Hello Steemit ! It's Dorine.
In cryptoworld, there is a fondamental motto to respect. Do not invest more than you are able to lose. Prices are volatile. We must remain cautious.
Want to know one of the reasons I love BitShares? Well ... it's simple : SELF LOAN 0% ! By owning BitShares (token BTS), you have the opportunity to borrow BitUsd, BitCNY or BitEUR for an unlimited period, at no cost and at any time !
In other words: a Zero-Cost Credit that can be used freely.
You want to buy more Steem Power or another cryptocurrency with a loan that you will payback later ? Well, it's not a dream ! It's real !
Credit and Stable Coin
Are you planning on getting a loan from bank ? Banks charge borrowers a higher interest rate than they pay depositors so they can profit. On the other hand, zero-interest loans can quickly become a traumatic experience when a borrower does not read the loan terms and conditions with a full understanding.
Thanks to Dan Larimer (the creator of Steem and EOS), the Bitshares Decentralized Exchange is given out loan with 0 interest rate. All you need to have : an amount of BTS in your BitShares account. That's the magic of the DEX !
BitShares : it's more than a cryptocurrency...
BitShares is a cryptocurrency. But it's also a decentralized exchange, and a personnal bank. We can exchange all kinds of tokens including Stable Coins or SmartCoin.
A SmartCoin is a cryptocurrency whose value is pegged to that of another asset, such as the US Dollar or Euro. SmartCoins always have 100% or more of their value backed by the BitShares core currency, BTS. This feature is the real stroke of genius of Dan Larimer. SmartCoins are a powerful tool for everyone from speculators to traders, merchants and savers.
For example, BitUSD combines the advantages of blockchain (decentralization, fast transactions and low-fee) with the stability of the dollar. In this sense, it is an ideal cryptocurrency.
Interest-Free Loan BitUSD !
SmartCoins implement a concept of a collateralized loan and offer it directly on the blockchain.To borrow BitUSD and if you have bitshares (BTS), all you have to do is to lock them as collateral. You will need to lock in at least 200% of the value of your BTS credit. If the BTS costs $0.10, you will have to lock 200 BitShares to borrow $ 10. However, it is recommended to increase this ratio to further secure your loan. A ratio of 5 or 6 gives you more security. In fact, keep in mind that the prices of cryptos are very volative. The value of your guarantee can actually decrease due to price volatility !
Imagine that that the BTS / USD exchange rate drops sharply. Your 200 BTS no longer cover 200% of the value of your credit. And you will be forced to sell at a bad rate.
Do not be too greedy !
This risk of margin-call is the counterpart of this excellent service. I advise you to always lock up at least 5x or 6x times the value of your loan. Be smart. You have to be protected from any crazy dip.
You can pay back your loan at your conveniance. There is no interest, no hidden fees, no repayment schedule.
That's it. You can borrow money for free. Can you find this kind of opportunity anywhere else ? Of course not...
So here it was a little trick that I wanted to share with you and one of the features that make 'BitShares' remains for me a cryptocurrency with very very high potential.
Kiss.
Dorine Clay
PS : Sorry if my english is not perfect, i'm french...
I am wondering if you are consciously misleading your readers or you just don't understand how bitshares and bitusd work.
Using words like borrow or loan in this context is confusing, because all you can do on bitshares is to borrow the bitusd from yourself in exchange for the BTS you already own. It's a mechanism for creating price stable currencies, not a mechanism for creating loans.
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I think you are misleading yourself @hr1. Money is just an IOU.
That's the way BitShares works :
When you go to a bank for a loan to buy a house. The bank creates new dollars from really nothing backed by your collateralized promise to pay back the loan. In this case, your house is the collateral. The bank may call your loan and foreclose if you stop making the required payments or if the value of your house falls too much. That's how the economy works...
In BitShares ecosystem, SmartCoins implement this concept of a collateralized loan and offer it on the blockchain. That's not misleading. It's the reality. The only difference here is that BTS is your collaterized promise to pay back the loan you made in bitUSD. And more importantly : you don't pay interest.
The two mechanisms of creating price stable currencies and creating loans are intrinsically linked.
By definition, to collateralise is to secure (a loan) with collateral
Concerning "borrow"
That's not a exchange or a sell of BTS. You just have to collateralise your loan with BTS from your wallet to create bitUSD. That's how it works. Then you are free to use your fresh bitUSD as you want. If you want to cashout, you are free to cashout. If you want to buy more BTS during a bullish period, as long as you are aware of the risks of margin call, you can. Of course, you will have to pay back the loan you made in bitUSD in bitUSD.
Dan Larimer created BitShares for helping us gaining freedom from banks. Profit it and spread the word.
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I am confused...I can actually borrow into US dollars and transfer money to my bank account? Or just convert into bitusd to buy other coins?
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The trick is that your collateral is sold in free market if you are too greedy and the price of BTS falls down, like it is now. You loose money in that case.
Edit: No, bitUSD is US dollar derivative (a caltulated currency) that you can exchange to US dollars as well.
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100% correct.
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SmartCoins are guaranteed to be worth at least their face value. 1 bitUSD = 1$. Their value are backed by the BitShares core currency, BTS.
But if you want to convert bitUSD to real US Dollars (transfered to your bank account) : you have to convert it to another crypto. For now.
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For example : You can borrow bitUSD with BTS. BTS is your collaterized promise to pay back the loan you made. With your fresh BitUSD you can buy BTC and transfer BTC to your wallet if you want.
If you want to cashout those BTC : localbitcoin, coinbase, kraken or any other exchange.
I can advice you Blocktrades.com if you want to convert and transfert bitUSD to your BTC wallet easily.
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