For a long time, third parties have been coming in the way of quality and affordable services. With the invention of peer to peer platforms and transactions, service delivery time has significantly and costs greatly reduced. Although there has been a challenge in the adoption of crypto, the technology is the now and future of transactions.

Today’s clients are not ready to pay for brokerage, and that is why third parties will be phased out though it may take time and effort. Sacrifice too will be required.

Crypto Lending

Cryptocurrency is a branch of blockchain technology. The peer to peer currency has great advantages compared to legal tender. One is the irreversibility which may allow the authorities to trace any sort of theft and deal with the culprits. Another gain is the speed in which crypto transactions get verified and processed. Besides, there is no third party involved which makes it more convenient and efficient.

With legal tender, banks and other lenders offer several financial services. Similarly, crypto lending is a possibility. Just like traditional lenders issue money and get repaid at an interest, crypto lenders too can give out crypto loans. The idea is similar but with a difference in execution. While traditional loans are issued traditionally with lenders, crypto uses technology to get the process done.

Crypto lending takes place when a borrower and a lender engage on a crypto platform. In most cases, there are two scenarios. In the first instance, a lender can be an individual dealing directly with a borrower. In this peer to peer case, both parties agree on the terms and the currency lent out. Alternatively, one could get a crypto loan from an organization. It is possible to get an Instant Loan these days and they have useful topics about cryptocurrency buying.

Collateral

Just like traditional loans used to work; crypto lending borrows a lot from the outgoing process. Loan security is an important factor, especially when the borrower is a high risk. In crypto lending, crypto can be used as collateral. How is this possible?

When seeking a loan, a lender wants guarantee or assurance you will pay the loan. That is why they are ready to hold on to any asset you already own as your commitment to them. The adoption of cryptocurrency has been a challenge. Financial institutions, governments and regulatory authorities are busy resisting and fighting the technology. Although this is true, some lenders have found the invention amazing and are willing to stake the coins in exchange for fiat or other loans.

Different Perspective

In 2018, a crypto lending deal in Kenya involving Ubricoin (UBN) and a homeowner based in Mombasa almost went through. The homeowner whom I’ll refer to as Ken contacted Ubrica’s CEO – Dr. Waruingi Macharia. Ubrica is Ubricoin’s mother company. The agreement was to exchange one of Ken’s estates worth millions of shillings for millions of Ubricoins. Then, one UBN was valued at $0.5. After the amounts were settled on, both teams’ legal departments started working on an agreement. One was documented, and both parties were to sign to the terms and agree on conditions.

One of the condition was; full ownership of the estate was to be transferred to Ubrica once the coins become fully diluted. In short, Ken was to sell the estate to Ubrica and get paid in Ubricoins. But, the deal was to be sealed only when UBN became fully diluted. This meant the deal was to go through once UBN becomes locally accepted.

According to Ubrica, this was to happen before the end of 2019. Along the way, things went south, and the deal fell off. It was a delicate deal to seal considering the circumstances. UBN was still a new coin campaigning for adoption, and so Ken half-heartedly went into the deal. Perhaps if the coin had been around for a while and was as popular as Bitcoin (BTC), things would have been different.

Going forward, it would be easier to get a loan with crypto assets as collateral. Why will that be the case? Then, crypto would be more popular and more locally used. Lenders fear to transact with these assets only to lose out in the end.

Adoption and Dilution

It is a high risk to trade with a coin whose dilution is not established. A coin with a fully diluted market like BTC and Ethereum (ETH) is worth a risk. There are more established coins. As we dive deeper into blockchain technology and peer to peer technologies, more cryptocurrencies will be established, and the number of communities per coin, as well as holders per community, will tremendously go up. That will make it easier to seal crypto loan dealings and other trades involving the volatile and highly feared technology.

Before we get there, a lot of work is there to be done. Endless campaigns to demystify the misconceptions held by many including influential individuals have to be done. Warren Buffet is one influential figure who has come out strongly to condemn crypto trades. Whatever crypto enthusiast believe and preach; he thinks otherwise. He has a right to think as he does. But, for the success of crypto lending, such individuals must be convinced otherwise.

Elon Musk once tweeted Ethereum, and within no time the price of the coin had gone up. If these individuals can be such influential on matters critical as prices, then onboarding them will make crypto lending more successful as it is an important factor of crypto engagements.

The Bottom Line

Crypto lending has a long way to go. The beauty is, the technology is here to stay, and adoption rates will improve as times goes by. There will be more assets whose ownership would be transferred using blockchain technology. Crypto will be used to facilitate personal loans, mortgages, car loans and several others. As crypto coins continue to gain popularity and attain full market dilution, more investors will come in, and this will lay off some risks associated with insufficient funds. Crypto lending has a great future!

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