SALT is the first platform in the world that offers cryptocurrency lending. This means that cryptocurrencies such as Bitcoin can be used as collateral. Because this is a relatively new system it is very important to determine exactly how it works before you invest any money.
SALT’s aim is to ensure that those who have assets on the blockchain can leverage this to obtain cash loans. It is the first platform that offers this. As of 2018, SALT has been fully live, after first being released on December 27, 2017. At that point, it was only able to accept Bitcoin. However, during the first quarter of this year, they plan extend that to Ethereum and to others by the third quarter. To date, SALT has around 45,000 members.
Taking out a loan is designed to be relatively easy:
- Members send their cryptocurrency to the collateral wallet.
- The loan is paid out in fiat currency of up to 80% of the value of the cryptocurrency.
- Members make repayments.
- The loan is completed and the cryptocurrency is sent back to the member.
Members start by purchasing SALT tokens, which gives them platform access. This can be done in three different membership forms:
- Regular membership, offering term financing, which allows access of up to $10,000 and terms ranging from three to 24 months.
- Premier membership, offering term financing and line of credit, allowing access of up to $100,000 in USD, EUR, GBP, JPY, and RMB. Loan terms range from one hour to 36 months.
- Enterprise membership, which offers term financing and line of credit with access of more than $1,000,000. Currency selections are offered ad hoc, and terms are metered.
Once members have purchased their tokens and have access to their membership platform, they can deposit cryptocurrency. They can then borrow against a maximum of 80% of this, after which they must make their monthly repayment. If repayments are not made, then the collateral (the cryptocurrencies) are seized and sold to cover the missed payment.
One of the key issues that some people are concerned about is the potential appreciation and depreciation of cryptocurrency and what this means for their loans. If there is appreciation in value, borrowers can choose to do nothing, choose to borrow more, or withdraw the excess cryptocurrency. If, however, there is depreciation, then it may be necessary to deposit more cryptocurrency or make more repayments. If there is depreciation and the borrower does not take action, some of the cryptocurrency will be sold to make up for the difference.
The SALT Team
SALT originally started as a company with just five employees. Today, it has 25 and it is looking to recruit about 11 more people. Some of the key players in the team are:
- Shawn Owen as CEO. He is known as a serial entrepreneur but has a background in the restaurant industry. Indeed, this is the first time he has had any involvement with cryptocurrencies at all.
- Erik Voorhees, who is ShapeShift’s CEO and founder. He is incredibly experienced in the world of cryptocurrencies and he was involved in making the documentary Banking on Bitcoin. Officially, he is an advisor to SALT, but he is also part of their Leadership Team.
The company also has eight people working for their Technology & Product department, which is a specialized team. This is also where further recruitment is likely.
- SALT enables people to retain their cryptocurrency while borrowing fiat currency against it. This means that, so long as they keep up their repayments, they don’t have to liquidate their cryptocurrency and miss out on potential value increase.
- SALT offers loans based on collateral. This means that a credit score is not of interest or influence at all. For those who have any cryptocurrency, they are able to receive a loan with a value that is 80% of that currency’s value in a fiat currency, so long as they have purchased the necessary tokens for their membership.
- SALT is the first and only company of its kind that offers this type of system. They are trendsetters and are quite literally changing the world – probably for the better.
- Because the value of cryptocurrencies remains volatile, there is a chance that some of the deposited currencies can be withdrawn again.
Risks and Concerns
- The token price is highly confusing and it is not clear how this links to the way the platform is used.
- Cryptocurrency investing is very different from traditional investing because there is no share price that increases or decreases.
- The leadership team is good, but inexperienced on paper. Owen, the CEO, has a background in the restaurant business, although he is a well-known entrepreneur. While they do have Voorhees as an advisor, he is technically only an advisor so his involvement is not guaranteed.
- The system is still relatively new, which means it is not clear whether it will be successful.
- Because the value of cryptocurrencies remains volatile, there is a chance that repayments suddenly have to be increased.
Being accepted for a traditional bank loan is almost impossible nowadays. The acceptance criteria are very stringent and it is often practically impossible to meet them all. Not just that but the terms are often highly unfavorable and the bank is only interested in the borrower’s financial background, not his or her financial present or future. SALT, by contrast, changes this. It allows the use of cryptocurrencies as collateral and allows anyone with any cryptocurrencies to borrow a fiat currency against that, up to 80% of the value of the cryptos. It is a relatively new idea and concept, but one that is gaining a lot of interest and traction and for good reason. While it is certainly true that there are intrinsic risks associated with the volatility of cryptocurrencies, they can be overcome.
An added benefit is that SALT offers a number of advantages above and beyond those offered by the traditional lending industry. They don’t have any hidden fees, or expensive non-hidden fees. Their membership and token system is fully transparent, allowing people to opt in to whatever works best for them. Additionally, they have made the system much easier to understand, the application requirements much easier to meet, and the penalties much fairer. It is even possible to pay off a loan early, without any penalties. Overall, therefore, it is highly likely that this project is going to be a tremendous success.