In the global business ecosystem, crypto miners and investors are unarguably the happiest set of investors. You will agree with me if you have some units of Bitcoin or altcoins growing at an exponential rate at the moment.
Cryptocurrencies are making these investors stinking rich because they made an informed investment decision.
But then, a close look at the current crypto trend quickly suggests to an observer that cryptocurrencies are acting as assets instead of payment instruments (currency) or both. Take, for instance, most crypto investors would prefer to leave their virtual currencies as assets in their wallets instead of using them to pay for goods and services. Make no mistakes about it; this is not how it is supposed to be. Just like the fiat currency (such as the US dollar), cryptos are supposed to serve as assets and payment instrument (currency).
**Reason behind the current trend **
Many crypto miners, investors and traders would prefer to leave their cryptos in the wallets as against trading or selling them because the owners would lose their investment position once the cryptos are traded or sold. But should anyone worry about this trend? Well, you will find out shortly.
Is it a worrisome trend?
The crypto industry players should be worried about this trend because the aim for which the currency was invented in the first place is gradually being thwarted. Yes, this is particularly true given that Satoshi Nakamoto, the pseudo name behind the Bitcoin, originally invented Bitcoin in 2008 to serve as a payment instrument not as an asset.
Besides, one feature that makes currency what it is today, is acceptability. The thing is, maintaining virtual currencies as assets will also threaten its acceptability. And when it comes to currency, liquidity is critical. When assets cannot be converted to fiat currency because it is not acceptable, it’s a huge setback. Therefore, continuous flow of money in the market is likely to increase its acceptability and liquidity.
Changing the status quo
Money Token Limited, a UK-registered company, is introducing a model that will effectively solve the problem identified above. Here is a credit model in which volatile crypto-assets act as collateral while credit is granted in a stable currency.
It also allows borrowers to gain profits from their assets as the market rises and reduces the risk that borrowers deal with as a result of market pitfalls. This issue can be easily resolved when cryptos act as security deposits via a very stable lending model. This, is the aim of MoneyToken.
**How It Works: A Simple Analogy **
Let’s say Smith, a manager of a bistro in Las Vegas, is in dire need of funds to finance his business in order to increase its capacity to meet the increasing demands of its teeming customers. With $50,000, Smith will be able to expand his business horizons, thus ensuring that he has enough staffers, space, tables, chairs, utensils and everything else needed to satisfy his customers.
Ordinarily, Smith will have two options: sell off your Bitcoins in your Bitcoin wallets and convert them to fiat currency in order to take care of all the above-mentioned needs OR take care of those needs directly using his Bitcoin savings.
Notice that if he takes any of the steps above, he has lost his deposits (Bitcoins) and they cannot be recovered again, unless through gains made from the business – which will be realized in a long time. But MoneyToken has an entirely different approach to it.
Solving Smith’s Problem the MoneyToken Way
Smith will approach MoneyToken for a loan using his Bitcoin as collateral. Yes, remember that Smith has Bitcoins worth $50,000 or more in his Bitcoin wallet
MoneyToken will grant his request in fiat currency as he has tendered a collateral in assets (Bitcoins)
Notice that Smith hasn’t sold his assets; he just left it with MoneyToken, meaning that when he’s done repaying the loan, his assets will be released to him in full
Well, when his collaterals are fully and unconditionally released to him, it means that while the Bitcoin market is growing (as it does every other day), Smith’s collateral (the Bitcoin) grows with the market, making him a top gainer in the whole deal.
What if the exchange rate drops?
Yes, this is a question that will definitely come to mind. Here is what will happen:
Smith can either
Set a repayment-to-collateral (RtC) ratio of 30% to 70% and then trigger the Stop Loss algorithm
Or secure himself by diversifying the risk (but terms and conditions apply).
Platform Technicalities
Now that we are here, let’s briefly examine some technicalities that you must pay attention to.
Built on Ethereum blockchain, MoneyToken platform uses smart contracts to define the terms and conditions of using the platform. As a decentralized system, MoneyToken platform is evolving, and it’s modeled to offer multi-chain transactions in the near future.
Also, collateral funds are deposited and protected by multi-signature wallets, which will require about three to four of such signatures to access the funds. While the lender and borrowers have the first and second signatures, the MoneyToken arbitration service owns the last two.
As regards loan repayment, the borrower is allowed to repay the loans ahead of time. When this is done, his collateral will be unlocked and sent to his wallet. More importantly, if the borrower’s collateral starts depreciating in value below the loan collected, as contained in the agreement, the borrower is expected to deposit additional collateral or repay part of the loan ahead of time to reduce the collateral load.
The platform will feature a token, known as Initial Money Token (IMT), with which members are expected to pay for the services rendered.
The world’s leading cryptos (such as Bitcoin, Ethereum, etc.) and fiat currencies (such as the US dollar, Euro, Japanese Yen, etc.) will be accepted on the MoneyToken platform.
Why You Should Invest in MoneyToken
In case you are still pondering: Should I invest in MoneyToken? Yes, you should. And here is why:
MoneyToken will launch a decentralized platform in Q2 2019, leaving you with the power to have a greater control over your tokens
It will help to change the crypto industry narratives which tend to suggest that cryptos are just good for assets and not as payment instruments
You are dealing with a registered company, Money Token Limited, so you should have no fear at all
The platform features a safety fund that allays all investors’ fears including yours.
So, visit any of these links to get started; website, whitepaper, telegram, twitter, facebook
Author – Coltpython
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