As we prepared for the upcoming launch of our IEO on the 18th November 2019, many ideas and suggestions have been thrown our way during the numerous discussions with our community on Telegram and social media channels.

One of the suggestion was crypto loan collateralised by other gold backed tokens. This is a great idea and loan collateralised by gold is something we are very familiar with. In 2016–2017, we operated a P2P fiat lending platform in Indonesia and one of the more popular loan product we offered was Ar-Rahnu or Shariah-compliant pawnbroking on gold jewellery.

The main issue that we had when we started the operation in Indonesia, was how to safe keep the gold pledged by the borrower. Since Indonesia is a large country it was practically impossible in terms of costs to set-up our own safe keeping vaults across the country to safe-keep the gold. The solution we found was simple, we entered into an agreement with one of the largest jeweller chain in Indonesia who acted as our agent and undertook the activities below:

i) Valuer — to undertake valuation of all jewellery used as the collateral

ii) Safe-keeping agent — to keep the jewellery safe in their own vaults which are insured.

iii) Auction agent — to conduct impartial auction, in the event of borrower’s default where the jewellery should be liquidated.

iv) Buyer of last resort — to be the buyer of last resort if the auction fails.

With certain adjustments, the above can definitely be applied for iP2PGlobal Platform, in this case we will have to appoint one or two established jeweller chain or licensed gold trader in each country that we intend to operate, we will also have to devise a process, probably through an App, that will allow the jeweller to easily upload/record the valuation report and SKR (safe keeping receipts) into the blockchain as unique smart contracts.

We all know the problem facing the cryptocurrency industry, in that, although its an excellent store of value, its a poor medium of exchange when it comes to real world usage (buying and selling real goods and services). Crypto loans do provide an avenue to improve usability of cryptocurrencies, unfortunately most of the secured crypto loan proceeds are used to re-invest in the crypto world itself in leverage or arbitrage trades, and in our opinion a crypto loan collateralised on gold backed tokens will probably have the same effect, since the collateral is still crypto/tokens.

However a crypto loan collateralised by real gold may just have the opposite effect….

Real Gold + Stablecoin loans = Real World Usage ?