Bitcoin Forum

Interested in p2p lending, supporting the "collateral or no loan" term, I think it will beneficial for all of us to have some common sense on the topic.
I have added some alt coins that seems to be liquid and some common digital assets - please comment if you think that something needs to be added.

I believe DogeCoin is the most stable and easiest to liquidate.

Bitcointalk accounts above Full Member have been pretty easy to turn around as well with all the lucrative signature campaigns.

I would say all altcoins with stable price.
I voted for doge, ripple, and NXT.

Who do you sell the accounts to? I haven't seen any kind of sales thread. What is the average price that you generally sell them for.

Do you verify ownership prior to accepting the accounts as collateral?

Dogecoin is the 5th more liquid asset according to http://coinmarketcap.com/currencies/volume/24-hour/
I usually do follow coinmarketcap when i want to see the market capitalization of a currency and the trade volume.

Bitcoin accounts, hmm it would be hard to put a value against it...i guess a free market would be able to do that but it still won't be liquid.
Signature campaigns sounds interesting though!

Agree, it is the same thing with domain names, and what bothers me more is the actual transfer - altcoins would be preferred asset as you can transfer it automatically(wallet transaction), this is good for business purposes.

One of my favourite coins... good vote! It will be also interesting to hear what would be the % of collateral that you expect against every pledge.
Let's say that borrowers have doge,ripple,NXT - what would be your requirements against every coin..for example an industry standard for borrower is to get 50% of the collateral value but that shall differ per asset isn't it?

If you can get a very specific signed message from the prior owner and the address signing the message can be reasonably linked to the account then ownership should not be put into question.

Your point about domain names is valid, however I would think it would be very difficult to damage the reputation of a domain just because it was "stolen" as there is really no central authority that manages all domain names.

I would think altcoins would be best to use as collateral, however there are many people that are not into altcoins or do not want to use the loan for trading which is what using an altcoin is designed to do

You can't say which is the best collateral. It depends on the lender, they are the ones who decide if the collateral is adequate enough. The things you listed are mostly for low amounts. When we are talking large amounts it could be anything from cars to laptops.

Really, any collateral which the lender can sell right away at the same amount loaned or more.

I would say that miner accounts are probably the worse in the above list. The majority of cloud mining companies are scams and you never know if the person offering it as collateral is part of the scam.

I think NXT assets rank very high up there in terms of risk for similar reasons, although if you are more familiar with the NXT marketplace this may not be the case

Id say dodgecoin seems to hold stable value at least with my experience. I also think loans are crazy anyway people always get scammed plus there's not much profit lending out .01 to someone give me a break who borrows 4 dollars from someone FML............

bitshares provides all kinds of bitAssets like bitGOLD, bitUSD, bitEUR, bitSILVER etc..
collaterized with 300% the value of bitshares!!!

not all lenders are getting scammed if you do some research about the lendee then your chances of getting not scammed will increase

For altcoin I choose doge & LTC
It's price is quite stable so it fits as collateral

and for bitcointalk account is legit as collateral. ( min  full member )  :)

Where the hell is CLAM!?

BitShares has stable BitAssets like BitUSD and BitGold.

These make the best collateral as you have a better idea what their value will be in the future.
The underlying crypto be it BitShares, Bitcoin or LTC is volatile. Therefore to use it as collateral you'd have to overcompensate which is a large unnecessary cost.

(LiteCoin for example has lost over 50% of it's value in two weeks making it a very poor collateral.)

You can see BitUSD maintains the value of dollar, is backed by an average of 300% collateral and pays 1% yield. It has no centralized counterparty risk, so it's very good collateral imo.

http://www.bitsharesblocks.com/assets/asset?id=USD

A platform that can take collateral as a pledge against a loan can serve a great value for the crypto community.
No collateral, no loan rule shall be taken seriously, scammed lenders shall go in the past!
I am looking into all kinds of digital assets, interested in every sound technology(not ignorant to non-bitcoin techs).

I would have to look deeper into Bitshares, I can see there are many votes on it already and 2 of you already commented
on the Bitshare assets....i know that counterparty and NXT have assets as well it will be interested to dig into all this.

