Secured loans have been a business practice for quite some time now. Many of these loans are issued by pawn shops and have their fair share of pros and cons. GoldMint wants to take the good aspects of these loans and improve upon them with the help of the blockchain and IT.
What are Secured Loans?
A secured loan is essentially any loan where the borrower must put up some collateral as a way to secure the loan for the lender. If the borrower is unable or unwilling to repay the remainder of the loan, the lender can take an asset as collateral to offset their loss. It is a good way to keep the borrower honest and the lender covered.
Pawn shops often issue these types of loans because they can be profitable and generally beneficial for both parties. The borrower gets their much-needed cash when they need it, and the pawn shop knows that it is protected from financial loss if the borrower is unable to pay back the original loan.
GoldMint has spotted four glaring issues with pawn shop secured loans as they stand today, however. They are unclaimed pledges, weird payment amounts and schedules, funding pawn shop lending, and consolidation of a unified standard of practice.
GoldMint Revolutionizes Secured Lending
The GoldMint team has years of experience in finance and lending, but for the past few years they have been particularly interested in the pawn shop model of secured lending. Ideally, they want to amplify the good aspects of it while addressing the four issues with the current model identified above. By using IT and the blockchain, they are confident that they can accomplish this. By collaborating with pawn shops, they have already helped address the unclaimed pledges problem. They issued their “Bogatstvo” card as another way for pawn shops to distribute loans besides cash. The previous cash model made it hard for pawn shops to issue credit because of the massive lack of transparency. GoldMint provides credit for pawn shops and connects pawn shops with those who are ready to lend to them.
GoldMint’s secured loans and lending will use gold as collateral. As mentioned, transparency in loan disbursements is one of the largest limiting factors to secured loans from pawn shops. By integrating disbursements with the blockchain, this becomes a problem of the past. While the U.S. dollar left something to be desired for the team, gold seemed like an excellent medium of value. However, the team also realized the challenges of issuing loans in and against physical gold. Consequently, they chose to have gold assets live on and transferred among individuals on the blockchain by tethering one ounce of gold to one GOLD token. In the future, users will be able to add gold onto the blockchain via the Custody Bot, which will verify the purity of gold entering the blockchain with its built-in spectrometer.
GoldMint’s Future and the Custody Bot
The peer-to-peer lending network that GoldMint is developing will connect lenders and borrowers via its hypermedia protocol. This in and of itself is revolutionary and exciting, but the team has even greater plans for the future. Custody Bot will act as pawn shops on the street or at the gas station. They even want to have a home Custody Bot one day. With that, users would be able to evaluate the purity and value of jewelry from the convenience of home.
Check out their project here: https://www.goldmint.io/
Check out their ICO page: https://www.goldmint.io/ico
This is a sponsored post and does not necessarily reflect the opinions held by any of The Merkle employees. This is not investment or trading advice; always do your own independent research.
