It only takes a brief look at the cryptocurrency market capitalization charts over the course of the past year to see that the majority of these currencies — Bitcoin, Ethereum, Litecoin, Monero and other major cryptocurrencies — show significant growth in value and are expected to see significant growth in the future, reflecting both a loss of faith in traditional money systems and a growing confidence in the power of blockchain technology.
However these cryptocurrencies are not proving to be very effective as payment instruments; their growth in value has caused them to behave more like assets than currency, so investors and miners are holding cryptocurrencies rather than using them to purchase goods and services . Users have no incentive to trade or sell them, since once they are traded, owners lose their investment position.
The solution is a credit model in which volatile crypto-assets act as collateral while credit is granted in a stable currency. This system allows borrowers to gain profits from their assets as the market rises, while reducing risk to credit providers and borrowers if the market falls.
Platforms that attempt to intermediate cryptocurrency-backed loans between individual lenders and borrowers usually fail to provide the service of proper risk management to their clients; price volatility of the collateral creates a burdensome risk to both the borrower and lender.
At the other end of the spectrum, most established lending channels are unwilling to accept volatile assets such as cryptocurrency as collateral at all. MoneyToken aims to resolve these issues, managing clients’ risks and creating a stable lending model using cryptocurrencies as a security deposit. Our model aims to facilitate access to credit while building a new credit market – loans backed by crypto collateral, based on the security and transparency of blockchain technology.
Money Token
