SALT Review – SALT is the world’s first Cryptocurrency Lending Platform which will allow you to use your Bitcoin/Cryptocurrency as collateral.
In our review, we’re going to be analysing several aspects of the project to decide whether we we would invest in it or not.
Disclaimer: This article is our opinions regarding our own investments. It is not financial advice.
YOU WILL LEARN:
What Is The SALT Project?
Will The SALT Token Increase In Price?
The Potential Of Lending To Buy Crypto
How To Buy And Store Your SALT Tokens
- What Is SALT?
- How Does SALT Work?
- Are SALT Solving Real Market Problems?
- Will SALT Token Prices Increase?
- Team & Roadmap
- Selling Points
- Barriers To Success
- Extra Points
- Where To Buy & Store SALT Tokens
- Follow Future Posts
WHAT IS SALT?
In Their Own Words
“The SALT Lending Platform allows holders of blockchain assets to leverage their holdings as collateral for cash loans. SALT is the first asset-backed lending platform to give blockchain asset holders access to liquidity without them having to sell their tokens”
In Our Words
SALT is a lending platform that allows users to borrow fiat currency by using their cryptocurrencies (Bitcoin, Ethereum etc) as collateral.
This is no different to a person’s house being used as collateral against their mortgage for example.
SALT loans are now live! The initial platform was released on December 27th 2017. This was only open to a small number of members but rollout will continue in stages to ensure quality and security as demand increases.
The platform is currently only able to offer Bitcoin collateralized loans but aim to accept Ethereum during Q1 2018 and other Cryptocurrencies by Q3 2018.
At the time of writing, SALT have already signed up over 45,000 members
2. HOW DOES SALT WORK?
The following steps occur for users who wish to take out a loan:
- Send Bitcoin/Altcoin – Users will send their Bitcoin/Altcoin to the SALT collateral wallet
- Receive Loan – Users will receive their fiat currency in return. This fiat loan will be a maximum of 80% of the value of their Cryptocurrency
- Loan Repayments – Users will make regular repayments on their loan
- Loan Completion – Upon completion of the loan, the borrower will receive their Bitcoin/Altcoin back to their wallet
As our regular readers will know here at CryptoGurus, we aim to give as in-depth a review as possible so we will discuss the process in a bit more detail.
This will be from the viewpoint of a person wanting to borrow funds using a SALT loan.
The first step is to purchase some SALT tokens; this is required in order to gain access to the platform. The platform offers three membership tiers: Membership, Premier and Enterprise. The details of these can be seen below.
Only a single token is required for access to the basic membership package whereas 30 SALT tokens are required for access to the Premier membership. This is an annual membership fee.
There are additional benefits with each package too, these include: customizable loan terms, portfolio management and even SALT merchandise. A full list of the benefits for each package can be found on the SALT website.
From here, users are then able to find the lending terms that best suit their needs and deposit their cryptos into SALT’s oracle wallet in order to receive the fiat funds.
The value of a user’s deposited cryptocurrencies must be equal to at least 80% of the requested fiat loan.
The borrower then makes monthly repayments and will receive their cryptocurrency back the debt has been cleared. If repayments aren’t made, then the users collateral (cryptocurrency) will be taken like a normal loan. This will be done by selling a necessary portion of the users cryptocurrency to cover the missed payment.
Now you may have noticed we highlighted a portion of the text above; this is because we believe it to be a very important point for users. A user’s cryptocurrency assets must be worth at least 80% of the requested loan.
We all know that the cryptocurrency market can be incredibly volatile so you may be wondering what happens if your collateral either appreciates, or depreciates in value. Let’s take a look at both potential circumstances:
What happens if your Bitcoin/Ether goes up in value?
We’ll start with the positive outcome first; this will mean that your loan/asset value ratio will be above the 80% required. If this is the case, users have three options:
- Do Nothing – You could just continue with your original agreement and receive your assets back at the higher value upon completion.
- Get a higher fiat loan – You could request more fiat to be deposited to your bank account, this would of course change your repayment terms also.
- Withdraw some crypto – You could withdraw a percentage of your cryptocurrency as long as you stay above the 80% mark.
What happens if your Bitcoin/Ether goes down in value?
