“Bitcoin is a great way to protect your savings”

Ledn also claims “the first mortgage backed by bitcoin.” (Photo: 123RF)

LES KEYS DE LA CRYPTO is a section that patiently deciphers the world of cryptocurrencies and its stock market, industrial and media turmoil. François Remy’s mission is to identify up-and-coming entrepreneurs, decipher technological progress and anticipate the impact of this digital currency on industry and society.

(Illustration: Camille Charbonneau)

It’s hard to believe given the current drop in cryptocurrency prices. However, the claim comes from a Canadian subject matter expert whose Bitcoin-backed home loans have generated over $2 billion in interest.

“Bitcoin is auditable, transparent and verifiable, and its supply is limited. The supply of dollars has exploded in the past two years, nearly doubling, and that’s what you’ve seen everywhere in asset prices. Thus, Bitcoin is a great way to protect your savings, it is controllable and transparent, which cannot be the case with the US dollar. So anyone can check their balance right now and see the status of the entire Bitcoin network in real time. You can’t do that with the US dollar or any other currency,” Mauricio Di Bartolomeo recently told FoxNews.

This name may not mean much to you. However, this is (another) Canadian crypto pioneer. Ledn, which he co-founded in Toronto, is on a mission to help consumers save money. This financial services provider received last week’s gazelle award, a company valuated in excess of $500 million and moving towards unicorn status (valued > $1 billion). Ledn, which now employs about 100 people, also received the NextGeneration Award, an award given to players who have changed Ontario’s economic landscape by providing a competitive advantage.

Bitcoinized loans

The company has outpaced traditional banks and loan providers by providing loans denominated in Canadian dollars but backed by bitcoin. Its first clients were cryptocurrency payment operators, exchanges, and other OTC digital asset markets that needed to borrow BTC to smooth their transactions.

But for several years, the brand has been offering bitcoin savings accounts to the public, currently promising up to 7.5% per annum. This allows crypto investors not to leave their digital assets idle in their digital wallets or on the accounts of the exchanges where they purchased them.

We are certainly witnessing a historic shift in financial and economic mechanics. For centuries, banks have borrowed money from depositors to lend to people who want to commit, the two experts in the note recall. But the cryptocurrency ecosystem is now using the same principle. A source of additional concern for banks.

“Teleportation” of crypto wealth to the real world

Not content with this activity to meet high demand from a certain clientele, Ledn is also claiming “the first mortgage loan guaranteed in bitcoin.” The operation is presented as simple: customers can buy a property using an equal amount of cryptocurrencies as collateral.

This is a real improvement over the current way mortgages are handled, where banks lend out money based on future income rather than the asset’s true value. “By using bitcoin as collateral, it effectively allows you to borrow against an asset of equal or greater value,” the co-founder and CEO of Ledn said at the Bitcoin Summit 2022 last month.

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

Be Careful With These Crypto Mortgages

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

“As long as property prices continued to rise, buyers could refinance properties and everyone got paid. However, as housing prices collapsed, millions of low-credit borrowers defaulted. The rest is history,” recalls the American rating agency Weiss.

There are many reasons to be concerned: the poor performance of stocks this year, the real estate bubble in the United States, rising interest rates. And by the way, bitcoin, which is worth half of its peak in November 2021.


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