[EDU] The Rule of "No Collateral, No Loan" - IGNORE AT YOUR OWN RISK!

[DiamondCardz]

As in 2013, it seems the trend has continued - a massive influx of users, both new and old, has continued to hit the Lending section with more and more loans being asked for daily. Due to scams a "rule" has been created which, while not currently "enforced", is basically a minimum requirement to get a loan. Note that this isn't an official forum rule, it's just a rule that most lenders will follow.

The rule of "No Collateral, No Loan" means that in order to get a loan you must give collateral that is equal, or preferably higher to the amount you are being loaned.

If you completely ignore this sticky and make a loan request with no collateral, without having massive trust on the forum, the chances of you getting negative trusted feedback and therefore having a Trade with Extreme Caution tag is almost 100%.

In general the amount lenders will be looking for is collateral equal to 110%-120% of the amount you are being loaned. Why is this? Well, first, they want to discourage you from running off with the funds. Collateral also needs to be something that can easily be sold, which brings me to my second point - your $500 worth of ink isn't going to cut it as collateral. Normally lenders will want things such as Altcoins or precious metals, although things that can be sent electronically are preferred.

A common question is why don't I just sell my collateral? Well the reasoning behind collateral is that you think it's going to appreciate in price or do not want to sell it, encouraging you to pay back the loan to have your collateral returned.

However, you must also watch out for collateral scammers. These guys take your collateral and run, without sending you the loan. Avoid this by using escrow.

This applies to lenders too - for your own sake, please follow this rule, both for your wallet and to discourage scammers from coming here.

The below post is also part of this [EDU].

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[Vod]

What is considered collateral?

Collateral is something that can easily be resold to cover the loan value plus interest should the loaner default on the loan.

- The best collateral is another crypto-currency, such as Ethereum (also written as ETH).  Coins must be moderately traded on multiple exchanges.
- Some digital wares such as domain names can be considered as long as the user cannot recover it.
- Small valuable items that can be shipped though the mail - i.e. gold, silver, iphones, etc.
- Large items, such as a motorcycle or guitar can be used if you live close to the person giving you the loan.  Try localbitcoins.com

What is not considered collateral?

- Merit.  Bitcointalk Merit is not a commodity and is not meant to be traded.  Asking or doing so may get you negative trust (Trade with Extreme Caution!)
- Items they want to sell.  They don't want it back, so they will default.  It's scammy unethical behavior and will lead to negative trust.  Check their recent posts!
- Items not in hand.  Don't trust a user that promises to give you something *when* they default!  Tracking numbers only show something has been mailed - it could be an empty box.
- Future income.  You can prove you'll make xx coins in the next few days, but nothing forces you to send those coins to pay your debt.
- Identification.  So what if they can prove who they are.  Are you going to spend more money and time taking them to court on untested legal grounds?  You'll probably just walk away, like everyone does.  ID is useless.
- Games codes or similar.  To verify the collateral you need to use the code, which destroys the collateral.  Consider this a purchase, not a loan.  (Post in Digital Goods instead)
- Most new alt-coins or alt-coins that trade for satoshis are not good collateral as they can become worthless overnight.
- Most pre-coins/tokens are worthless, or may take significant time to be worth anything.  
- Paypal should never be used - they are anti-bitcoin and will rule against you 100% of the time.  Escrow can't even help, as paypal charge backs can come over six months later!
- Most valuable online accounts can easily be recovered by social engineering (the user contacting support to say they were hacked, and regain control of the account)  Examples:  Steam
 
When should you use Escrow?

 - Never send collateral directly to a low activity/post account offering you a loan, as they are likely to take your coins and disappear. (Collateral Scam)
 - Use only "Legendary Members" for escrow - they have a vested interest in the community with the time they have spent here.
 - Do not use a third party escrow service unless hero members can vouch for it - it's too easy to create a website, do a few escrows then disappear with a big balance.  Rinse and repeat.
- A list of trusted escrows can be found here:  https://bitcointalk.org/index.php?topic=855778.0
 
When considering the trustworthiness of a user, ignore "Posts" as there are schemes that pay a user per post.  A person can make 1,000 useless posts in one day and contribute nothing to the community.  Instead look at the "Activity" number - that gives you a more accurate tally of how involved the user is in the community.  The new "Merit" system highlights thoughtful or useful posts, but gives no indication of trustworthiness.

