xCoins is a bitcoin-fueled peer-to-peer asset-backed lending platform. Borrowers gain access to bitcoin, providing fiat money in USD as collateral. The benefit to the lender is they don’t need to sell their BTC to generate profits.
It’s a marketplace, like Prosper.com only fueled by cryptocurrencies. Borrowers enter the amount they’d like to access and xCoins matches them up with a potential lender in an automated process. The borrower can then proceed to select the offer based on the rate, terms, etc. For lenders, xCoins.io boasts a 50% margin guarantee.
xCoins supports two-factor authentication (2FA) and as of year-end 2017 they bolstered their verification process for both borrowers and lenders (more on that below.) The borrowing and lending process involves both fiat money and bitcoin. The loan is given in bitcoin, but the security deposit is made in USD.
The company appears to have suffered a hack in December 2016 in which bitcoin was stolen from user accounts. Understandably it caused an upheaval among members, but based on reports the company appears to have reimbursed all stolen funds back to users. The Steemit poster who originally reported the hack said the stolen funds were returned within 15 hours.
One of the key features that users on this platform rave about is instantaneous access to bitcoin, which is a feature xCoins touts over an exchange. That’s because xCoins doesn’t have to be concerned about chargebacks since they are not purchasing bitcoin on investors’ behalf, which removes the need for a lengthy waiting period.
This brings up another feature, which is being able to use PayPal for transactions, which is a catch 22 for the community. On one hand it’s convenient, but on the other hand PayPal hasn’t rolled out the welcome mat for bitcoin users. As a result, lenders have seen their PayPal accounts suspended for months as a result of transacting with xCoins.
Meanwhile, for the borrower, the key difference between xCoins and an exchange is you don’t own the bitcoin, you’re borrowing it for a few layers of USD-denominated fees.
The service might beneficial to someone who wants to attempt to make a purchase with bitcoin but doesn’t own enough or any of it yet. They can get near-instant access to the cryptocurrency, make their purchase and then repay the loan.
The xCoins tagline is “bitcoins for everyone,” and they boast that the platform is completely secure. xCoins claims to have more than 25,000 customers across 40-plus countries. According to Crunchbase, the company was founded in 2016 by Sergey Nikitin.
- Supports bitcoin and USD
- Signing up for the platform is a simple three-step process
- xCoins accepts credit and debit card payments. They also take eChecks.
- Supports PayPal (credit and balance)
- Lenders can also use bank transfers (ACH)
- Opportunity for investors to earn returns with the P2P lending model
- Mobile app for Android (a mobile app for iOS couldn’t be found)
- They provide around the clock support
- Quick transaction times of just a few minutes that borrowers rave about.
- Users say xCoins is transparent about fees
- xCoins has a physical address in California and provides contact details (below)
- Interest rate stays the same regardless of the duration of the bitcoin loan
- Automated payment tracking
- High returns. xCoins recommends that lenders set the interest rate at 15% to start and adjust accordingly.
- Lenders can begin with a USD 20 investment
- Average profit margins for the lender are 80%
- Refunds are possible for the borrower
- Earn extra profits through their affiliate referral program
- xCoins said on its user forum that they’re in the process of updating the website and that the new site will support altcoins. They plan to make the announcement on their social media pages.
- Doesn’t support any altcoins or any fiat currencies except USD
- You’re borrowing the BTC, not buying it
- There are several layers of borrower fees (interest rate, loan origination, payment processing/bank transfer, etc.) The commission fee that lenders pay to xCoins is unclear.
- Loans are not always available, and borrowers may have to wait.
- The platform was hacked in December 2016, though the company reimbursed users the stolen funds.
- PayPal itself doesn’t support bitcoin, so there could be issues/confusion with using this payment method.
- High fees for the convenience factor
- Investors are inheriting some risk. The bad loan ratio is in the low single digits.
- The xCoins.io website is a little dated and can take a couple of moments to load.
xCoins urges its users to implement two-factor authentication via Google Authenticator. In fact, they recommend Google Authenticator instead of SMS-based 2FA.
For instance, one weekend xCoins’ SMS service provider had an outage. Customers that had added Google Authenticator were still able to make transactions, but those without it had issues.
xCoins says it has a “very strict verification process” and that it blocks 99% of scams. If a chargeback occurs, the company guarantees a 50% profit margin to lenders.
xCoins says it “performs fraud screening and customer support for all of the transactions placed through its web portal.” They also say there hasn’t been a high occurrence of borrowers using “stolen credit cards or hacked PayPal accounts.”
But xCoins discloses there have been incidents of “friendly fraud,” where users pay with their own credit card but report it as fraud to the issuing bank. xCoins vets its borrowers with third-party consumer data providers and “blacklist databases.”
xCoins performs automated fraud checks on every transaction that occurs on the platform. They admit, however, that “even the most sophisticated automated fraud defenses are vulnerable to social engineering attacks, where the user is tricked by a scammer into willingly giving away his or her personal information.”
Social engineering attacks are a key threat for xCoins members. To thwart this fraudulent activity, xCoins bolstered its security staff in 2017 and launched a process by which they contact first-time users by telephone to verify that they’ve authorized a payment. xCoins says as a function of expanding their staff, the support-ticket response times were reduced to one day or less.
