Blockchain Technologies Project: P2P Lending and Smart Contracts

This report examines the implementation of blockchain technology in peer-to-peer (P2P) lending, exploring its potential to revolutionize the financial landscape. It investigates how blockchain can enhance trust and transparency by removing intermediaries and using smart contracts for automated transaction validation and execution. The report details the benefits of integrating blockchain in P2P lending, including cost reduction, and increased efficiency. It also explores the use of Ethereum networks, smart contracts, collaterals, tokenization, and proof of work within the P2P lending model. Furthermore, it discusses the business use case, market opportunities, and risk factors associated with blockchain-based P2P lending platforms. The white paper and conference-style report outline the business proposal, technological merits, and implementation roadmap, including the use of Solidity for smart contract development on the Ethereum network.

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Abstract:
The purpose of this study is to find out the implementation of block chain in P2P lending.
The blockchain is geared up to reconstruct the model of the peer-to-peer disposal platform by
transfer a lot of trust and transparency to the system. firms like SALT disposal, Lendoit, and
Jibrel Network have already launched a peer to look disposal platform victimisation
blockchain and good contracts. It can be concluded that Using blockchain in peer to look
disposal might facilitate take away intermediaries from this system.

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Table of Contents
Introduction:...............................................................................................................................3
Translations:...............................................................................................................................4
Smart contract:.......................................................................................................................4
Ethereum networks:...............................................................................................................4
Collaterals:.............................................................................................................................5
Tokenization:..........................................................................................................................5
Proof of work:............................................................................................................................5
Network:.....................................................................................................................................6

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1 Introduction:
. For the previous few years, blockchain has seized the worldwide monetary markets
with its unquiet power to rework numerous industries. whereas multiple sectors have skilled a
positive impact on the blockchain, the disposal market is additionally able to be a component
of it. The blockchain is geared up to reconstruct the model of the peer-to-peer disposal
platform by transfer a lot of trust and transparency to the system. firms like SALT disposal,
Lendoit, and Jibrel Network have already launched a peer to look disposal platform
victimisation blockchain and good contracts (Beck et al., 2016). But why we have to
implement the blockchain in peer to look disposal and what may be the pain points within the
ancient lending process. In an ancient disposal method, folks need intermediaries’ sort of a
loan officer, banks, underwriter, and loan processor to create the trust. however, adding
middlemen and rules to the method of disposal results in the high fees. Using blockchain in
peer to look disposal might facilitate take away intermediaries from this system. Let’s
perceive however P2P disposal blockchain platform might facilitate create the lending
method a lot of economical (Böhme et al., 2015). Cost Reduction: Blockchain might scale
back the prices by permitting the borrowers to cope with lenders directly. Blockchain might
connect borrowers and lenders from everywhere the planet through a decentralised platform.
the complete P2P disposal blockchain method might become seamless and trustworthy.
The block chain has been becoming one of the hottest technologies at present day as
well as it is altering the traditional ways. The payments and coins have been the use cases that
is initial for block chain. Most of the services related to the block chain that are available,
revolving around those functions. The service like remitting services, coin exchanges and
processing of payment are presently maturing that the companies can explore confidentially
supporting the crypto currencies in the respective business of them. The bitcoin is also

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recognized widely as a payment method that is legal. The adoption by the tech companies
like intuit, Microsoft and wordpress have been so much instrumental for enhancing the
reputation of the bitcoin as one of the legitimate tenders for the online related transactions.
2 Translations:
2.1 Smart contract:
A smart contract, conjointly referred to as a crypto contract, could be a computer virus
that directly controls the transfer of digital currencies or assets between parties underneath
bound conditions. a sensible contract not solely defines the principles associate degreed
penalties associated with an agreement within the same approach that a conventional contract
will, however it may mechanically enforce those obligations (Cachin, 2016). It will this by
taking in data as input, distribution a price to it input through the principles come into being
within the contract and execution the actions needed by those written agreement clauses -- for
instance, crucial whether or not associate degree quality ought to visit one person or should
be came to the opposite person from whom the asset originated.
2.2 Ethereum networks:
Like the Bitcoin, the Ethereum may be a public blockchain based network that is
distributed. Though there are so many important technical variations between two of the, the
foremost vital distinction to the notice is that, the Bitcoin and the Ethereum dissent well in
capability and purpose (Crosby et al., 2016). One explicit application is offered by the block
chain that is belong to the blockchain technology. A peer to see the electronic money system
which allows on-line payments of the bitcoin. Whereas the Bitcoin’s blockchain is employed
to trace possession of bitcoins as well as the Ethereum focuses on the programming code that
is on going of any suburbanized application. Within the Ethereum rather than the mining for
the bitcoin, the miners work for earning Ether, a kind of crypto related token which fuels the