Ignore the sob stories that users post - it's just a scam to get your coins.  If a person really is in such a situation, they can turn to family, friends or other social circles they frequent.  They are just posting in our community because the payment is anonymous and irreversible.

[KWH]

Maybe add the accepted collateral requirements as well, have it all in one sticky.

[sonysasankan]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

[DiamondCardz]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

It is a sticky, yes. Now I wouldn't ban users who do that but I do support actually moderating the Lending section and putting criteria in place for a loan, and deleting clear scams (sympathy loan scams etc.) instantly. Posts that clearly ignore the criteria could also be deleted just as the Giveaway threads are. Of course until theymos sees the issue in the Lending forum, that's not gonna happen.

[Crypto.Conyo]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

I agree. Even if it is not a forum rule, it could be a section rule.
All requests for a loan without a collateral, should be closed. If a user insists with these kind of requests, must be banned.
More than the 90% of the posts in this section is currently pure garbage.
CC.

[DiamondCardz]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

I agree. Even if it is not a forum rule, it could be a section rule.
All requests for a loan without a collateral, should be closed. If a user insists with these kind of requests, must be banned.
More than the 90% of the posts in this section is currently pure garbage.
CC.

No, not all, but I do agree there should be criteria put in place (information, etc.) rather than some of the 10 word loan requests we get which are basically spam.

[sonysasankan]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

I agree. Even if it is not a forum rule, it could be a section rule.
All requests for a loan without a collateral, should be closed. If a user insists with these kind of requests, must be banned.
More than the 90% of the posts in this section is currently pure garbage.
CC.

Or maybe create split on the loans section. It could be like the Marketplace in bitcoins and the other marketplace inside the altcoin subsection. Only in this case the two would be residing in the same section. One where altcoins for collateral is compulsory. The other one can be non-alt coins and other electronic/physical goods for collateral or even without collateral. That would keep the first section full of genuine quality posts and the other one the shady place with scammers where you tread at your own risk and people who want to risk lending can still do so if they want to gamble for out of this world returns. Then there would be no excuse for posting a no-collateral post on an altcoin collateral only section. It can simply be moved to that section without deleting no?

[DiamondCardz]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

I agree. Even if it is not a forum rule, it could be a section rule.
All requests for a loan without a collateral, should be closed. If a user insists with these kind of requests, must be banned.
More than the 90% of the posts in this section is currently pure garbage.
CC.

Or maybe create split on the loans section. It could be like the Marketplace in bitcoins and the other marketplace inside the altcoin subsection. Only in this case the two would be residing in the same section. One where altcoins for collateral is compulsory. The other one can be non-alt coins and other electronic/physical goods for collateral or even without collateral. That would keep the first section full of genuine quality posts and the other one the shady place with scammers where you tread at your own risk and people who want to risk lending can still do so if they want to gamble for out of this world returns. Then there would be no excuse for posting a no-collateral post on an altcoin collateral only section. It can simply be moved to that section without deleting no?

Raise your suggestion in the Meta section. I do think that would work, but obviously I am not an admin and telling your ideas to me won't make anything happen.

[sonysasankan]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

I agree. Even if it is not a forum rule, it could be a section rule.
All requests for a loan without a collateral, should be closed. If a user insists with these kind of requests, must be banned.
More than the 90% of the posts in this section is currently pure garbage.
CC.

Or maybe create split on the loans section. It could be like the Marketplace in bitcoins and the other marketplace inside the altcoin subsection. Only in this case the two would be residing in the same section. One where altcoins for collateral is compulsory. The other one can be non-alt coins and other electronic/physical goods for collateral or even without collateral. That would keep the first section full of genuine quality posts and the other one the shady place with scammers where you tread at your own risk and people who want to risk lending can still do so if they want to gamble for out of this world returns. Then there would be no excuse for posting a no-collateral post on an altcoin collateral only section. It can simply be moved to that section without deleting no?

Raise your suggestion in the Meta section. I do think that would work, but obviously I am not an admin and telling your ideas to me won't make anything happen.