The collateral should be liquid enough, I am not sure CLAM is?
In addition, the lender shall define the % of the loan that has to be pledged as collateral, in that case CLAM might be ok but maybe you would be able to get
20%-30% of the collateral value as a loan or whatever the free market says...

And that's the key right there... becoming familiar with the SAE: A truly underrated beast of a platform.

[Edit] Typos

Agreed, I am myself quite comfortable with both NXT and NXT AE

how about asking for different % of collateral depending on the assets in the poll?
how would you rate them?

An altcoin. It has recently become somewhat popular and has increased in price because just dice started accepting it (exclusively) on it's site

Counterparty or similar token backed by stable, redeemable commodity. I made a goofy comment elsewhere about this, but a Tidecoin (literally backed by jugs of Tide laundry detergent) would probably be as close to ideal as you could get. Worst case scenario, you have to actually use the overpriced shit -- but its use as a laundry detergent does give it some... "near-objective" value.

That said, "non-productive" collateral is still a bad kludge to a practically unsolved problem which needs to be fixed properly. Cars make sense for collateral because people need them, and they usually need the exact car they bought on loan, and, for that reason, a loan officer probably isn't going to issue another car loan to the same person while he still has an outstanding car loan. Same with houses and home improvement/repair loans. -But a lendee doesn't really "need" litecoin or XRP or whatever, and there's a good chance the collateral will be worth significantly less than when collateral was negotiated. Normally, in a repo event, the collateral would be sold around FMV with the proceeds used to REDUCE the loan amount - but because collections are almost impossible with crypto-loans between people separated by hundreds or thousands of miles, the lender being made whole is still extremely unlikely. On the flip-side, a malicious lender may hold collateral hostage, demanding FMV be paid for the collateral to be returned, and it's unlikely the lendee would have viable recourse.

Good point, considering that an asset could be used as either a promissory note of types (i.e. crowdfund profit-share) or a token representing a specific value (i.e. digital goods, physical goods, services, etc.)

This is why escrow should be used when using collateral for a loan. The escrow can be trusted enough to not pull off some kind of scam to demand more then what is owed.

While the incentive to repay should be there for borrowers the lender should secure collateral they can easily resell at slightly below FMV (to ensure a quick transaction) to cover the repayment amount of the loan.

Altcoins have little actual use to most borrowers however they are liquid so a lender can easily sell them in the event that their value approaches the repayment amount of the loan so the lender would be protected.

There is always a risk involved when you take a loan:

1)risk for borrower to lose the collateral - there might be a rule to lose the whole collateral if there is no repayment for "N" days after the due date.
2)lender is taking the risk of not receiving the full repayment, then the lender has to request the collateral from the escroll and try to sell it. Or maybe the escrow shall try to
sell the collateral to BTC or whatever the loan currency is. The escrow then would probably compensate the lender and keep any proceeds if any.

If there is a free market, the lenders could bid on collaterals and % of collaterals to be pledged, in order to mitigate the risk involved with different digital assets.

Agreed, overall. However, Smart Contracts would at least bind the loan / collateral to the blockchaian it was issued to; whereby making it a legally-enforceable contract between the buyer and the seller (or two traders, in the case of a barter arrangement).

NXT does start to address this issue with the ability to issue a NXT-backed MS altcoin held in escrow via Smart Contract; based on the defined properties and terms (i.e. block height expiry, etc.) The SAE currently has a relatively primitive Smart Contract available, albeit the true power of Smart Contracts is rumoured to be released around v1.7 or 1.8 of the NXT wallet client.

No it does not. All a "smart" contract does is ensure that certain cryptographically verifiable conditions are met. If there are no such conditions then parties are not protected

tokens are fine but offering profit-share is illegal, it's like promising dividends of stocks and that shall be regulated, even with digital currency it is illegal up to my knowledge.

Agreed, in addition, one would need cross-blockchain smart contract in order to handle collateral loan, isn't it?

I strongly suspect that will be one of many fine SuperNET attributes, given the altcoins / blockchain technologies (i.e. MaidSafe) that it has partially / fully integrated (or is in process of).