Gold as Collateral in Crypto Loans Market

Gold has been a precious commodity for most of the investors, while experts argue there have been reports that Gold protects user’s financial portfolio from volatility as there is an inverse relationship between gold and equities. Gold is also widely used as collateral in the Debt market, and with the push of innovation, now borrowers in the crypto lending community could use gold as collateral. Let’s explore a bit more on this –

The Crypto Lending Using Gold as Collateral

Conventional Lending has been a cumbersome and tedious job, as individual raise a request to the Bank or NBFC ’s, Banks explore the user’s credit score, verify personal and financial details and then the loan is sanctioned. Crypto Lending, on the other hand, does not need to verify your economic status, based on the collateral value the loan amount is fixed and released at a predefined interest rate. While earlier tokens were used as collaterals, quite recently Gold has been used as collateral by the crypto-backed loans platform.

How Gold as Collateral works in Crypto Loans?

The borrower could submit a loan request and deposit the gold in the wallet provided by the Blockchain lending platform. Here there are two types of service providers, one where the platform connects the borrowers/lenders from across the world and second where the platform itself act as a lender. So in the first case, once the loan request is made, and if a matching application from a lender exists, the loan could be issued promptly, or otherwise, the request sits on the dashboard unless an apt funder is found. In the second case, the loan amount either in the form of cryptos or fiat is issued and transferred directly to the bank account or a crypto wallet.

Once the repayment of the principal amount is made, the borrower can get his Gold collateral back. Mostly there are no prepayment charges applied by the lending platforms and have fixed interest rates.

The Lender and borrower are under an agreement made by smart contracts, to prevent either party from relapsing on the agreed terms.

Why Gold as Collateral in Crypto Lending?

By using Gold as collateral, the blockchain lending platform is raising the possibility of including other tangible assets like precious metals, real-estate, etc. Also, Gold as collateral has been existing since olden times, and individuals still include Gold among their financial portfolio as a diversifier or as a hedge in case inflation is peaking so then why not take its benefits in crypto markets as well?

What are the Risks Associated with Gold loans in Crypto Market?

Gold loan is classified as a secured loan because it’s an asset-backed loan where mostly lenders do not have to worry about defaulters and Gold is a universally accepted commodity. Hence lenders are making a safe bet. However, the borrower might have to worry about the crypto prices since it’s a volatile market with not much regulation.

Firms Offering Gold Loans in Cryptosphere

ETHLend has listed the gold-backed cryptocurrency, the Digix Gold token (DGX), on its platform; enabling borrowers to use gold as collateral effectively for blockchain lending.

———————————————————————————————-

Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

If you liked our post, please follow us on twitter [@getnuo] to get latest updates and insights.

 

Five Things You Need To Know About Crypto Loans

In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans, what are the different types of crypto loans, advantages of crypto-backed loans, Risks associated with crypto lending, crypto lending platforms in US, Crypto Lending Platform in UK and Crypto Loans platform in Europe. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would talk about five things you need to know about crypto loans.

Crypto Loans – Five Things You Should Know

Crypto Lending Platform are operational 24*7

Yes thanks to the nature of the services, the lending platform is operational 24*7. Most of the platform connects the lenders and borrowers from across the globe, making them operational 24*7. Unlike loans offered by banks or NBFC’s in the countries, the crypto lending market is a digitized platform where individuals could register from any part of the world.

 

Get FIAT against a crypto collateral

One of the beauty of crypto loan is the new business model that offers Fiat currency loan against crypto collateral. If users have cryptos in their wallets which are lying idle and he is in need of cash, a crypto loan with fiat model is the best bet. The lending platform offers secured wallets that could be used to deposit your crypto collaterals, and the loan amount could be issued within 2~24 hrs directly to your bank account, depending upon the platform policies.

 

Crypto Loans are only for RICH or millionaires

While Home loans, Car loans may be for the affluent community, crypto loan market offers microloans of even 50USD depending upon the platform you choose. Yes holding a financial portfolio of cryptos like bitcoin, Ethereum or Altcoins might be a game for millionaires, but the crypto lending market is open to all investors.

