Puddle: Borrowing money from friends or/ and relatives undoubtedly can lead to complex and not particularly pleasant situations – however many consider that such a thing may be preferable to dealing with banks or usurers.
Puddle is aimed at them : a new application/service that gives the user the ability to borrow money from their social circle - their social "network" instead of through "traditional" channels (banks, credit cards, etc.).
As reported in a Wired article, the basic principle is simple: the user puts money into a digital "cup" and gains the ability to draw from it fivefold (for example, if they put in $10, they have a "line of credit" of up to $50, which they can draw whenever they want). Loan repayments are made in monthly installments, lasting three or six months, with no interest beyond a standard amount for each month (depending on the size of the loan).
This kind of creation of a «fund»/ «reserve» by a community is not something new: essentially these systems have existed almost since money was created, and function as «interpersonal» banks, where credit is based on trust among community members. As explained in Wired by one of its creators, Skailar Goodworth (the other two are Matt Flaneri and Jean Claude Rontreguez Ferra Mason) the challenge was adapting this «offline» system to modern online data. Using the Internet for this purpose entails much higher speeds, while there is always hesitation regarding how much one can trust someone known only through a digital profile. That is why social networking elements were incorporated into the application, following the standards of Facebook and Reddit, with «reward» systems for «good behavior».
Puddle is presented as self-regulating – and according to its designers, the principle it is based on seems to be working, as the service (which has been in testing for two years) has a payback rate of around 98%.