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network. on the far side cryptocurrency that is traceable, Ether is additionally utilized by the
developers of the application to procure dealing services and fees on to the Ethereum network
(Eyal and Sirer, 2018). The solidity is a programming language for developing smart
contracts, that is object oriented. It is used to implement smart contacts on some several
platforms that are related to the block chain.
2.3 Collaterals:
The total price of securities being employed as collateral within the financial set-up
worldwide is calculable to be excluding money. Collateral is employed for various functions
such as: Over-the-counter (OTC) derivatives margins. Secured funding with market
counterparties and central banks (Eyal et al., 2016). Trading with central counterparties.
Traditionally, money establishments viewed collateral management as a reactive operate. One
that was positioned at the end of the mercantilism cycle, and performed inside a back-office
operate restricted to the process of collateral movements and negotiation of connected legal
agreements. However, the recent money crisis, with its origins during a severe liquidity
crunch, has dramatically modified the perception and importance of collateral management
(Heilman, Baldimtsi and Goldberg, 2016).
2.4 Tokenization:
The Tokenization on the Blockchain network could be one of the steady trends of the
year 2018. It appears that, each and everything is being tokenized on the Blockchain
based network from company stocks, diamonds and paintings for the assets. During this
article, It will describe what is suggested by it that for the tokenization associate plus
on Blockchain as well as the way it applies to the assets that are physical (Huh, Cho.
and Kim, 2017).

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3 Proof of work:
A proof of the labour may be one of the pieces of the information which is
troublesome (costly and time consuming) for providing however straightforward for others
for verifying as well as that satisfies bound necessities. manufacturing one symbol of the
labour will be a random method with the likelihood that is low, so lots of error and trials are
needed on the average before a sound regarding the proof of work is being generated (Kosba
et al., 2016). The Bitcoin uses the Hash cash proof of the labour system. A application that
come from this idea is, the exploitation Hash cash as one of the techniques to preventing
email spam and also requiring a symbol of the labours on the contents of the email (including
address), on eveery legitimate email. The Legitimate emails are ready always for doing the
work to come up with the proof that is simple (no abundant work is needed for email),
however mass emailers who produces spam can have issue in generating needed for the
specified proofs that sould require the vast process of the resources. The Hash cash proofs of
the labour that are utilized in the Bitcoin for the generation of the blocks. So as for one block
that is to be accepted by participants of the network, the miners should complete a symbol of
the labour that covers all the information within the block. it suggests that each of the blocks
indicates that the employment has been done by generating it. Each of the blocks contain the
hash of blocks thar are preceding (Mytis et al., 2018). This protects the block chain from
meddling.
4 Network:
A blockchain may be a network. A network may be a cluster or system of connected
folks or things. The computers or devices on the network, referred to as nodes, form up a
blockchain network. The networks have a tendency to use these days are centralized. this

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suggests that they need a central purpose, wherever all data flows in and out from. one in
every of the explanations that this can be not smart is as a result of whoever managements
this central purpose has full control over network information and users (Swan, 2015). A
blockchain network is completely different from a standard network as a result of it doesn't
have one central purpose that stores and controls data. Instead, the responsibility to seem
once the network and store data is shared by completely different devices, referred to as
peers, thereon network. this can be why a blockchain network is understood as a peer-to-peer
network, shortened to P2P. The name comes from the actual fact that the tasks and
responsibilities of maintaining the network are unceasingly shared from peer to look.
Figure 1: Blockchain network
5 Incentive:
An incentive is any style component of a system that influences the behaviour of
system participants by dynamical the relative prices and advantages of decisions those
participants could build. Incentives embrace pay-for-performance reward systems that
compensate people with cash and that they additionally include systems that incorporate no

