Crypto -FIAT Lending Start up

Promising or another short sighted start up?.

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Celsius, a cryptocurrency lending startup

says it's paying thousands of users interest for depositing bitcoin and ether with its wallet app. In a news taken of CoinDesk, Celsius claims to have garnered more than 10,000 users since the soft launch of its mobile app on June 29, with an average deposit of 0.5 bitcoin or 5.5 ether earning up to 6.7 percent on an annualized basis. The interest comes from income Celsius makes lending fiat and crypto, much of the latter to hedge funds that want to short, or bet against, the coins.

Sounds relatively good, but knowning that merchandising speech has not much breath when it comes to get ouf the red. But read further...

Traditional bitcoin holding holding Bitcoins hoping for the best.

It is not a brand new idea:

It is not the first time bitcoin is used to create a lending platform: BTCJam and BitLendingClub, two peer-to-peer lending platforms, bellied up in 2016, due to cited regulatory issues. The individuals lending on these platforms had little recourse when the borrower defaulted. What happened is what happens with most failed crypto start ups, they lack in giveing back collected funds.

Bank-like model

Compound, Celsius new rival just lending crypto, while Celsius loans are issued in fiat, although the company requires crypto to be pledged as collateral for these. Celsius' custodial crypto wallet, offered through a partnership with the qualified custodian BitGo, resembles a bank account in that users earn interest on their deposits every Monday. Even as they do so, Celsius wallet users can withdraw their deposits at any time to a non-custodial wallet, or one where they control the private keys. In this way, the wallet resembles an interest-bearing checking account (though to be clear, there's no federal deposit insurance here).

Ethereum provides a platform for creatives to develop their own use cases for smart contracts. It allows for any kind of smart contract to be programmed using their coding language Solidity, giving the community the power to use this powerful technology in any way they see fit. Ethereum also contains its own currency, called “Ether”, that represents the “gas”, or computing power that enables smart contracts to be verified and automatically executed by the network.

Also like a bank, Celsius loans out part of the money deposited by crypto wallet users. The borrowers, typically hedge funds looking to sell the coin short, pledge dollars or other cryptos as collateral in these transactions, and pay interest in bitcoin.. On the asset side of its balance sheet, Celsius has generated a dozen fiat loans totaling roughly $11 million, with repayment periods ranging from 30 days to three years. The startup is finalizing a $10 million loan in XRP. Celsius hopes its biggest differentiator will be the auditable CEL blockchain, which it expects to launch by 2019. "We're building our own blockchain that is going to provide total transparency on all our banking activities like no other service out there," Leon said. "That's our commitment to do this on a distributed ledger rather than a private server." Even before the CEL blockchain launches, Celsius accepts this ethereum-based token as repayment regardless of whether the loan was in a different currency, in order to establish the utility value of the token.

Biggest Asset

Once launched, the public CEL blockchain should allow users to audit every function performed across the platform, without revealing the identities of borrowers or depositors, the company says. Mashinsky said Celsius will use this blockchain to hold itself accountable for distributing all profits after operating costs to users. That vision is what persuaded Satoshi-cited cryptographer Stornetta to join Celsius as an advisor. He's generally avoided involvement with crypto startups until now. "I made an exception, the first exception, for Celsius because I think their success is going to be a win for the entire blockchain community," Stornetta told CoinDesk.

If the idea succeds is a reasonable sized if, CEL need to be widely accepted by retailers for instanz. Unlike most blockchain forks which are not.

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