan applications submitted by Borrowers on their own terms. The speed of accepting a loan application depends only on its attractiveness to Lenders. The time of transferring funds to the Borrower on the accepted application depends on the chosen method of providing the collateral.

The Borrower and the Lender can use any of the markets for making loan transactions.

2.Lending through the Market of Lenders

2.1. Submitting a loan offer

The Lenders market is currently in beta testing mode, therefore the Lenders can submit offers only through a support request.

The user who places the loan offer becomes a Lender.

2.2. Borrower's actions to get a loan

The user who makes a request to get a loan through the loan offer becomes a Borrower.

In order to receive a loan through the Market of Lenders, the Borrower must accept one of the published lenders’ offers, specify the terms of the loan and transfer the collateral. After that, the collateralized loan application will be created from the loan offer.

To obtain a loan, the Borrower must perform the following actions:

  • Choose a suitable Lender's offer

  • Click the Apply for a loan button of the selected offer and specify the terms of the loan within the limits indicated by the Lender:

    • Loan amount in USD. The value must be in the range between the minimum and maximum amount indicated for one loan.
    • Available currency. It is necessary to choose one currency from the ones offered by the Lender which is convenient for the Borrower to receive and repay the loan in. The amount received and the amount repaid may differ if the exchange rate of the chosen currency to the USD changes.
    • Loan term. The loan term in calendar days must be indicated within the limits established by the Lender. The loan must be repaid before the due date.
    • Discounted collateral value. The discount on the collateral value cannot be lower than the minimum value established by the Lender. The greater the percentage of discount is, the greater the amount of collateral is needed but the lower the risk of a Margin Call occurrence will be.
    • The annual interest rate on the loan is predetermined by the Lender and cannot be changed.
  • Loan transfer method. It is required to specify the payment details to which the Lender will transfer the money to the Borrower. If the Lender indicated several ways of transferring money in the offer, the Borrower should choose the most suitable one.

On the Provide your Public key page, the Borrower needs to choose one of the two ways to provide Biterest with their Public Key. The choice is provided in an easy and advanced way.

  • The easy option allows to create public and private keys in the user’s browser by clicking the Generate keys button with the help of a special script. When the Borrower goes to the next step, the script sends Biterest only the generated Public key. The Private key will be known only by the Borrower.
  • The advanced option allows the user to upload their existing Public key formed according to the BIP32 format. Before uploading the Public Key, the Borrower must ensure that they have the corresponding Private Key.

The borrower should ensure that they have securely saved their public and private keys before leaving the Provide your Public Key page. The Borrower is obligated to keep them throughout the entire loan period.

Biterest does not store a record of any user's private keys. The platform saves only the user’s public keys which are used for creating multisig addresses. If a user loses the Private Key, they will not be able to collect the collateral!

On the next step the Borrower needs to provide the collateral by transferring a certain amount of BTC. As soon as the loan application is created from the loan offer, the Lender is notified about that. The Borrower’s payment details will become available to them for transferring funds.

The Lender must transfer money to the Borrower within the time specified in the payment window for this offer. If the Lender does not confirm the transferring of money to the Borrower before the end of the specified period, the loan application will be cancelled, and the Biterest’s collateral access keys will be given to the Borrower.

The remaining lending steps are described in the General Provisions sections of this document.

3. Lending through the Borrower's Market

3.1 Submitting a loan application

In order to be able to get a loan through the Borrowers' Market, a user needs to submit a loan application. They become the Borrower regarding to this loan. To submit a loan application, the Borrower must perform the following actions:

