Lately, there have been a lot of discussions about cryptocurrency usage as collateral. Considering that cryptocurrency is impacting financial and investment sectors we have asked cryptocurrency expert Alex Faliushin from CoinLoan how cryptocurrency is impacting the financial markets and banks?
1. As you are the cryptocurrency expert, could you briefly explain,for beginners, how cryptocurrency can be used as collateral?
Currently there are no solutions which allow using cryptocurrency or other blockchain assets as a collateral of financial liabilities in fiat currency such as USD or EUR but I can to tell you how this can happen on our platform. Our project, CoinLoan, is the first one among the global “cryptocurrency community” to develop an approach enabling to use crypto-assets as a collateral. You have to sign up at the platform, make a cryptocurrency deposit (e.g., Bitcoins) and create an application. You will receive fiat funds in the amount up to 70% of the market value of your cryptocurrency immediately. The received funds can be withdrawn very easily, e.g., by an instant transfer to a bank card or a bank payment. After repaying the borrowed amount, the cryptocurrency is returned in full amount. Those who see opportunities for growth of cryptocurrency can save it for a long-term prospective without selling Bitcoins at exchanges. Also any user can provide fiat funds without any risk. Their repayment is guaranteed by the cryptocurrency collateral.
2. Can you share insights of how cryptocurrency can influence cash industry?
The most popular cryptocurrencies are highly volatile. New cryptocurrencies whose cost is pegged against precious metals and fiat currencies keep appearing. In my opinion such projects will be rather promising when implemented within the law and accepted by state institutions. When a cryptocurrency complying with this criteria appears, it shall become very successful. CoinLoan will be gladly allow working with such cryptocurrencies like with fiat funds or using them as a collateral. It’s important to know that due to the “cryptocurrency component”such platforms as CoinLoan allow financing holders to keep virtual currency. It is also
expected that with development of blockchain technologies non-competitive financial institutions who offer high interest rates will be gradually forced out.
3. How blockchain and cryptocurrencies are impacting the current investment market in finance and stocks and what changes can we expect in the next 5 - 10 years?
In my opinion, during the next 5-10 years the trend of cryptocurrency and blockchain technology development will be fully positive. More and more states would officially accept and legalize cryptocurrencies, implement blockchain technologies in routine processes, transfer their real estate, education, medical, financial registers and accounting systems. This will allow creating a safe, transparent and fully automatized infrastructure which makes life easier. Currently more and more start-ups and companies prefer raising funds for business development by ICO / ITO (Initial Coin Offering/Initial Token Offering) instead of conventional initial public offering (IPO). Even now ICO is a fast, modern and transparent way to receive financial resources.
4. Do you think that business models which are using cryptocurrency as collateral will become more popular in the near future?
Yes, sure. Total capitalization of the cryptocurrency market has increased 13 times during the last year and continues to increase. More and more people become interested in cryptocurrencies and wish to invest into them. Secured assets on cryptocurrency will become an important part of the cryptoworld ecosystem, like real estate collaterals. The whole system would just be profitable, quick and very convenient for investors. For instance on CoinLoan platform, cryptocurrency holders can live on the spot, pursue everyday needs without selling such profitable investment asset even in case of an urgent need of money. Secured assets on cryptocurrencies can be borrowed for a term up to 5 years. During this time, according to the trend, the cryptocurrency cost will increase. This will compensate the cost of using financial resources secured on cryptocurrency and even receive income after selling the crypto assets at a higher and more profitable rate.
5. Do you think that regular banks can be replaceable by cryptocurrency exchanges in the future? Are you able to tell how can cryptocurrency can affect banking sector?
Nowadays many states are very interested in blockchain technologies. Many countries transfer their real estate registers to blockchain. For example in CoinLoan platform, the conventional method of securing financial liabilities on real estate may be considered as a new type of crypto collaterals. It will become very popular because blockchain assets are evaluated immediately and all transactions with them are fully automated. In my opinion, crypto collaterals will greatly influence the conventional banking system, especially in countries with high bank interest rates.
6. Considering that cryptocurrencies will rule in the future, how is this matter going to affect the elder society in terms of technology usage?
Until recently users had to install a program on their PC and wait for a long time in order to fully synchronize 100 Gb blockchain for working with Bitcoins. Cryptocurrency and blockchain technologies develop rapidly and become very simple in use. There are a lot of mobile wallets for Bitcoin and other cryptocurrencies e.g., Copay/Bitpay. Web-applications allow creating a wallet for cryptocurrencies in a few minutes are also developed. I’m sure that if compared with the conventional banking system, usage of cryptocurrency and blockchain solutions will be easier even for the senior citizens. Now to pay a bill with help of Bitcoin you only have to scan a QR-code using a mobile app and press a button.
7. What coin would you recommend for cryptocurrency beginners and what platform is the best for trading them?
I would recommend novice cryptocurrency traders to use Bitcoin. It’s the most popular cryptocurrency, it’s easier to use it and there are many convenient wallets for it. Also many merchants approve it for payment. It`s worth using Ethereum, as it is very promising. I would recommend you to begin with CEX as a platform for starting trading an purchasing cryptocurrency.