Since the creation of bitcoin, there have been questions about the usefulness of the innovation. Apart being a blockchain network, it has been used as a cryptocurrency, and now, as a collateral. However, there are still criticisms about the authenticity of using bitcoin as a collateral.
Mauricio Di Bartolomeo, Co-Founder & CSO of Ledn Inc, shared at the Bitcoin Amsterdam that borrowers worldwide need good, easy and accessible collateral to utilize credits just as those in the US do. However, the situation at hand is that many people in nations such as Venezuela and Columbia don’t have access to credit systems, he added.
This scenario has opened an opportunity where bitcoin is not being used as collateral to access loans in these countries, Mauricio said. Bitcoin can be traded 24/7, can be liquidated at any time, and can be sold in fractions, thus, it’s “the world’s best collateral.”
Bitcoin protects you as a lender and opens up financing options for you as a borrower.
Mauricio Di Bartolomeo
People don’t trust their banks again
The Co-founder described the service Ledn has created which is serving clients in Brazil, Argentina, Columbia, and Canada. According to him, users can use their bitcoins as collateral on their platform and retrieve it when they pay back their loan.
In seasons where the price of bitcoin goes down, they have a newly created system, Auto-top up, that takes money from the savings account of users in the platform and adds to their collateralized bitcoin.
He added that in situations where a user does not have enough money in their savings account, and the value of the bitcoin collateral has gone so low, it would be liquidated.
The Ledn Co-Founder explained that because people are losing trust in their banks, they are looking to bitcoin as an alternative to hedge against inflation.
When the anchor, Dan Held, former Director of Growth Marketing at Kraken, asked about the recent collapse of lending platforms, Mauricio said that most of the platforms used GBTC and not BTC. We were not affected during the crash because we collateralized with Bitcoin, he added.
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