  • Go to the Creating a loan application page, where they need to specify the loan amount in USD, select the available currency which is convenient to receive and repay money in it at the USD exchange rate, specify the term of the loan period and the desired interest rate per annum on the loan.
  • Based on the above parameters, the platform will automatically calculate the amount of BTC required to secure an application with collateral. In assessing the required amount of collateral, a discount to its current market value is taken into account. The Borrower can independently change the size of the discount, taking into account the probability of a change in the Margin Call rate. The minimum amount of discount can be 1%, maximum 99%
    • The annual interest rate that can be specified during the formation of the loan application. The minimum interest rate per annum is 0.01%, the maximum is 10,000%.
    • The minimum amount of a loan cannot be less than 0.0025 BTC of the collateral value.
  • Choose one of the available ways to secure a loan application with collateral.
    • Transfer the collateral upon completing a loan application. The loan application created in this way should be immediately secured with collateral. Until the Borrower transfers the collateral, this application will not be posted on the platform. The collateral can be withdrawn at any time until the Lender has accepted the application.
    • Transfer the collateral after the Lender has accepted the application. The loan application created in this way is immediately placed on the platform. The Borrower secures the loan with collateral only after the Lender accepts it.
  • The Borrower must choose the loan transfer method which will be used for transferring them money. There are available methods as Payment systems (PayPal, WebMoney, QIWI, Yandex.Money), Bank Transfer and Cryptocurrency (Bitcoin, Etherium, Litecoin, Bitcoin Cash, Ripple)
  • The minimum loan period for receiving money through the Payment systems and Cryptocurrency is 1 day. PayPal transfers must only be sent as the “Friends and family” payments. If you receive money with a different type of payment, do not use this money and immediately apply for Dispute Resolution. This payment might be fraudulent!
    • The minimum loan period for receiving money through a bank transfer is 14 days.
    • The possibility of receiving money through a bank transfer is not available for loan periods which are less than 14 days.
    • If the Borrower specifies several ways of receiving money, then the Lender has the right to select one of these ways to transfer money to the Borrower.

On the Provide your Public key page, the Borrower needs to choose one of the two ways to provide Biterest with their Public Key. The choice is provided in an easy and advanced way.

  • The easy option allows to create public and private keys in the user’s browser by clicking the Generate keys button with the help of a special script. When the Borrower goes to the next step, the script sends Biterest only the generated Public key. The Private key will be known only by the Borrower.
  • The advanced option allows the user to upload their existing Public key formed according to the BIP32 format. Before uploading the Public Key, the Borrower must ensure that they have the corresponding Private Key.

The borrower should ensure that they have securely saved their public and private keys before leaving the Provide your Public Key page. The Borrower is obligated to keep them throughout the entire loan period.

Biterest does not store a record of any user's private keys. The platform saves only the user’s public keys which are used for creating multisig addresses. If a user loses the Private Key, they will not be able to collect the collateral!

On the Commission page, the Borrower must top up the account balance in order to submit the loan application. The commision is 0.5% of the annual interest rate on the loan.

The moment of publishing a loan application on the platform depends on the method chosen by the Borrower to secure it with collateral.

  • If the Borrower chooses to Transfer the collateral immediately upon creating the loan application, it will be published on the platform after clicking the Pay a commission button and providing the collateral by transferring a certain BTC amount to the specified Bitcoin address.
  • If the Borrower chooses to Transfer the collateral after the loan application has been accepted by the Lender, it will be published on the platform and become available to the Lenders immediately after a commission is debited from the account balance by clicking the Publish the loan application button).

Information about the loan application characteristics is available on the corresponding page.

If none of the Lenders has accepted the loan application created by the method of Transfer the collateral after the loan application has been accepted by the Lender within 7 days, it will be removed from the platform and the commission will not be refunded to the Borrower’s account balance.

3.2 Actions of the Borrower after the Lender has accepted the loan application

After the acceptance of the application by the Lender, the platform may require actions from the Borrower depending on the chosen method of providing collateral.

No additional actions are required if the application was submitted by the method of Transfer the collateral immediately upon creating the loan application. The collateral will be automatically transferred from the transit bitcoin address to the multisig address within 4 hours.

In a case when a selected method was Transfer the collateral after the loan application has been accepted by the Lender, the Borrower has to transfer a necessary amount of BTC to the specified multisig address within 24 hours. After that, the Lender will be notified that the application has been secured with collateral, and the Borrower’s payment details will become available to them for loan transferring.

If the Borrower does not provide collateral within the specified period, the loan application will be automatically cancelled and removed from the platform. The commission will not be refunded to the Borrower's account balance.

The Lender must transfer money to the Borrower for the accepted and collateralized loan application within 24 hours. In a case when the Lender has accepted the loan application but has not confirmed the transfer of money to the Borrower, the application will be cancelled. The Biterest’s access keys to the collateral will be transferred to the Borrower. The commission will be refunded to the Borrower’s account balance.

3.3 Cancellation of the loan application

If it is necessary, the Borrower may remove their published applications from the platform. This option is available only for applications that have not been accepted by the Lenders yet. The cancellation process differs depending on the chosen method of providing the collateral:

  • For applications with the selected method Transfer the collateral immediately upon creating the loan application: The Borrower can remove the application from the platform and get their collateral back upon clicking the Cancel the application button. The Borrower has to indicate their Bitcoin address to receive the collateral within 24 hours. The commission will be refunded to the Borrower’s account balance.
  • For applications with the selected method Transfer the collateral after the loan application has been accepted by the Lender: The Borrower can remove the application from the platform and get the commission back to their account balance upon clicking the Cancel the application button.