Crypto Loans are not regularised

While cryptocurrency itself is banned or restricted in many countries, many regions do allow the exchange to operate. However, the license and registration of a lending platform can be obtained in the US by the U.S. Securities and Exchange Commission (SEC) or in Canada the Ontario Securities Commission in Ontario. Even France and UK authorities, i.e., the Autorité des marchés financiers and the Financial Services Authority in the UK assist in providing a license to the P2P lending platforms.

Reg crypto to cash loans, there are a number of legal formalities and prove yourself worthy of maintaining a legal payment institution regarding financial stability, security or legality and then get a license to work as a lending platform.

 

Assets are unsecured, and returns are uncertain

All investments are subject to market risk, and most of the investment that fails [in crypto or non-crypto domain] is due to ignorance of the investor. Financial education is of utmost importance while making any investment, so in the crypto loan, the investor should be well aware of the volatility of the market, the offerings and the conditions that could lead to being a defaulter.

For the lender to mitigate risks associated with the cryptocurrency volatility, the lending platforms fix the collateral ratio from 10~70%. So the level of risk varies with each participant.


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

If you liked our post, please follow us on twitter [@getnuo] to get latest updates and insights.

Crypto Loans Platform in Europe

In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans, what are the different types of crypto loans, advantages of crypto-backed loans, Risks associated with crypto lending, crypto lending platforms in US and Crypto Lending Platform in UK. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would talk about different crypto lending platforms in Europe.

The two firms from Europe – Ethlend and Nexo are making much noise in crypto communities. While each one differs in the way their business model work, they have been working hard to capture the customer base and innovate crypto-backed loan space. Let’s take a closer look –

Crypto Lending Platforms in Europe

Ethlend

Ethlend facilitates decentralized lending on the Ethereum network. Ethlend lending works by lending Ether units and not by lending fiat currency. Also, Ethlend loans are backed by collateral as ERC-20 tokens and not Ether or bitcoin. They accept all kinds ok token like Vibe Coins or OmiseGO or Golem to name a few.

For a borrower on the Ethlend platform, he needs to deposit his ERC-20 token and lenders need to deposit their ether. Then Ethlend contracts make the switch and loan have started. The borrower now needs to pay the interest amount in Ether, failed to do so provide the lender a right to claim the deposited collateral.

Nexo

Nexo using blockchain technology provides loans directly to the borrowers. NEXO itself provides the funding, so you may not might additional lenders on their platform.

Nexo offers loans outside Europe in USD and EUR with no credit scores check. The borrower could also repay the loan amount using USD, EUR, Bitcoin, Ethereum or Nexo Tokens[the first SEC-approved security token]. One of the advantage borrowers receives while using Nexo token is a discounted interest rate. Nexo token holders also get a dividend as a percentage of the firm’s profits. While dividends, discounts may be overwhelming for the borrowers being SEC approved they are risk averse

Crypto Lending App Lndr by Blockmason, Adds PayPal Integration

Blockmason a firm from the US that launched an application Lndr an expense sharing app is integrated with Paypal. The A distributed mobile app built on Blockmason’s Credit Protocol, a foundation for recording debt and credit obligations on the blockchain is keen on expanding its reach would allow its users to settle their loans on the platform using Paypal. Users can use a total of 20 fiat currencies and ETH on the platform. The CMO of the firm says that they are exploring the options of cross-currency transactions, so one person could send ETH and receive USD.

However it’s essential to know Paypal is not having a partnership with the firm Lndr, they are using open API for integration.

Read more at bitcoinexchangeguide

———————————————————————————————————————————

Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

Crypto Lending Platforms in UK

In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans, what are the different types of crypto loans, advantages of crypto-backed loans, Risks associated with crypto lending, and crypto lending platforms in US. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would talk about different crypto lending platforms in UK.

A quick look on Google Trends for the term crypto loans indicates the growing interest of individuals, enterprises, and customers. The trend also suggests an opportunity for enterprises to tap onto and come up with innovative solutions, just as the startups from the UK are pioneering the art of crypto lending.