What's a meta section? How Do I find out who's the mod for the lending section. Don't see any moderator titles in the section heading. I really don't understand the hierarchy system at Bitcointalk... I see some as "staff", then there's also "global moderators". Is each staff assigned a section of the forum to moderate or something? I'm not very old here in the forums and havent really ventured outside posting replies and PMs 

[DiamondCardz]

This needs to be a sticky and will avoid a lot of clutter here. The genuine loan seekers get lost in all this shit.

In fact I would go one step further and ban the user who are all like "oh but I would never ever ever cheat some one cross my heart and its for the dying people of coinistan", etc. No collateral needs to be enforced just like the No giveaways rule and the "reserved" posting rule. I'm all for reducing nightmares

I agree. Even if it is not a forum rule, it could be a section rule.
All requests for a loan without a collateral, should be closed. If a user insists with these kind of requests, must be banned.
More than the 90% of the posts in this section is currently pure garbage.
CC.

Or maybe create split on the loans section. It could be like the Marketplace in bitcoins and the other marketplace inside the altcoin subsection. Only in this case the two would be residing in the same section. One where altcoins for collateral is compulsory. The other one can be non-alt coins and other electronic/physical goods for collateral or even without collateral. That would keep the first section full of genuine quality posts and the other one the shady place with scammers where you tread at your own risk and people who want to risk lending can still do so if they want to gamble for out of this world returns. Then there would be no excuse for posting a no-collateral post on an altcoin collateral only section. It can simply be moved to that section without deleting no?

Raise your suggestion in the Meta section. I do think that would work, but obviously I am not an admin and telling your ideas to me won't make anything happen.

What's a meta section? How Do I find out who's the mod for the lending section. Don't see any moderator titles in the section heading. I really don't understand the hierarchy system at Bitcointalk... I see some as "staff", then there's also "global moderators". Is each staff assigned a section of the forum to moderate or something? I'm not very old here in the forums and havent really ventured outside posting replies and PMs 

That's correct. There aren't any mods for the Lending section right now as there are no rules that can be enforced here, and spam and all that is usually dealt with by the global moderators. Also, meta is https://bitcointalk.org/index.php?board=24.0

[KWH]

What is considered collateral?

- The best collateral is another crypto-currency, such as Litecoin (also written as LTC).
- Some digital wares such as domain names can be considered as long as the user cannot recover it.
- Small valuable items that can be shipped though the mail - i.e. gold, silver, iphones, etc.
- Large items, such as a motorcycle or guitar can be used if you live close to the person giving you the loan.

What is not considered collateral?

- Items not in hand.  Don't trust a user that promises to give you something *when* they default!  Tracking numbers only show something has been mailed - it could be an empty box.
- Most alt-coins that trade for satoshis are not good collateral as they can become worthless overnight.
- Paypal should never be used - they are anti-bitcoin and will rule against you 100% of the time.
- Most valuable online accounts can easily be recovered by social engineering (the user contacting support to say they were hacked, and regain control of the account)
 
When should you use Escrow?

 - Never send collateral directly to a newbie offering you a loan, as they are likely to take your coins and disappear.
 - Use only "Hero Members" for escrow - they have a vested interest in the community with the days they have spent here.
 - Do not use a third party escrow service unless hero members can vouch for it - it's too easy to create a website, do a few escrows then disappear with a big balance.  Rinse and repeat.
 
When considering the trustworthiness of a user, ignore "Posts" as there are schemes that pay a user per post.  A person can make 1,000 useless posts in one day and contribute nothing to the community.  Instead look at the "Activity" number - that gives you a more accurate tally of how involved the user is in the community.

Ignore the sob stories that users post - it's just a scam to get your coins.  If a person really is in such a situation, they can turn to family, friends or other social circles they frequent.  They are just posting in our community because the payment is anonymous and irreversible.

Finally, do not encourage scammers to come here!  Giving out loans to newbies with no collateral, or loans to people with "SCAMMER" under their name are likely to get you negative-repped by other users, like me.  

[DiamondCardz]

For reference...BTC is not collateral for a BTC loan. That's like me saying "Here's $5 collateral, can I have that $100 loan now?" First, I might as well have just taken out a $95 loan, and secondly, if you're offering BTC as collateral you obviously have less than 100% collateral else you wouldn't be taking out the loan, meaning you're probably not going to find someone to loan to you.

