BTCJam implements risk-based pricing model

BTCJam, a bitcoin peer-to-peer lending network, has put into operation a risk-based pricing model, altering the way it determines borrowing interest rates in order to improve security of its users. The model uses the credit score to set the borrower's interest rate; the higher the credit score, the lower the interest rate and vice-versa.

"Since BTCJam has all of the information about the borrowers, we are in a better position to determine the likelihood of the borrower paying back the loan and will adjust the interest rate accordingly", the company said. "We are confident that this change will improve BTCJam and allow us to continue to maintain the highest repayment rates in peer-to-peer lending, as well as increase overall returns to investors".

The new model will standardise the interest rates for all loans so that investors will be able to offset possible loans from defaults.