3.4 Loan issuance by the Lender

To issue a loan, the Lender must have a sufficient amount of funds on their account balance. A commission in the amount of 2.5% of the annual interest rate of the requested loan amount is debited from the Lender’s account balance each time when they accept a loan application. The withdrawn amount of the commission will be refunded to their account balance only in the case if the Borrower does not provide the collateral on time.

The user who accepts the loan application becomes a Lender regards this application.

The Lender accepts a loan application by clicking the Lend button on the Information about a loan application page. After that, the platform deducts the required amount of the commission from the Lender’s account balance. If the Borrower has specified several loan transfer methods, the Lender must choose one of them.

On the same page, the Lender needs to choose one of two ways how to provide Biterest with their Public Key. The choice is provided in an easy and advanced ways.

  • The easy option allows to create public and private keys in the user’s browser by clicking the Generate keys button with the help of a special script. When the Lender clicks the Lend button, the script will send Biterest only the generated Public key. The Private key will be known only by the Lender.
  • The advanced option allows the user to upload their existing Public key formed according to the BIP32 format. Before uploading the Public Key, the Lender must ensure that they have the corresponding Private Key.

The user should ensure that they have securely saved their public and private keys before leaving this page. The Lender is obligated to keep them throughout the entire loan period.

Biterest does not store a record of any user's private keys. The platform saves only the user’s public keys which are used for creating multisig addresses. If a user loses the Private Key, they will not be able to collect the collateral!

If the Lender accepts the Borrower's collateralized loan application, the collateral will be transferred from the transit bitcoin address to the multisig address within the next 4 hours.

The Borrower’s payment details will become immediately available on the Money transfer to Borrower page. On this page there is a countdown timer for transferring money to the Borrower. The term of the timer depends on the chosen loan transfer method of the current loan application: via a bank transfer it is 24 hours, via Payment systems and Cryptocurrencies - 4 hours.

The collateral will be transferred to the multisig address from the transit bitcoin address only after the Lender provides Biterest with their Public Key. It is necessary for formation of a multisig address where the collateral is stored until the end of the Loan period.

If the Lender accepts the non-collateralized application, the Borrower has to provide it with collateral within 24 hours by transferring the required amount of BTC to the multisig address. After that, the Transfer money to the Borrower page will become available to the Lender. If the Borrower does not transfer the collateral within the prescribed period, the application will be cancelled. The Lender’s debited commision will be refunded to their account balance.

The Money Transfer to Borrower page on the Borrower’s side also contains a countdown timer for receiving a loan amount from the Lender. After transferring the loan, the Lender must confirm it upon clicking the I transferred the money to the Borrower! button. Only after that the loan will be issued and the the loan period will begin.

If the Lender accepts the loan application but fails to provide their Public Key within the prescribed time and not confirm the loan transfer upon clicking the I transferred money to the Borrower! button, the loan application will be automatically cancelled.

The remaining lending steps are described in the General Provisions sections of this document.

4. General provisions

4.1 Loan period

The beginning of a loan period is the moment when the Lender clicks the I transferred the money to the Borrower! button on the Transfer money to Borrower page.

The end of a loan period is the moment when the Borrower repays a loan and confirm that by clicking the I transferred the money to the Lender! button.

The loan period may not exceed the number of days which the Borrower has requested a loan for. For example, the Borrower received a loan on April 1, at 12:00 UTC + 2. The loan period is 30 days, so that the Borrower must repay the loan no later than May 1, 11:59 UTC + 2.

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

4.2 Loan repayment

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

If the loan is not repaid to the Lender before the expiration date and time, the loan will be automatically finished and Biterest’s access keys to the collateral will be transferred to the Lender. The Borrower loses ownership of the collateral in this case.

After repaying the loan, the Borrower must immediately click the I transferred the money to the Lender! button on the Information about your application page.

When the Lender receives a notification about a loan repaying, they are obligated to check the received amount of money and notify the Biterest by clicking the I received the money button. After that, the loan will be successfully completed. The Biterest’s access keys to the collateral will be transferred to the Borrower.

In a case when the Lender has not received the money from the Borrower, they must promptly apply to the Dispute Resolution Help. If the Lender does not confirm the loan repayment within 10 days and not apply to the Dispute Resolution Help, Biterest considers this loan as being repaid and transfers the access keys to the collateral to the Borrower.

