MoneyToken is a blockchain backed cryptocurrency loan operation that will utilize smart contracts. They are currently in the process of completing a pre-sale and will be opening up for an Initial Coin Offering (ICO) in May of 2018.
Peeling back all of the jargon for a moment, MoneyToken is a loan company that will deal exclusively in cryptocurrencies. Their business model revolves around that fact that cryptocurrencies have very quickly become more than just an asset for transfer. These currencies have, unfortunately, or not, become an incredibly valuable investment product and consumers no longer wish to use them to complete the kinds of simple and anonymous business transactions for which the coins were originally intended.
MoneyToken’s solution to all of this is to offer loans whereby cryptocurrencies are offered up as collateral and in return, customers are given a loan in a currency such as US dollars. There is an interest rate on the loan, but once the loan is entirely paid off, all of the cryptocurrency that was originally given as collateral is returned to the customer. According to the creators of MoneyToken, this service will act as the perfect solution for those individuals that wish to use some of their digital currency to make purchases but also wish to benefit from any gains the currency may have made since the start of the loan period.
If any of this sounds familiar, it’s probably because it’s pretty similar to what happens when you pawn something at a pawn shop. You have something of value, like an antique watch, and you need money right now. The only problem is, the watch is a collectible and it has been increasing in value every year that you’ve owned it. You want to get money without having to sell the watch. So, being the crafty consumer that you are, you take the watch to a pawn shop and pawn it. The pawn shop gives you a loan with interest and takes the watch as collateral. As long as you come back and pay the loan within a predetermined period of time, you can get the watch back. Congratulations! Now you’ve managed to use the watch to get your loan without giving up your ownership of the item. As you might have already guessed, your cryptocurrency is the watch in this scenario and MoneyToken is the pawn shop.
Terms of a MoneyToken Cryptocurrency Loan
MoneyToken clearly states in their white paper that the terms of their loans may change as the business progresses, but the original terms will look something like this:
- Loans between $500 and $1,000,000 will be offered
- Daily Interest Rates on the loans will vary between 0.2% and 0.5% (10% to 15% APR)
- The amount of collateral requested by MoneyToken is currently 2:1
- Loan terms will run between 3 and 90 days (longer terms will be offered for larger loans)
More MoneyToken Details
MoneyToken has gone out of their way to offer multiple options for their potential customers to learn about their business. You can look at the MoneyToken White Paper or you can take a slightly easier route and check out the MoneyToken Onepager White Paper. If you are interested in looking at more ICO’s, we suggest that you visit our section on Initial Coin Offerings.