CryptoGram_0019: January 23, 2018
DON'T PANIC: SALT & ETHLEND - Emerging Markets, Tokens, & Dollars! #CryptoGram
Getting into it...
I want to reflect a little on the power of Bitcoin, and CryptoCurrency in general.
One of the main powers of cryptocurrency is the ability to take banks and governments out of finance. One of the major, if not the most important part of finance, is the whole premise of credit and lending. Using credit and lending mechanisms currently in place, the western world has become the financial power that it is today.
In order to have a legitimate investment/lending platform in place you need a few things.
- Lenders
- Borrowers
- Contracts
- Credit
- Collateral
- Identity
In emerging markets, this financial infrastructure is not in place. Even where there are pieces of this financial system in place, they are not dependable. However, cryptocurrency changes that. Already there are all 6 items listed above being created in the system. This infrastructure will give emerging markets the credit they deserve in order to start building enterprises and business that they once could not get the capital organized to build. Here are my assessments of the tokens representing the 6 pieces above that will facilitate this atmosphere.
1, 2 & 5 Lenders, Borrowers, Collateral
Bitcoin and Ethereum lay the ground work in connecting lenders, borrowers and collateral. Suddenly, anyone with assets can be a lender, and anyone who needs assets can be a borrower. As far as collateral, they can now use crypto, or smart contracts, which brings me to the next points
3. Contracts
The contracts portion of finance can be accomplished through any platform with smart contracts. Currently the largest are Ethereum and BTC - RSK. Using programming, lenders and borrowers can agree on terms and then submit assets that are only delivered if the terms are met. These contracts have been set up by a few different parties for ease of use. Currently, the two tokens that i know of that are connecting lenders and borrowers are SALT and ETHLEND (LEND.) Ethlend currently only gives loans in in crypto, and Salt provides loans in fiat currency using crypto as collateral. The platforms lay the groundwork for decentralized lending.
4. Credit
Currently both SALT and ETHLEND provide a basic reputation or credit function based on how often you pay back loans, however both require more than or close to 100% collateral. This can be solved by establishing credit on the blockchain. The main company performing this function that i can find is BLOOM, (BLT.) Bloom seeks to basically replace common credit agencies via the blockchain. Using a bloom ID one could ultimately associate any number of experiences or expense with an identity allowing people to make decision on whether or not to lend to you based on your assets and experiences, instead of just collateral. Basically, you can establish credit.
6. Identity
In order to be able to confirm that the person you are lending to, or borrowing from is the person that they say they are, there has to be a secure identity platform. That is it. Its done. Blockchain identity is the future. It will greatly reduce fraud and other malevolent actions regarding identity. IT is also a basic principal of finance. If i am a lender, i want to know, who you are, what you've got, and what you want. all of that can be securely stored in a blockchain and only released with permission. The leaders in this space in my opinion is currently civic, however, bloom and other identity players could easily become relevant if their space restricts access to certain identity platform, (like their own.)
All in all, blockchain is laying down the foundation for emerging markets to skip over all the financial progress we made over the last 2000 years and jump right into secure finance via the blockchain. This would not be surprising to me as they did the exact same thing with the telephone. For the most part, emerging markets skipped land lines and went straight to internet accessing smart phones.
Thanks for reading,
-libertyhound
State of The Market:
For new readers:
Cryptogram is my personal journal of thoughts about cryptocurrencies and related topics.
Purpose of CryptoGram:
Currently in the crypto space it can be difficult to remember what you have discussed or been thinking from one week to the next. The rapid development of, and many changes in the space keep everyone on their toes. Now that I have been financially involved in the space for roughly a year, I realize that I would love to have my thoughts from 2017 written down somewhere. I believe having this information will help me stay focused, avoid repeating past mistakes, and hopefully help some other people, (anyone who decides to read this,) from making those same mistakes.
Briefly, I need a place to record my train of thought and that place will now be dubbed "CryptoGram"
My thoughts on the structure of this post are:
- About 500 words.
- Frequency of once a day to once a week.
- Each post will have a number and date.
- A snippet of top 5 cmc coins for price reference. (state of the market)
- I will always use these 5 tags, three of them will be:
- bitcoin cryptocurrency ethereum
- the other two will be topic specific