This will mean that your loan/asset value ratio will be below the required 80%. If this is the case, users have two options:
- Deposit more crypto – Users could deposit further cryptocurrency to the SALT collateral wallet to bring the ratio back to 80%
- Make additional fiat payments – You could make additional fiat payments, on top of your agreed upon repayments, reducing your overall loan
3. ARE SALT SOLVING REAL MARKET PROBLEMS?
Problem – Who Wants To Sell Their Crypto?
This is of course a very new problem but one that we feel will resonate with almost every reader on this site; who wants to sell their cryptocurrency?
The main reason people invest in cryptocurrencies is because they believe their value will increase in the future. Liquidating a portfolio now would of course relinquish any potential future gains.
As you have probably gathered by now, SALT’s platform means that users are able to keep your portfolio while receiving a fiat loan. Therefore, users still benefit from any gains their investments may make in the future.
Problem – Poor Credit Scores
A problem with some traditional lending platforms is that user eligibility is often based on a person’s credit score; a poor credit score can either mean a person is simply refused their requested loan or they face large interest rates or fees to cover any risk.
Since SALT’s loans are all entirely collateral based, a user’s credit score is entirely inconsequential; any user’s collateral has the same value to lenders as anyone else on the platform. Therefore anyone is able to gain a loan, providing they have purchased the necessary tokens and hold the necessary assets.
4. WILL THE SALT TOKEN PRICE INCREASE?
This is another incredibly important point that people often overlook when investing in Cryptocurrencies – is the token price truly linked to the platform usage?
Investing in Cryptos is not the same as traditional investing – when you buy shares in a company, you’re buying ownership. As the company makes increased profits, the share price will increase and your investment value will rise also.
With the majority of Cryptocurrencies, the tokens don’t represent shares.
Therefore, it’s possible for the company to be successful (i.e the CEO and employees get rich) and yet the token prices may actually fall if they aren’t correctly linked to platform usage.
The ONLY factor determining token price is supply and demand on exchanges.
Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following two questions:
- Demand – Will there be token demand on the exchanges?
- Supply – Will there be excessive inflation hindering prices?
Let’s first look at demand:
What Are The Sources of Demand?
As previously stated, possession of the SALT token is required for access to the platform, the number of tokens required is dependent on the desired membership level.
As more people want to use the SALT lending platform, the demand for the token will rise and so should the price as a result.
SALT tokens can also be used to pay down the interest on loans, receive better loan terms and purchase SALT merchandise.
The price of the SALT token is sufficiently linked to the demand for the platform.
SALT has passed this test.
What Is The Likely Inflation Rate?
SALT created a fixed supply of tokens meaning a zero inflation rate but this doesn’t mean that new tokens won’t enter the market though.
With over 50% of tokens yet to reach the market, inflation is a concern for us. We would be far happier to see this number as a much lower figure. However, we wouldn’t fail SALT on this aspect either as this isn’t too high a figure.
Overall, we would categorise this as a concern and neither a pass or failure.
5. THE SALT TEAM & ROADMAP
As our regular readers will know, one of our mantras here at Crypto Gurus is to “invest in people, not ideas”. It’s based off the principle that an idea is only as good as the people who execute it. As investors, we strongly believe in this principle.
SALT is an established and operating currency so for this reason we will just highlight a few important names involved with the project.
A team of originally five, it has since grown to upwards of 25 and is looking to hire further staff with current listings highlighting another eleven positions.
The first name to note is CEO Shawn Owen; described as a serial entrepreneur, with experience in the restaurant industry, this seems to be his first full venture into a cryptocurrency project so it will be important to analyse those around him also.
The standout name involved with the project is Erik Voorhees; Founder and CEO of ShapeShift, a cryptocurrency exchange. Not only he is experienced, he is also well known in the industry thanks to his involvement in the ‘Banking on Bitcoin’ documentary, something that can only be of benefit to the project.
Another extra point to note is that, while listed as an advisor, Vorhees features in the Leadership section of the SALT team alongside Shawn Owen suggesting he may have a heavier involvement in the project than the other advisors.
A final positive note is their eight strong Technology & Product team; it’s nice to see a specialized team involved in such a project and the team is only set to grow.
