Hi aston. As you suggest in your post, the majority of demand for bitcoin borrowing comes from market making traders on bitcoin exchanges. They have a need to borrower for a number of reasons, including going short. You say that currently there are cheaper ways to short, which is true. For example, on Bitfinex the borrowing rate is something like 4% APR. However, the rate is also very volatile and can jump up to 50%+ when demand is high. That's one reason why borrowers receive funds from us. Another is that they can use their funds on Coinfloor, which offers access to the GBP/BTC market. Trading of this kind is very popular right now, so I can assure you that these people exist. You and other posters are right to be concerned about Ponzi scheme. What might reassure you and others is reading our full T&Cs - you'll see the time and care we have put in to them. They might give an indication of how we do not want to do anything illegal, or even unprofessional. However, there's always going to be an element of trust involved and if you're too suspicious then you should keep your bitcoin in your own wallet until we're able to prove ourselves.