As Bitcoin grows and continues to dominate the world of cryptocurrency, people can now rely on accessing more items through crypto-based payments. With experts like Saleh Stevens, those who may have never experienced the world of investing can quickly learn how this new industry functions. This is why it is almost crucial for common companies like lending businesses to start accepting cryptocurrency as a valid form of collateral placed on loans, mortgages, and so on. Doing so could help replace factors like poor credit and the following few reasons demonstrate why this strategy could be very beneficial.
The Growth Factor
As it has been proven over the course of 2017, Bitcoin is a currency that appreciates enormously. This means that its value keeps going up as more outlets decide to accept it as a valid form of payment. On January the 1st of 2017, for example, the price of Bitcoin was a little under $1,000. At the end of that same year, the currency went over $16,000 at one point in December. This means that 12 months in 2017 had an unprecedented yield of over 1,600 percent. Thus, if a loan was to utilize these coins as collateral, one might see such growth that the loan itself becomes irrelevant. Here is a potential scenario: If someone accepted 10 coins as collateral on a $100,000 mortgage at the beginning of 2017, that collateral would have been worth around $10,000. By the end of the year, however, the collateral’s value would have gone up to $160,000 which is more than the loan itself!
Easy Transactions
Doing transactions online through cryptocurrency is one of the easiest ways to make payments nowadays. The times of money orders that must be purchased through third-party sellers, checks or even cash payments are over. The majority of these methods involve the lender having to do an extra step to actually access the funds. With cryptocurrency, everything can be done over a smartphone and money could be available within minutes. It hardly gets easier than that.
Fosters Modernization
If someone believes that not keeping up to date with technology won’t be detrimental to their business, just ask Blockbuster who got killed for not keeping up with Netflix. People might soon be switching to only borrow money from those who can offer them an agreement under their terms. If cryptocurrency becomes mainstream, which it already indicates it might, those facilities that do not allow things like Litecoin and Ethereum (to name a few) will lose demand. This means that profits will plummet and the choice will come down to either modernize or terminate. Might as well make that decision right now!
Irreversible and Secure
When someone places their assets as collateral, there is usually a period of verification that must take place. This includes actually seeing all those items that the lender will gain possession of, in case that terms of the loan are not being followed. It is also not the safest way to handle business. For example, if a mortgage on a house uses that house as collateral, what happens when payments stop and the house somehow burns down? Well, both the loan and the collateral simply disappear and court proceedings must ensue. This can be avoided by using cryptocurrency. It is built to only do irreversible transactions that cannot be blocked or sent back. It is also one of the safest ways to exchange funds with countless dangers arising from online hackers and human errors.
Low Fees
Even with a simple wire transfer of money, there will be sizeable fees associated. People who use assets as collateral will have to gain proper paperwork verified by a third-party professional which, once again, does not come cheap. By using cryptocurrency, one might find fees that are a lot more affordable than any of the aforementioned. This becomes highly important when the size of modern-day collaterals is considered. Many individuals might soon not have anything as valuable as their cryptocurrency wallets anyway!
Saleh Stevens, the previously named expert who started working with cryptocurrencies long ago, is one of the many people who think the best is yet to come. Nevertheless, those looking to upgrade to these type of state-of-the-art strategies should do their research first. Even though cryptocurrencies are likely to be very successful soon, all the laws related to them must be looked at. Right now, there is a clear lack of regulation in this industry that will probably get looked at by the Congress soon. Hence why it is very important to know how to properly implement any new models that will be crypto-friendly and avoid scrutinizing the existing customers!