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Author Topic: LENDERS ONLY! What do you consider the best form of collateral?  (Read 485 times)
LondonTrader
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October 25, 2015, 01:08:28 AM
 #1

Hi everyone, I am a new user and am looking for some advice to educate myself.

I have been browsing the lending forum lately and wanted to ask lenders (that have actually lent btc already) a quick question....?

What do you personally consider the best form of collateral that works and most importantly is quick, simple and lowest risk?

As i have read i understand that a minimum 120% collateral in Litecoins is considered very good? I have also read that bitcointalk accounts that are senior and trusted are favoured?

I am looking to lend a few micro loans out soon to test out the btctalk lending system, so i would really appreciate any advice from reliable lenders so that i can lower my lending risk in the future when i actually start lending.

I hope you guys can help with this important question as i could not find too much info on the forums other than the two options i stated.

Look forward to your replies

Cheers
LondonTrader
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marjod
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October 25, 2015, 01:49:46 AM
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I think it mostly depends of you. Some accepts btctalk account, some would accept domain, etc...
For me, it would be altcoins, mostly the stables ones and easily tradable in exchange.

From my point of view, you have to ask yourself the good questions if you consider taking collaterals:
What do I consider as a secure collateral ?
If I take an btctalk account, will I be able to sell it if the borrower default ?


Again, I think it's up to you.

LondonTrader
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October 25, 2015, 02:01:12 AM
 #3

Hi marjod

Thanks for your reply, its great to get your opinion on this issue.

My answer to your questions is that i am not sure what i would take as collateral? But i am trying to follow the EDU sticky on the lending forum which says NO COLLATERAL NO LOAN.

I am just looking to offer my borrowers the most choice and flexibility while at the same time limiting my losses.

I am also MOST IMPORTANTLY looking to avoid scammers that borrow my bitcoins and then just run off!

Hopefully other new users and lenders can read this post and educate themselves about this with everyone's suggestions

I Look forward to more replies from other members soon

Thanks
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October 25, 2015, 02:53:55 AM
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Altcoins are by far the best collateral, especially the ones that are established, stable and have a decent trading volume.

If you have intimate knowledge about the markets of other digital items, including what it would take to sell various digital items and how much they would sell for if the seller was motivated to sell, then you may wish to accept other digital items provided it is difficult to reverse such digital items. There are a number of people who are very well versed in the bitcointalk account market and this is why so many people accept these as collateral for loans, however I would suggest that you do not do this until you are yourself well versed in the bitcointalk account market. The same is true for domains, as if you know a domain can quickly sell for well above the amount of the loan in the event of a default then you may wish to accept it as collateral, however if you are unsure then you should not.

In regards to wanting to avoid people running off with the bitcoin that you lend them, your best bet is to be sure that your collateral is sufficiently valued above the amount of the loan + interest, with a greater margin of additional value as the market for the collateral is smaller and the liquidity is less. If you make a loan for $100 and take collateral that can easily and quickly be sold for $200 then the borrower will most likely not default on such loan, on the other hand if you make a loan for $100 that is secured by $110 of collateral that is difficult to sell then the borrower is not going to have as large of an incentive to repay the loan because he stands to lose much less by defaulting on the loan.

Happy New Year!
LondonTrader
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October 25, 2015, 03:13:31 AM
 #5

Hi Quickseller

Wow, thanks for taking the time to respond. Great advice.

OK then i will definitely take your advice on altcoin value and price volatility. When i start loaning out my coins i will research the prices and liquidity of the altcoin collateral they are offering and adjust it accordingly depending on how risky it is.

In terms of the bitcointalk ranked accounts, i dont understand what value there is in this? Forgive me as i am new and still learning but if i did accept ranked btctalk accounts as collateral, how would i extract the value of this collateral to pay back my losses to the borrower?

How does this system work, in simple terms?

Hope you can help

Cheers Mate
LondonTrader
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October 25, 2015, 03:32:04 AM
 #6

Hi quickseller,

ok i think i understand the value of highly ranked bitcointalk accounts as collateral for loans...now.

I have searched and seen that i could probably resell this account again on this forum as these senior accounts can be used to get income via signature and avatar campaigns. This is where companies pay them in bitcoins to post on this forum

is this info correct about the value of bitcoin accounts? Have i understood correctly?

Let me know
Cheers
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