Since blockchain technology was developed, people have expected it to impact people and their way of life greatly. Many people speculated on fields the technology might hit, and some of their speculations have come to pass. One of these fields was the banking sector. The news has come out of how cryptocurrency affects how people transact and use their money. But in this article, the main focus will be on money borrowing. Cryptocurrency has been used to influence how people borrow and pay back their loans with the development of a crypto lending platform. This article presents some of the latest ways cryptocurrency has affected money lending worldwide.
- Goldman Sachs Bitcoin-Backed Loans
The first on the list is Goldman Sachs’s new loan services. In the last week of April 2022, Goldman Sachs announced that they would offer their customers Bitcoin-backed loans. What this means is that cryptocurrency holders will have the ability to use their Bitcoin to access loans and other financial services from the organisation. The best explanation might be how people use life insurance to back their loans. People pay for life insurance to act as both their life insurance and an asset they can use as collateral to access huge sums of money from the life insurance organisation or other financial institutions.
It does not affect the value of their life insurance in any way, but if they do not pay back the loan they received, the financial institution will deduct the balance from their life insurance coverage; after discovering many organisations and people investing in cryptocurrency have turned into whales. Whales are people with huge sums of money invested in cryptocurrency. According to recent reports, most Bitcoin in the market is held by investors waiting for the value to rise. The Bitcoin-backed loans mean that whales can now access millions or billions without affecting their cryptocurrency portfolio.
- Teller Mortgage in Texas
The second recent news of how cryptocurrency has been used to offer financial loans to the public is the announcement made by Teller, a financial organisation based in Texas, USA. Teller has launched its crypto-based mortgages for people living in Texas. Some details on the mortgage include that the maximum value for a mortgage will be capped at $5 million. The services will use USDC, proving to be the most powerful stablecoin in the market. The mortgage is meant for home buyers.
According to the region’s market, $5 million is enough to buy or build a big house in Texas. To access the mortgage, people will have to deposit 20% of the entire mortgage into their wallets and connect it to their Teller account. They will then have to pay back the loan with an interest rate of 5.5% over the next few years. People can also stake cryptocurrency to offset some of the loan or the entire amount of the loan they acquired from Teller.