Bitcoin Global News (BGN)
May 04, 2018 -- ADVFN Crypto NewsWire -- It won’t be too long
before we stop seeing cash loan businesses on almost every city
street corner and we start seeing crypto-based loan businesses in
their place. We do already have crypto-based loan businesses
like SALT, but this idea of cash
advances that are facilitated with crypto is quite new. Even so,
one particular former Goldman Sachs executive seems to be
onboard.
According to an announcement on
Medium by the startup called HOLD on May
2nd, Priyanka
Lilaramani has recently been hired as their CEO.
Lilaramani was an Executive Director at Goldman Sachs from
2001-2012, and then went on to be a leader at several non-Crypto
startups before moving into the Crypto-space, this
year.
Why did someone with such a large
background in traditional finance join a crypto firm? The most
striking thing about HOLD is what their mission
is. HOLD wants to be the cash-advance center of the crypto-sphere.
This means that if they are successful and their business model
truly takes hold, then traditional cash advance firms could
theoretically start to become obsolete.
On top of this, if they are
successful, we might just start to see more governance and
therefore fairness in the cash advance space, which is now an
industry that’s ripe with arguably dishonest rates related to loans
and compounding interest.
If all information related to such
loans was on the Blockchain, then there would be little
grey areas to dispute. Everyone would know the original terms and
third parties could weigh in whenever an argument
arose.
In addition to these possible,
positive implications that could come from HOLD’s success, there’s
also the fact that the firm has made it clear that it will not
require traditional credit checks. If this turns out to be 100%
true, then a key advantage as well as a key disadvantage logically
follow.
Firstly, the key advantage is that
all transactions will be done in crypto and users will be able to
collateralize up to 65% of the crypto that they own in exchange for
cash, according to HOLD and CoinTelegraph. That’s also the key
disadvantage.
The Crypto market is still quite
possibly the most volatile financial market that we’ve ever seen in
history. Unless users are well-schooled in trading and know when to
get in at the low and get out at the high, for example, HOLD’s
services could be said to be quite risky.
In addition to HOLD keeping a
percentage of the user’s crypto as collateral for the duration of
the loan, HOLD also reportedly requires that anyone who wants to
use its services keeps HOLD’s dedicated token locked in his or her
wallet for at least 6 months. If this is isn’t done, then you
simply cannot request a loan.
This tactic is tried and true
already in the industry as it incentivizes users to get in and stay
in the network, for the long-term. Another group that’s
incentivized is the lenders themselves. If you’ve been assuming up
to this point that the lender was HOLD, then you’d be
off-base.
HOLD will facilitate the process
but will be decentralized. Lenders will be anyone who has the funds
to do so and meets whatever HOLD’s identity requirements for users
turn out to be.
According to HOLD, once a lender is
approved and starts lending fiat on the platform, then he or she
can reasonably hope to earn 4.5-7.5 percent interest per annum.
Thus, this serves as a semi-similar income stream to Masternodes.
All in all, like many of the other
projects that we’ve discussed HOLD is promising but it hasn’t
gotten off the ground yet. It’s also worth mentioning that
HOLD appears to have an office in Malta. Is a future partnership
with Binance in the future? When HOLD takes off and this starts to
become clearer, its lending practices might bear close following as
an example for others who are looking to follow HOLD in this
area.
By: BGN Editorial Staff