Getline - https://getline.in - is a peer-to-peer bitcoin lending platform. While other platforms offers loans on strict formats, getline is offering more flexible "credit lines" - withdraw the bitcoins whenever you need them and repay whenever you can ... or so goes the theory.
There has been some criticism in the Getline community lately due to the credit lines suddenly disappearing. You were relying on the credit line to be there, and then ... whosh ...it just wasn't there when you needed to withdraw. Either the credit line was overcommitted, and some other borrower took the funds that was available - or the lender decided to withdraw available funds from his own account, efficiently removing your credit line.
I've been thinking a bit ...
The bank vs getline
A bank has a lot of liquidity at hand, it is a credit-worthy institution of its own, and it has peering agreements - hence as long as you're credit worthy, you can usually withdraw funds in local currency from any ATM using your credit card. It's cheap for the banks to offer a credit line, compared to the potential income they have on borrowers actually using the credit line. Ideally getline should be in the same category - if you are deemed credit worthy, you can deduct bitcoins whenever you need bitcoins.
The banks can give free credit lines because they can borrow more money cheaply and fast when needed (often directly from the institutions operating the "printing press"), and because they are overcommitting the available liquidity. If a bank has a sufficient amount of customer, on "ordinary days" (with no extraordinary event causing everyone to rush to spend all their credit lines) a relatively small amount of liquidity is needed to satisfy all withdrawal requests.
In Getline there is currently not so much liquidity available, there is currently a glut of borrowers, getline has only the funds that the lenders are willing to put in, it's not possible for getline to borrow money directly from the printing press. Lenders currently have very little incentive to have idle funds in their wallets and use it for giving credit lines; the risks involved in giving a line is almost as big as the risk involved in actually lending bitcoins, the income is null, and as for the potential income - since there is currently a glut of borrowers, the lenders have no problem getting their bitcoins lend out.
Credit line vs loan
When you have a loan, it's 100% certain that you have the funds, no-one can take them away from you, and you pay interest on it - but a credit line can be removed any time. In getline, if it's really important for you to have the liquidity offered by the line, you should convert it to a loan and pay interests on it.
When you have a credit line from a bank or on a credit card, it's extremely unlikely that the line will just suddenly disappear. Downgrades can happen, but usually those will be announced in advance (laws and ToS can vary from country and credit provider). However, if all the customers of the bank would suddenly decide to use as much of the credit line as possible, then I believe one would actually end up having problems i.e. withdrawing fiat from the ATM. Perhaps such problems actually happens every now and then, but as the end customer it's not easy to see the difference between a "technical problem" in the banking communication systems and a "liquidity problem". Actually, the reason is irrelevant when one is having problems. Technical problems does happen; in real the credit line from the bank is not always available. Perhaps it's available 99.9% of the time, perhaps 99.99% ... the statistics probably exists. We'll probably never get there, but 95% would probably be "good enough" for many purposes?
The road ahead
Personally I've tried hard to actually give people a reliable credit line, to keep available funds on my account. It didn't work out very well, I had to continuously pump more bitcoins into my getline wallet, but now I'm quite much at the limit for how many bitcoins I'm willing to risk.
I believe this situation can be changed;
- We need more liquidity and more customers to the platform; then there will always be some amount of free liquidity available. To get there we do need some few more big investors, or a lot more of minor investors.
- It must be done easier to forward credit lines. Say A trust B and B trust C. A gives B a credit line at 0.05%, and B gives C a credit line at 0.15% Then C should be allowed to withdraw if A has liquidity in the wallet. (Getline had some feature like this in the early days, but it was removed - deemed to dangerous or complicated? The current suggestion is to separate out a "borrower account" and an "investment account" such that one can transfer from one to the other and manage it manually, but this doesn't help much on credit lines, why should a user be willing to borrow money and pay interest, just to provide a free credit line for another user?)
- Borrowers must be able to opt-in on paying a bit for the credit line itself. Lenders must still be able to overcommit. I even believe that it should be theoretically possible for a lender to earn more by yielding an available overcommitted credit line than to actually lend out the money.
- There is a suggestion to split the account in three; a borrowing account, a lending account and a "technical" account - plus to make internal transfers instant and off-chain. Then one can turn an unreliable credit line into borrowed funds and back again if one needs to "lock" the credit line.
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See also https://steemit.com/bitcoin/@tobixen/bitcoin-peer-to-peer-lending-not-for-the-faint-of-heart for more information on bitcoin peer to peer lending