Borrowing money from friends and/or relatives can undoubtedly lead to complicated and not particularly pleasant situations – however, many consider that this may be preferable to dealing with banks or loan sharks.
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 related 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 is 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 nothing new: in essence, these systems have existed almost since the creation of money, and they operate as “interpersonal” banks, where credit is based on trust between community members. As one of the creators of Puddle, Skylar Woodward (the other two are Matt Flannery and Jean-Claude Rodriguez Ferreira Masons), explains to Wired, the challenge was to adapt this “offline” system to modern online data. Using the Internet for this purpose implies much faster speeds, while there is always the hesitation regarding whether someone can trust someone they only know through a digital profile. That is why social networking elements were integrated into the application, along the lines 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%.
Source: huffingtonpost.gr