Google Trends - Crypto Loans
Google Trends – Crypto Loans

Crypto Loans Platform in UK

Kambo

Kambo values your crypto and offers blockchain based loans for long-term hold with an easy supply of cash. The company established in 2010 intended to provide individuals with cash without selling their cryptos. They have their offices in 18 countries and allow customers to avail loan against Bitcoin and Ether.

Their working model is simple where the user needs to sign up and specify the loan amount and submit the application. The borrower needs to transfer their cryptos on to the Kambo secured wallets, and within an hour 50% of the blockchain assets market value would be deposited into your bank account.

 

 Nebeus

Nebeus, a startup from London offers Loans by using Bitcoin as collaterals; they also have a Loan Calculator that could help you in analyzing the ROI of the investment made. The loan is usually dispersed within 24 hrs after submitting the loan request and could be availed by customers outside of the EU. It also provides users with the opportunity to have fiat loans against BTC and ETH for 20% interest rate. Nebeus also have other offerings like  Nebeus Prepaid card that allows the customer to use the card to get instant access to your crypto. You can also withdraw cash through ATM or pay in any shop. They also have a Digital Exchange that facilitates buying and selling of cryptocurrencies

Celsius

Celsius another start-up from UK  allows its customers to deposit BTC, ETH, LTC into a mobile wallet and earn a regular interest. In case the person is in need of cash, he could also opt for a crypto loan in Dollars where your cryptos are used as collateral.

With a tagline Crypto for the people, the interest earned via loans is redistributed to its HODlers in CEL token within the Celsius network

Ripio Expands its crypto lending platform across Latin America

As reported by Coindesk – Ripio an Argentinian startup is offering peer to peer microloans to all of its 200,000 bitcoin wallet users in Argentina, Mexico, and Brazil. Ripio mentioned it has 3,000 lenders on the marketplace issuing loans for up to $730.

The distinguishing feature of the Ripio lending model is that Ripio offerings are available to unbanked crypto users. Although the startup doesn’t have data on how many unbanked users are on its platform, a survey of 1,000 Ripio users revealed 19 percent didn’t have a credit card. They often fund their wallets by depositing cash at convenience stores that partner with Ripio.

Read more at coindesk.


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

Crypto Lending Platforms in US

In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans, what are the different types of crypto loans, advantages of crypto-backed loans and Risks associated with crypto lending. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would know about different crypto lending platforms in US.

Most of the crypto lending platforms work in a similar fashion where they connect borrowers and lenders. The platforms are backed by assets that include gold or even real estate. Let’s take a closer look onto these crypto loans platforms –

Crypto Lending in US

Credible Friends

As the name suggests, Credible Friends are into Trust Based peer-to-peer lending, that is built on Bitcoin and enables anyone to quickly extend lines of credit to all of their trusted friends.

The working model is quite simple; the user needs to create an account/wallet on his phone [available for iOS and Android] and deposit the bitcoins. Create a contact list by inviting your friend’s through social media, and most importantly whom you can trust. Release the credit to your friend in need based on your risk assessment; the friend needs to pay you an interest amount decided mutually. Once the digital currency is transferred, your friend could use it for shopping or emergency. And once the friend settles the final amount, your money would be returned to you leading to deal closure.

BlockFi

BlockFi is another crypto lending platform that aims to innovate the crypto lending space by infusing new lending and debt products for crypto asset owners.

The working model is quite straightforward, where the borrower needs to submit a loan request, within 24 hrs the request is either accepted/rejected. Once the request is approved sign the loan agreement, deposit your collateral to BlockFi’s secured storage wallet, and loan amount would be released. One of the significant advantages of BlockFi business model is that you get interest in dollars/cryptocurrencies, and borrowers get dollars without even selling their cryptocurrency.

Unchained Capital

Unchained capital that offers Personal, Real Estate or Business loans supports Bitcoin and Ether currency only. The model is quite similar to BlockFi where you need to create your account/loan request, once it is approved to submit the collateral and loan amount would be released. However, Unchained Capital works with international borrowers as well, with a condition of the lending amount be $100 K.