4.3. Biterest commission and account balance

A commision is an amount of money that is debited from the user's account for submitting and accepting loan application.

The commision is charged from the Borrower’s account balance only for submitting loan applications through the Borrowers' Market. It is 0.5% of the annual interest rate of a loan amount.

The commision is charged from the Lender’s account for lending both through the Lender’s Market and the Borrower's Market. It is 2.5% of the annual interest rate on a loan amount.

The commission is deducted once from the user’s account balance at the time of submitting or accepting the application, and is the income of the Biterest platform.

The user’s account balance can be topped up in the Balance Control section of Settings.

The debited amount of the commission refunds to the Borrower’s account balance in two cases when:

  • The Borrower had cancelled the application before the Lender accepted it.
  • The application was accepted by the Lender who has not confirmed the transfer of funds to the Borrower by pressing the I transferred money to the Borrower! button.

The amount of the debited commission refunds to the Lender’s account balance if they accept a non-collateralized application which is created by the method Transfer the collateral after the loan application was received by the Lender but the Borrower do not transfer the collateral in a due time.

4.4 Information about applying for Dispute Resolution Help

Dispute Resolution Process aims to solve disputes between two users. In a case when one of the parties of the loan deal fails to fulfil their obligations, the other party has the right to apply for the Dispute Resolution Help.The process is performed by the administration of Biterest.

The decision as a result of a Dispute Resolution Process is mandatory to fulfil for all the parties of the loan deal and cannot be a subject for an appeal.

The opportunity to apply for a Dispute Resolution Help becomes available to one of the parties for a limited time and only on the appropriate stage of the loan obligations fulfilling.

Applying for Dispute Resolution Help is available via the Appeal to Dispute Resolution button on the loan request page. The Dispute Resolution Process is public for all participants of the certain loan deal.

Each party can apply for the Dispute Resolution Help only once within the framework of the certain stage of a loan deal.

The option to apply for Dispute Resolution becomes available to Borrower when the Lender has pressed the I transferred money to the Borrower! button:

  • If the loan transfer methods are Bank Transfer, the Appeal to Dispute Resolution button becomes available to the Borrower in 5 days after the Lender has confirmed the transferring of the money, and remains available for the next 5 days.
  • If the loan transfer methods are Payment Systems or Cryptocurrency, the Appeal to Dispute Resolution button becomes available to the Borrower as soon as the Lender has confirmed the transferring of the money, and remains available for the next 10 days.

The option to apply for Dispute Resolution becomes available to the Lender when the Borrower has pressed the I transferred the money to the Lender! button:

  • If the loan transfer methods is Bank Transfer, the Appeal to Dispute Resolution button becomes available to the Lender in 5 days after the Borrower has confirmed the loan repayment, and remains available for the next 5 days.
  • If the loan transfer methods are Payment System or a Cryptocurrency, the Appeal to Dispute Resolution button becomes available to the Lender as soon as the Borrower has confirmed the loan repayment, and remains available for the next 10 days.

Dispute Resolution decisions are resolved by the Biterest administration and taken effect immediately.

Each party of the Dispute Resolution Process must answer within 24 hours to any question made by Biterest administration in the current Dispute Resolution Process. The administration of the platform has rights to request documents which confirm the timeliness and completeness of remittances between the participants of the loan deal.

Answers of the parties during the Dispute Resolution Process must be polite, deployed and justify their position. Rudeness, a lack of information, responses with a delay of more than 24 hours, and failures to provide the necessary information may adversely affect the decision of Biterest administration to the respondent party.

4.5 Dispute Resolution Process

There are three situations of the proceedings when the Lender transfers money to the Borrower:

  • If the Lender does not transfer the loan to the Borrower, the administration of Biterest will provide the Borrower with the access keys to the collateral.
  • If the Borrower does receive the money but does not notice it, their loan period will keep going and they must repay it before the original due time.
  • In the case where the Lender’s transfer does not reach the borrower but they receive money as a result of Dispute Resolution, the loan period is started from the point at which the dispute was resolved.

The loan repayment procedure will not begin until the Dispute Resolution Process is completed.

There are three situations of the proceedings when the Borrower repays the loan to the Lender:

  • If the Borrower does not repay the loan to the Lender, the Biterest administration will provide the Lender with the access keys to the collateral.
  • If the Lender does receive the money but does not notice it, the loan is considered to be successfully finished. The Biterest administration provides the Borrower with the access keys to the collateral.