The SALT Roadmap
6. SELLING POINTS
A problem often witnessed when applying for traditional lending is that the lender will want to know how you intend to spend the funds and your answer will often influence their decision.
With the SALT platform, users can apply for any financial product that is offered by traditional fiat banks without fear of rejection; as long as they have the necessary collateral
Traditional lending platforms will often come with a number of high fees, hidden or otherwise. SALT are aiming to make things easier and cheaper for their users by negating any origination fees, closing costs, or prepayment penalties on their fixed rate term loans.
Borrowers can elect, at any time, to pay off their loans early at no additional cost to themselves.
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7. BARRIERS TO SUCCESS
Highly Regulated Industry
Lending platforms are among the most highly regulated industries around, a point that SALT themselves have highlighted in their whitepaper. We are not going to pretend that we are experts on this situation but would worry of any potential implications that could arise here.
The team are looking to hire a number of staff members to prevent any potential issues with listings for roles such as Compliance Officer featuring on their site. We believe it’s most likely that SALT will encounter issues regarding regulations in certain countries.
However, due to the truly global nature of Cryptocurrencies, we suspect there will still be lots of countries who will be onboard with SALT’s plans and thus there will still be sufficient demand worldwide.
One concern that we have seen mentioned during our research is that there is no proof SALT possess the lending network they claim.
We are not going to pretend to have any sort of inside knowledge and are not in a position to dispute what either SALT or their detractors say. However, we believe it highly unlikely SALT would launch their platform without a sufficient lending network.
This may have been a worry before the launch but with the platform now live, we believe this will not be an issue.
What Happens When The Bubble Pops?
Before we explain this point any further, we should make our position on this point very clear; we believe that Cryptocurrencies are potentially in a bubble BUT we also believe that the bubble has a long way to go before it pops.
We believe that the Cryptocurrency bubble could well surpass the Dot Com bubble and others in the past on its way to becoming the largest bubble of all time.
SALT is a fantastic idea during the speculative phase of the bubble. After all, who would want to sell their Cryptos while prices are shooting up?
However, if the bubble pops and prices begin crashing spectacularly, who would want to keep hold of their Cryptos? Nobody.
Virtually everyone would wish to sell their Cryptos at this point and nobody would wish to use the SALT platform at this point.
It’s for this reason that we believe SALT could have an incredible run during the bubble phase but will also struggle severely when the bubble does pop.
8. EXTRA POINT
Using SALT To Buy More Cryptocurrencies?
One situation we would like to mention is one that we covered in our ‘Top 7 Cryptos of 2018’ article and it surrounds people taking out SALT loans in order to purchase more cryptos.
In other words, users will effectively leverage their portfolio. While we strongly believe that this is a bad idea, we also recognise that this market is highly irrational and this situation will most likely occur.
While this could be a very bad thing for many investors if they default on their loans and lose their Cryptocurrencies, it is a big positive for the price of SALT tokens as we’re essentially saying that we believe people will overuse the SALT platform.
For a more in-depth discussion of this point, we recommending watching the video below from a popular Crypto YouTuber called ‘Crypto Investor’.
9. WHERE TO BUY & STORE SALT TOKENS
Where To Buy SALT Tokens
SALT tokens are available for purchase on the following exchanges:
Where To Store SALT Tokens
SALT is an Ethereum-based token which means it can be safely stored on any ERC-20 compatible wallets. Our favourite option is MyEtherWallet which you can download via the link below:
For instructions on how to download and install MyEtherWallet, check out the video below (not produced by us).
10. THE CRYPTOGURUS CONCLUSION
In conclusion, we believe that the SALT platform is a truly innovative business plan and could benefit hugely from the first mover advantage and the irrational nature of the Cryptocurreny market.
We do have a few concerns still though; the first relates to the inflation rate as we discussed earlier and the second pertains to the long-term viability of SALT – we believe that they could have an incredible run before the bubble bursts some day but we also believe they may struggle to continue once the bubble does burst.
Overall, we are bullish on the price of SALT in the medium term and their token prices will most likely beat the market average. However, we would not be buying SALT tokens and locking them up for 10 years as we suspect that they may be one of the many casualties once the bubble pops.
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