Salt gives crypto enthusiasts the ability to leverage their #crypto assets to secure cash loans.
To simplify this, #Salt is a lending platform that allows members to use cryptocurrency such as #bitcoin or #Ethereum as collateral to secure a fiat currency loan.
I want to talk about collateral for a few minutes. So, collateral is something that is pledged as security for repayment of a loan that will be forfeited to the lender in case you cannot pay back the loan.
I’m going to use the pawnshop as example. Let's’ say you take a gold necklace to the pawn shop and put that up for collateral. The pawn shop doesn’t care if you pay the loan back and to be frank, they hope you don’t because they can easily resell the jewelry to make a positive return on their investment and they are not going to give you spot price for the gold. The pawn shop also allows you to make payments on the jewelry to get it back in your possession and this becomes even more profitable for them when the consumer forfeits the jewelry due to lack of repayment.
A home equity loan is another great example. Let’s say hypothetically you bought a house for $100k and in 5 years it’s worth $150k. You now have $50,000 of equity that you can use to secure a loan through your bank, lender and or financial institution.
At the end of the day, Salt Lending is simply a crypto-backed loan platform.