In the case where the Borrower’s transfer does not reach the Lender but they receive the loan repayment amount as a result of Dispute Resolution, the loan is considered to be successfully finished. The Biterest administration provides the Borrower with the access keys to the collateral.

4.6 Chat

It's forbidden to be rude and provide inaccurate information during communications in the chat. The chat does not substitute a Dispute Resolution Process.

The chat helps the Lender and the Borrower to communicate with each other, clarify the money transfer methods and additional information.

The chat is unavailable during the Dispute Resolution Process. The Correspondence in the chat might be taken into account during the Dispute Resolution Process.

4.7 Payment details and changes in them

Payments details must be fully specified without errors and typos. Money must be provided via details specified in the certain loan application.

The Borrower’s payment details are available to the Lender on the Money transfer to Borrower page.

The Lender’s payment details are available to the Borrower on the page where the end of the loan period is specified.

Depending on the user’s role (Borrower or Lender), there are some differences in editing payment details:

  • The Borrower who applies for a loan through the Lender’s offer is unable to edit their payment details after submitting the loan application. If the Borrower submits the loan application on the Borrower’s Market, they can edit their details until the Lender accepts the application.
  • The Lender is able to change their details during the loan period until the Borrower presses the I transferred money to the Lender! button.

Payment details of a valid loan application become mandatory to the Borrower in 24 hours after the Lender has changed them. In the case where the new payment details have not become available yet, it is correct to repay the loan to the old ones. The Lender may change their payment details once in 24 hours.

If a party of a loan needs to change their details beyond the rules specified in thе documentation, then it might be done through the Dispute Resolution Help. The transfer method of receiving money (Payment system, Cryptocurrency, Bank transfer) is unable to change.

4.8 Margin call

Margin Call is a situation where a loan deal must be forcibly finished, and in order to pay off the Borrower's debt Biterest gives the Lender its access keys to collateral. This situation happens due to the fall in the BTC rate. Margin Call occurs when the market collateral value has decreased and become equal to the total repayment amount which the Borrower has to repay to the Lender.

Margin call can only be applied to a loan application that have a valid loan period.

Margin call does not occur:

  • If the loan application is in a Dispute Resolution Process because the Borrower has complained about the Lender’s deception.
  • In a case, when the money was sent via a bank transfer method less than five days ago.

Margin Call is affected by a discount on the value of the collateral and the bitcoin rate. The higher the discount is set by the Borrower, the lower the probability of occurring a Margin Call is.

The collateral value in case of Margin call is calculated as (market collateral value at the time of creating the application) / (100% -% discount from the value of the collateral).

The BTC rate and the market collateral value at which the Margin call occurs is displayed to the participants of the loan on the Loan application page during the entire loan period.

The currency of accounting the Margin call rate is USD (US Dollar).

The changes between the current collateral value and its initial value is displayed in the Collateral ($) column in the list of the applications on My applications page.

In a case when a published loan application has not been accepted by a Lender yet but its collateral value has dropped to the value of the Margin call, this application becomes invalid and is removed from the platform. The Borrower needs to create a new the loan application.

4.9 Loan currency

All loans on Biterest are indicated and calculated in USD currency (US dollar).

The users are entitled to use the others loan currencies which are alternative to the US dollar. The other available loan currencies are selected by the first party of the loan deal when they set the loan terms. Then the second party need to choose the currency of the loan among available ones when accepting the request.

The amount of funds in selected currency transferred by the lender to the borrower depends on the current exchange rate of this currency to the USD. The received loan amount and the repayment amount may vary if the currency rate of the selected currency changes to the USD. The users cover the costs of the currency fluctuations associated with changes in the US dollar exchange rate.

If the loan application or loan offer consists another currency than the US dollar, the currency calculator will appear on the loan page. The calculator displays the current exchange rate of the selected currency to the US dollar. The exchange rate data is provided by Openexchangerates.

4.10 Transfer of funds and collateral security

If the user tops up the account balance or transfers the collateral in an incomplete amount of funds, they have to promptly send the missing amount to the same payment details. If they are unable to send the missing amount of funds to the same details, they have to promptly contact the Customer Support. The collateral amount is credited to the bitcoin multisig address after three confirmations of the transaction in the Bitcoin blockchain.

In the case of meeting problems with topping up the account balance, the Biterest administration has the right to ask the user to contact the processing service CoinPayments which is responsible for providing the payments.

Do you have a problem or a question?

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

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