Why are Altcoins Accepted as Collateral?

[jeffthebaker]

I've never personally got into lending on this forum, I looked into it a bit here and there as a potential option for increasing my BTC, but decided to stay away for a few reasons. Although I dismissed the idea there was one factor I have been curious about- Altcoin collateral.

It is clear to me that anyone could easily scam a loaner by using Altcoins as collateral. All one simply has to do, is purchase an obscure altcoin, request a loan, and offer the altcoin as collateral. If the altcoin goes up in value, the loan is paid back and the scammer sells his altcoin for a profit. If the altcoin loses value, he simply does not repay the loan. Have people attempted to do this in the past? I would imagine if this did happen that loaners would no longer accept altcoins.

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If the altcoin loses value, he simply does not repay the loan. Have people attempted to do this in the past? I would imagine if this did happen that loaners would no longer accept altcoins.

this point is why the lenders who accept altcoins only choose to accept stable altcoins as collateral, and ask that at least 115%+ of the loan value is given as collateral. a loaner who doesnt really know better is vulnerable to being scammed this way i would imagine. i dont often see altcoins used as collateral on here though, at least not nearly as often as forum accounts are used.

[lihuajkl]

I never encounter such kind of borrowers. The altcoins as collateral shoud be listed in the leading exchange, has high trading volume, innovative features etc. The collateral value is over 110% of the loan amount! All of these rules ensure the payback of outstanding loans.

[jeffthebaker]

If the altcoin loses value, he simply does not repay the loan. Have people attempted to do this in the past? I would imagine if this did happen that loaners would no longer accept altcoins.

this point is why the lenders who accept altcoins only choose to accept stable altcoins as collateral, and ask that at least 115%+ of the loan value is given as collateral. a loaner who doesnt really know better is vulnerable to being scammed this way i would imagine. i dont often see altcoins used as collateral on here though, at least not nearly as often as forum accounts are used.

Makes sense, I kind of figured there would be some sort of set of rules each lender has in regards to altcoin (and other collaterals, I'm sure). It just isn't something I had ever really seen mentioned, maybe because such a scam would be too creative to see much popularity.