The Future of Micro-Lending With Bitcoin

We’ve seen a lot of unique crowdfunding and microlending ideas pop up and become popular in recent years. Lending Club is something I’ve personally used to get a modest return on some micro-loans I’ve made in the past and Kickstarter and Kiva both have their own unique models that we’ve seen replicated by other businesses as well. These are all typically models of giving a relatively small amount of money ($25 let’s say) towards a larger fund goal. Depending on the business model you either get some sort of interest return paid on your loan, or you get a share in the project/company you funded, or you just do this as a charity and get your money back without interest. They’re cool ideas overall.

Last week I saw an article on QZ┬ástating that the SEC will allow people who aren’t traditionally wealthy to become investors in startups. Being that I worked in the tech-startup industry for 10 years in Boston, MA, Madison, WI and Boulder, CO, I was happy to see this. I always felt frustrated sitting out on the sidelines when only my wealthy (usually older) friends I knew could make an investment in the startups and potentially get a payout if they hit it big.

I’ve been around long enough to not have “hitting it big” be the delusion that makes me want to invest, though. I like to put my money where my mouth and interests lie. I’m doing that with Bitcoin in the types of companies I invest in on in the NYSE. I did that with renewable energy companies I liked as well in the past. It makes me feel like I have skin in the game. So, I’m happy that if I meet some startup team that has a great idea and I want to invest any amount of money in them, I can do that.

But what I’m curious about is, how could Bitcoin be applied to this model. Can Bitcoin be applied to a micro-lending scenario like the ones mentioned above where you give a little bit towards a funding goal and then be entitled to some basic return as the company achieves success and pays the loan back? Even if the company strikes it big and you’ve got some residual Bitcoin investment with them.

Has anyone built any sort of model like this? What would be the challenges technically and legally speaking?