Since April 1, the price of Bitcoin has seen resurgence prompting expectations that the good times are back especially among enthusiast. This was highlighted by the fact that there has been massive movement of the coin since then. There has been inflow of substantial volume of the coin which is responsible for the spike in price.
The Nexo Connection
Heartwarming is the news as released by Nexo that the company facilitated the purchase of an Amsterdam home for Brock Pierce who paid $1.2 million for a chapel converted to a home.
Nexo is the crypto lending platform that commenced operation since last year, enabling holders of digital currencies to obtain loans in fiat with more than 40 currencies supported by the platform.
First Mortgage financed By Bitcoin-Backed Loan?
From an interview with FOX Business, the company CEO stated that this is the first mortgage finance the company has been involved with.
Anthony Trenchev who is also a co-founder of Nexo stated that the actor whose financial assets are mostly in crypto was excited to finance his home purchase using Nexo, highlighting that he backed the loan with bitcoins.
Bitcoin enthusiasts traditionally do not like spending their cryptocurrencies based on the belief that hodling – the act of holding unto the coins will result in future profit when the price surges such as we are witnessing since April 1, however, there are times when the financial need of the individual compels them to sell.
Companies such as Nexo come to the rescue by lending the enthusiasts the funds they need. In exchange, the owners back up the loans with crypto. In the case of Nexo, the digital currencies used as collateral are held by a trusted third-party pending repayment.
“So we take that bitcoin and other digital currencies as collateral using a third party qualified custodian to store it and give them fiat cash for it. But neither the client nor us have access to the coins,” Trenchev said.
The company stated that they offer loans of up to $2 million in 45 different fiat currencies at rates ranging from 8 to 16 percent which is comparable to what is obtainable with some credit card companies.
The clause that borrowers should not overlook is that they need to deposit double the amount they need in crypto.
“For a loan of $10,000 dollars you will need to deposit $20,000 in bitcoin. So, we lend you like 50 cents on the dollar” said Trenchev.
Pierce said that Nexo, which currently has more than 170,000 customers worldwide is bridging the gap between traditional financing and the new blockchain technology.