“Bitcoin is a great way to protect your savings”

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“Bitcoin is a great way to protect your savings”

THE KEYS TO CRYPTO is a section that patiently decodes the world of cryptocurrency and its stock market, industrial and media shocks. François Remy’s mission is to identify promising entrepreneurs, decode technical progress and anticipate the industrial and societal impacts of this digital currency.

Hard to believe, given the current fall in the price of cryptocurrency. Still, the claim comes from a Canadian expert in the field, whose bitcoin-backed home loans have generated more than $2 billion in interest.

“Bitcoin is auditable, transparent and verifiable, and its supply is limited. The supply of dollars over the last couple of years has exploded, almost doubled, and that’s what you’ve seen reflected in asset prices everywhere. Bitcoin is therefore a great way to protect your savings, and it is controllable and transparent, which the US dollar cannot be.

Thus, anyone can check their balance right now and see in real time the status of the entire Bitcoin network. You can’t do that with the U.S. dollar or any other currency,” Mauricio Di Bartolomeo recently told FoxNews.

This name may not evoke much to you. Yet it is an (umpteenth) Canadian pioneer of crypto. The Toronto-based company he co-founded, Ledn, is on a mission to help consumers save.

This financial services provider received last week an award as a “gazelle”, a company whose valuation exceeds $ 500 million and which is evolving towards the status of unicorn (> $ 1 billion in valuation). Ledn, which now employs a hundred people, also won the NeXT Generation Award, an award for players who have changed Ontario’s economic landscape by providing a competitive advantage.

“Bitcoin is a great way to protect your savings”

Bitcoin loans

The company has outpaced traditional banks and credit providers by providing loans denominated in Canadian dollars, but backed by bitcoin. Its first clients brought together crypto payment operators, exchanges and other over-the-counter markets of digital assets that had to borrow BTC to streamline their transactions.

But for several years, the brand has been offering the public savings accounts in bitcoins, currently promising up to 7.5% annual interest. This allows cryptocurrency investors not to let their digital assets sleep in their digital wallets or on the accounts of the exchanges where they have acquired them.

We are certainly witnessing a historic shift in financial and economic mechanics. For centuries, money was borrowed by banks from savers to lend it to people who want to do business, the two experts recall in a note. But the cryptocurrency ecosystem now employs the same principle. A source of additional concern for banks.

“Teleporting” crypto wealth to the real world

Not content with these activities, to meet a strong demand from a certain clientele, Ledn also claims the “first mortgage loan secured in bitcoins”. The operation is presented as simple: customers can buy real estate using an equal amount of cryptocurrencies as collateral.

This is a real improvement on the current way mortgages work where banks advance money based on future income and not on what the asset is really worth. “By using bitcoin as collateral, it actually allows you to borrow against an asset of equal or greater value,” said the co-founder and CEO of Ledn at the Bitcoin 2022 summit last month.

For some bitcoin holders, those who believe in the technological virtues of this web money, not having to sell their BTC is essential. And this mortgage product is a great way to “teleport some of that bitcoin wealth into the real world,” says Mauricio Di Bartolomeo, co-founder and chief strategy officer of Ledn.

Caution with these crypto-mortgages

Securitizing (Editor’s note: Operation by which banking institutions mobilize their receivables.) real estate loans with bitcoin, this is an interesting strategy. But other experts feel a sense of catastrophic déjà vu. The financial crisis of 2008-2009 not to mention it.

“As long as property prices continued to climb, buyers were able to refinance themselves and everyone was paid. However, when house prices imploded, millions of low-credit borrowers defaulted. The rest is history,” recalls the American rating agency Weiss.

There are many reasons to worry: the poor performance of stocks this year, a housing bubble in the United States, rising interest rates. And, incidentally, a bitcoin that is worth half as much as its peak in November 2021.

“Bitcoin is a great way to protect your savings”

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