[Rupture]

I do loans without collateral here: https://bitcointalk.org/index.php?topic=590231.0

[KWH]

I do loans without collateral here: https://bitcointalk.org/index.php?topic=590231.0

[RyanMilligan1]

What is considered collateral?

- The best collateral is another crypto-currency, such as Litecoin (also written as LTC).
- Some digital wares such as domain names can be considered as long as the user cannot recover it.
- Small valuable items that can be shipped though the mail - i.e. gold, silver, iphones, etc.
- Large items, such as a motorcycle or guitar can be used if you live close to the person giving you the loan.

What is not considered collateral?

- Items not in hand.  Don't trust a user that promises to give you something *when* they default!  Tracking numbers only show something has been mailed - it could be an empty box.
- Future income.  It's great that you can prove you'll make xx coins in the next few days, but nothing forces you to send those coins to pay your debt.
- Identification.  So what if they can prove who they are.  Are you going to spend more money and time taking them to court on untested legal grounds?  You'll probably just walk away, like everyone does.  ID is useless.
- Most alt-coins that trade for satoshis are not good collateral as they can become worthless overnight.
- Paypal should never be used - they are anti-bitcoin and will rule against you 100% of the time.  Escrow can't even help, as paypal charge backs can come 6 months later!
- Most valuable online accounts can easily be recovered by social engineering (the user contacting support to say they were hacked, and regain control of the account)
 
When should you use Escrow?

 - Never send collateral directly to a low activity/post account offering you a loan, as they are likely to take your coins and disappear.
 - Use only "Hero Members" for escrow - they have a vested interest in the community with the days they have spent here.
 - Do not use a third party escrow service unless hero members can vouch for it - it's too easy to create a website, do a few escrows then disappear with a big balance.  Rinse and repeat.
 
When considering the trustworthiness of a user, ignore "Posts" as there are schemes that pay a user per post.  A person can make 1,000 useless posts in one day and contribute nothing to the community.  Instead look at the "Activity" number - that gives you a more accurate tally of how involved the user is in the community.

Ignore the sob stories that users post - it's just a scam to get your coins.  If a person really is in such a situation, they can turn to family, friends or other social circles they frequent.  They are just posting in our community because the payment is anonymous and irreversible.

Finally, do not encourage scammers to come here!  Giving out loans to newbies with no collateral, or loans to people with "SCAMMER" under their name are likely to get you negative-repped by other users, like me.  

Another for 'small valuable items' could be jewellery. I was just looking at watch collection and thinking that could cover over a 100K btc loan.

[CCU]

Thanks for the warning and the general knowledge.

I've come to invite those who like to share knowledge to consider teaching at CCU (Cryptocurrency University), we expect to be up and running by Fall of 2014.  

Here is a link to our request for instructors: https://bitcointalk.org/index.php?topic=632961.msg7061983#msg7061983

 

[DiamondCardz]

Note: You need to acknowledge this if you are taking a loan out - if you are a new member (Newbie, Jr. Member, perhaps even a Member), trying to take out a loan without collateral will almost always result in you receiving negative trust and being marked with a red "TWC" tag. Mods will not remove this and neither will Admins.

[Muhammed Zakir]

Note: You need to acknowledge this if you are taking a loan out - if you are a new member (Newbie, Jr. Member, perhaps even a Member), trying to take out a loan without collateral will almost always result in you receiving negative trust and being marked with a red "TWC" tag. Mods will not remove this and neither will Admins.

What if that person have no collateral but can give the btc back as he promised?

Kindly,
        Muhammed Zakhir

[sonysasankan]

Note: You need to acknowledge this if you are taking a loan out - if you are a new member (Newbie, Jr. Member, perhaps even a Member), trying to take out a loan without collateral will almost always result in you receiving negative trust and being marked with a red "TWC" tag. Mods will not remove this and neither will Admins.

What if that person have no collateral but can give the btc back as he promised?

Kindly,
        Muhammed Zakhir

Any scammer "can" give the BTC back. Collateral acts as an answer to "if he doesn't". Its to protect the lender, not prove the borrower's trustworthiness.