We recently reported on a way to release equity from your crypto holdings whilst retaining control of your assets. But a new startup intends to shake up the pawnbroking industry, enabling loans secured on gold backed by blockchain technologies.
The Break of Pawn
The basic idea behind a secured loan from a pawnbroker is this. You need short term money and have something of value, but you don’t want to sell it. You take it to the pawn shop, who assess the item and offer you a loan, keeping the valuable item as collateral.
Interest and fees will be added to the loan amount, and the entire sum must be paid back by the agreed date. The pawn broker then returns your item… or you don’t pay back the loan and your item is sold by the pawn shop.
The benefit of this is that you can release the equity in your possessions without having to give them up. The process is generally very quick as it does not require the same level of credit checking. Sadly, the pawn industry has historically had almost as bad a reputation as the one it sounds like.
The GoldMint Way
Startup GoldMint plans to offer a similar system, whereby you use their GOLD tokens as the collateral to secure the loan. They record details of the loan on a graphene-based blockchain, which provides an immutable ledger of each transaction. The loan comes in the form of a credit card, with a limit corresponding to the value of your collateral.
GOLD tokens are going to be pegged to the price of gold, being backed by physical gold assets and ETFs. This will provide a stable valuation, negating the risk of fluctuation in standard cryptocurrencies.
GoldMint intends to install secure ATM-style machines at pawnbrokers around the world. Called the Custody Bot, these machines will accept deposits of gold jewelry, coins or other items.
The Custody Bot will weigh the gold and analyze it with a spectrometer, providing an instant valuation and conversion into the GOLD token. The machine will store the gold items securely, and the GOLD tokens can then be used as collateral for a loan.
Initial Coin Offering
GoldMint is also going to issue another token called MNT, to facilitate the blockchain and creation of smart contracts. MNT owners will receive a proportion of the commission taken from procession GOLD transactions.
An ICO for MNT tokens starts on September 20.