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money rewards the least bit. he case choice method, like seeking and valuing the various
potential advantages, concerned prices that were non-monetary.
6 Background:
P2P loaning cuts out the middleman - ancient banks - and connects lenders with
individual borrowers or tiny business. Since 2005, once the primary P2P loaning platform
launched within the United Kingdom of Great Britain and Northern Ireland, direct loaning
has full-grown dramatically, taking the full quantity in loans from £1.5m to £3.5bn in 2016.
And that’s solely within the United Kingdom of Great Britain and Northern Ireland. It is a
gorgeous investment possibility for highly-effective savers and smaller investors. though the
lender’s capital is in danger, the returns will go as high as thirteenth. Its price mentioning that
the longer the loan amount is, the higher are the returns. Even the short-run client loans will
average sixth yield a year. Coined within the wake of the cryptocurrency boom, decentralized
disposal or decentralized banking has become potential solely within the last five years.
Blockchain allows these transactions to require place while not intermediaries (Tseng et al.,
2018). Decentralized disposal platforms, at their essence, offer loans to businesses or the
general public. Regular banks supply this too, however the most important distinction with
decentralized disposal is that less or perhaps no intermediaries are gift. substitution the
standard banking industry wherever the bank acts as a trusty party with sensible contracts and
P2P (peer-to-peer) services is ground breaking. Coined within the wake of the cryptocurrency
boom, decentralized disposition or decentralized banking has become attainable solely within
the last five years. Blockchain permits these transactions to require place while not
intermediaries. Decentralized disposition platforms, at their essence, give loans to businesses
or the general public. Regular banks provide this too, however the foremost distinction with

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decentralized disposition is that less or perhaps no intermediaries are gift. replacement the
standard industry wherever the bank acts as a trustworthy party with good contracts and P2P
(peer-to-peer) services is ground breaking.
7 Market opportunities:
Blockchain’s a touch like the XML that was within the late Nineteen Nineties and
early 2000s, however the substantial effort needed over few years for appreciating the
potential. The biggest chance that is opened by the blockchain opens the door, to is — the
creation of the code agents with the status as well as also the intelligence for acting and
transacting the business on the behalf. (Yli et al., 2016). The user has got to possess third
parties for managing Associate in Nursing autonomous group action atmosphere.
8 Risk factors:
The Blockchain is the future, it will alter businesses for transferring the knowledge
faster, additional firmly as well as at lower value. It is doubtless to become one of the core
pillars of the resilience-cyber. It is explained by Richard Magran why it actually matters as
well as what the risk managers ought to do (Zyskind and Nathan, 2015). There is no risk that
is bigger to the international economy within the coming back years than one cyber event that
is large. The Blockchain might represent the simplest hope to prevent as well as to limit such
incidents within the future.
Transparency of the block chain comes from one of the fact, which is transactions and
holdings of all the public address that is open for viewing. In the concept of block chain,

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identity of an user is unrevealed behind cryptography that is powerful. Once the main
weakness of a system can be identified, a publishing scheme that is improve can be proposed.
The vendors’ willingness to commit for the assurance of performance is to be
depended on some consideration. a) service for delivery model , b) reward or risk profile, c)
the multiplication factor to accept significant liability for so many customers. The block
chain management system do have some potential for becoming one of the integral part for
the operation in so many businesses that are offering security, scalability as well as
computing power at lower OPEX and CAPEX.
9 Conclusion:
It can be concluded that Using blockchain in peer to look disposal might facilitate
take away intermediaries from this system. Network have already launched a peer to look
disposal platform victimisation blockchain and good contracts. But why we have to
implement the blockchain in peer to look disposal and what may be the pain points within the
ancient lending process. In an ancient disposal method, folks need intermediaries’ sort of a
loan officer, banks, underwriter, and loan processor to create the trust. however, adding
middlemen and rules to the method of disposal results in the high fees.

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10 Reference:
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Cachin, C., 2016, July. Architecture of the hyperledger blockchain fabric. In Workshop on
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Crosby, M., Pattanayak, P., Verma, S. and Kalyanaraman, V., 2016. Blockchain technology:
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Eyal, I. and Sirer, E.G., 2018. Majority is not enough: Bitcoin mining is
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Eyal, I., Gencer, A.E., Sirer, E.G. and Van Renesse, R., 2016. Bitcoin-ng: A scalable
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Heilman, E., Baldimtsi, F. and Goldberg, S., 2016, February. Blindly signed contracts:
Anonymous on-blockchain and off-blockchain bitcoin transactions. In International
conference on financial cryptography and data security (pp. 43-60). Springer, Berlin,
Heidelberg.
Huh, S., Cho, S. and Kim, S., 2017, February. Managing IoT devices using blockchain
platform. In 2017 19th international conference on advanced communication technology
(ICACT) (pp. 464-467). IEEE.