SALT Lending

SALT Lending which was recently in the news to be acquired by a rival Nexo after the CEO departure is another crypto lending firm from the US. SALT an abbreviation of Secured Automated Lending Platform allows users to leverage their blockchain assets to secure cash loans. The beauty of the firm is that without selling your crypto assets, you can get a cash amount. They have recently expanded their operations into 20 new US states increasing their reach to 35 states. The company has also introduced a new program, i.e., Proof of Access (POA) program that offers members to modify their loan conditions by using the company’s SALT Token in

Poloniex

Poloniex, one of the top crypto-exchange also offers crypto-lending solutions to its customer base. The advantage of using their platform is a support to 12 cryptocurrencies for lending. However, they do not provide fiat lending.

What are the Risks of Crypto-backed loans?

In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans, what are the different types of crypto loans, and advantages of crypto-backed loans. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would be targeting the risks associated with crypto-backed loans or crypto lending.

No technology or concept is fool-proof, so while there are many advantages associated with crypto lending, there are some risks associated with it, that could be mitigated if you are an informed person. Here are some of the risks of crypto lending –

Platform Safety

There are two kinds of platforms that connect a borrower/lender in crypto lending. First being the firms offering their software solutions, connecting lenders/borrowers and charging a small fee for the platform. On such a platform, it is crucial to know about the security aspects followed by them. Has there been a past breach? If the data was hacked? Also, it would be good to know the kind of measures provided by the firm in case of hacking. Simply know all aspects of security measures and policies offered by the platform provider to safeguard your assets from being hacked.

The other entity is the online cryptocurrency community where borrowers/lenders interact directly with each other. In such cases, as it’s an independent contract executed by the borrower and lender, there are less/negligible chances of any assistance in case of disputes of defaults or in case of scams.

Default Rate

Blame it to regulation or difficulty is repaying the loan, but crypto-backed loans come with a possibility of higher defaulters when compared to peer to peer loans.

Volatility

Crypto market is up and running all throughout the day, so while arbitragers try to make a profit out of it. The lenders/borrowers might suffer a set back if the money repaid/borrowed has dipped throughout the day. In fact, many investors might see a possibility of seeing an assets’ value depreciated to a point where the debtor is better off defaulting than repaying the loan.

 

Refrences

finder, fastinvest.

Advantages of Crypto-backed loans

In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans and what are the different types of crypto loans. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would be targeting the benefits of crypto-backed loans or crypto lending.

Involving blockchain technology into lending could make the product offerings cheaper, faster and much more transparent to borrowers and lenders. Transactions powered by Blockchain are instantaneous and indisputable, that also comes along with – no transaction fees clause. Fundamentally,  leveraging blockchain technology with peer-to-peer lending offers following benefits –

Negligible Transaction Fees

Under the P2P lending process, when a borrower initiates the loan request, it goes to a bank/financial institution’s that charge you fees for processing, documentation, or early payment charges, that was mostly applicable to the borrower. If we refer to Processing charges by Banks in India, it could go up to 20000 INR, on the other hand, crypto-backed loans do not have any processing or transaction charges. Only if you are using the platform [like Nexo, Nuo Bank, Ethlend, etc.], they might be charging you with a small amount. So crypto-backed loans come with a value of money when compared to P2P loans

No Paper Work or Need of Bank Accounts

While opting for Crypto-to-Cash loan you may need a bank account, but otherwise, there is no need of any paperwork or bank account while picking a crypto-backed loan. It also helps in targeting the individuals at the lower level of the pyramid, which is unbanked and cannot provide the required KYC documents.

No Boundaries, Loans Diversified

P2P lending mostly works in restricted geographies’, however, crypto lending could open gateways to cross-border lending, offering diversification to both lenders and borrowers. Crypto-backed loans offer an opportunity to the lending community to diversify their portfolio across different continents and countries. While lenders can take advantage of cross-country diversification, borrowers get a global pool of lenders. A win-win for both.

 

References

Hackernoon

 

Up ↑