While xCoins may have suffered a hack in 2016, they appear to have made things right by reimbursing users who were affected. Meanwhile, the company points out that it doesn’t gain access to its users’ PayPal accounts, so there doesn’t appear to be any security issue there. The wallets where bitcoin is sent to the borrowers use encryption, according to reports.
On one Reddit thread, a member said that the xCoins physical address doesn’t exist or it’s for another business. But in 2017, xCoins announced it relocated its office headquarters to Santa Monica, Calif. at the previous Google campus.
The borrower is responsible for several layers of fees, including an interest fee that they pay in combination with their loan security deposit in fiat money. The interest is a flat percentage and isn’t tied to the duration of the loan.
Borrowers are also responsible for a loan origination fee and any PayPal or other payment processing fee or bank transfer fee. There also appears to be a commission that lenders pay to xCoins, though the details on that are scarce.
In a demonstration on YouTube from March 2017, the borrower took out a bitcoin loan worth USD 20 and total fees were approximately USD 6 and change.
ACH payments are available in select states and have a 1.5% fee attached.
They say on Facebook –
Lenders set criteria including the interest rate they want to charge borrowers. Borrowers enter the amount of bitcoin they’d like to access and xCoins through an automated process will provide you with the most attractive interest rate for the amount that satisfies your request. It’s a competitive process for lenders because the only way their loan is visible is if they’re offering the best rate for that amount.
The repayment process appears to be flexible and is determined between the borrower and lender. The loan duration could be anywhere from days to months based on how long the borrower needs it and when they’re able to purchase BTC to pay back the lender. Once you repay the loan, borrowers get their fiat money deposits back minus any fees. If a borrower fails to repay, their collateral, or fiat money security deposit, won’t be returned.
Keep in mind that all loans are denominated in USD. So, when it comes time to repay your loan, “return the amount of bitcoin equivalent to the amount you received in US dollars,” as per the company’s website. For the borrower, xCoins will only match you with a lender that has sufficient bitcoin in their account to cover the loan.
Signing up for xCoins takes about half an hour. You’ll be required to upload your identification along with a selfie holding your ID and a piece of paper with xCoins written on it. Sellers must also verify their identity.
Accessing bitcoin on the xCoins platform is basically a three-step process.
- Sign Up
- Make a payment via one of their accepted payment methods. They take credit cards including Visa, Mastercard, American Express, Discover as well as ACH bank transfers, eChecks and PayPal.
- Get bitcoin in your wallet. Withdraw the funds at your convenience.
Once you’ve signed up, logging in seems simple enough. Just enter your login, password and verify that you’re not a robot. There’s also an email-driven password recovery process should you need it.
xCoins says most transactions are completed within less than five minutes. But there are a few instances in which it could take longer, including if it’s your first BTC loan or if you request a bitcoin loan during the hours of 8:00 a.m. and 6 p.m. PST or between 6:00 p.m. and 8:00 a.m. PST.
- “Someone makes a payment to you directly for the amount of bitcoin plus the spread.”
- “You give them bitcoin.”
- “You keep the difference in price.”
Here’s an illustration of what a completed transaction looks like from a lender’s dashboard –
xCoins uses blockchain.info for their “USD reference price of 1 BTC,” as per Facebook.
Not surprisingly, all the reviews on the xCoins website from borrowers and lenders are largely glowing. But there are plenty of user complaints on other forums.
There appears to be a problem with lenders having their PayPal accounts suspended for engaging in transactions on the xCoins platform.
Meanwhile, BuzzFeed in 2017 posted an article about what you can buy with bitcoin and suggested users head over to xCoins.io to borrow some cryptocurrency today. One reader responded, saying the company is “shady” and that they had cancelled his loan.
A Reddit poster said that they lost USD 82 on xCoins from a transaction that was never completed. While xCoins provides contact details, this user said it was a non-working telephone number. We tried it and the call went through to xCoins. It was answered by a recording that said for all support-related matters, visit the website and otherwise to leave a message and they would get back to us.
Another user had a negative experience, suggesting that lenders must mark up the interest rate to 30% to 40% to earn a decent profit. On this same Reddit thread, an investor lent bitcoin, but the payment was declined by their PayPal account. Where the issue lies is unclear, but the concerning part is that the investor didn’t receive the necessary support to recover their funds.
For all the complaints, xCoins seems to be responsible to customer messages on social media, particularly Facebook. They just require a transaction number or ticket number. If you have that information, they should be able to help you.
xCoins seems to satisfy a need in the market for quick access to bitcoin. And as an investor, you can’t beat the opportunity to earn several revenue streams.
They appear to be focused on strengthening their security and better turnaround times for customer support. But there’s the matter of trust. There are still complaints on social media forums surrounding payments being lost, which is concerning. We recommend you start with a small amount, say the minimum investment of USD 20 and test the waters first.
If you’re lending, just be aware of the risks surrounding PayPal suspending your account. If both lenders and borrowers could use the bank transfer option, that might help to alleviate some of the issues. It’s not perfect, but for those who don’t run into any issues xCoins does what it says it will do as a P2P bitcoin lending platform – provide quick access to bitcoin and for the lender an opportunity to generate profits.
If you need to reach xCoins, unlike most trading platforms they provide contact details, including their phone number: +1 (310) 589-4556 or email: [email protected] If you have a transaction number, include it in your email.