Case Study - Blockchain assignment PDF

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Case Study Analysis on a Specific Blockchain Solution

Case Study Analysis on a Specific Blockchain Solution Name Student ID(s)

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Table of Contents Executive Summary.........................................................................................................3 Introduction......................................................................................................................4 Salt Lending: Introduction...............................................................................................5 How it Works................................................................................................................... 5 Blockchain Technologies Used........................................................................................6 Benefits ........................................................................................................................... 6 Limitations....................................................................................................................... 7 Alternatives...................................................................................................................... 6 Conclusion....................................................................................................................... 8 References.......................................................................................................................... 9

Case Study Analysis on a Specific Blockchain Executive Summary

Executive Summary

This report aims to investigate a Blockchain solution of the Company SaltLending.com and to understand how the blockchain technology has been developed and how it can facilitate the daily activities of a business. The report briefly explains the context of the business in which blockchain has been used. Following with the problem that the blockchain solution is solving. And then how does it work and benefit of using this specific technology. And also, in the last with the limitations it has and the areas, it can improve.

Addressing Demand, 2018, Salt Lending Medium

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Introduction

Introduction Blockchain is a connection of blocks that contain a hash of the data and its previous hash, all the blocks connected to form a chain. Every block contains information on the previous block and so on. Any block created in the blockchain has to be accepted by the whole community. This feature makes blockchain achieve distributed computing. The report gives an analysis of how the blockchain technology is used in SaltLending.com. SALT stands for Secured Automated Lending Technology. Salt Lending is a lending platform for blockchain-backed assets. The members of the platform can use their blockchain-based assets to get cash. (Rakesh Sharma,2017) Many of the people having crypto as assets usually sell them to covert the crypto assets to a currency. But, in the future, many of the assets rise in value. To save people their assets SALT helps secure loans based on the crypto collateral and all the assets can be redeemed after paying the debt. This report presents the context of the business, the problem blockchain is solving, how does the solution works, and what are the merits and demerits of the solution.

Case Study Analysis on a Specific Blockchain Analysis

Analysis SALT Lending

Salt Lending: Introduction SALT stands for Secured Automated Lending Technology. The company’s website is www.saltlending.com. Salt Lending gives its members a platform to act as borrowers of cash from the lenders and using blockchain assets as collateral. According to Salt Lending, the blockchain assets are ideal collateral because they exist in a distributed P2P ledger. Which in turn provides them with features like efficient transfer, storage, and liquidation and all the processes being transparent and publicly available. This in turn also lowers both the costs and instances of fraud. (Jane Frankenfield,2019) Blockchain Assets as Collateral The problem with the traditional blockchain-based assets was that to have cash in their hand's people would usually liquidate their assets. As history speaks for itself the blockchain assets have only gone upward in value. So, the investors who liquidated their assets would have been the only them to see the value of the assets go up. Here Salt comes up with a great solution that also provides the owner with the cash they want and also without liquidating the assets. It provides asset holders to leverage their investment for cash loans. So, the investor has the ownership maintained while fulfilling the cash needs. In addition to all this, Salt Lending also provides very competitive interest rates to both borrowers and lenders. How It Works To use the SALT lending platform users first need to buy membership of the lending platform and hence buying the platform’s cryptocurrency i.e. Salt. Salt is built on an ERC-20 smart contract. The same smart contract is used for any Ethereum token contracts use. Salt Lending’s approval is also very fast as they focus on the blockchain assets rather than the credit score. 

Loan Creation: When a member of the salt community wants to borrow money, they can do this from the extensive network of lenders the community has. Borrowers can put up many different kinds of blockchain assets like bitcoin, ether, ripple, etc. as the SALT Oracle Wallet is a multi-signature blockchain wallet which stores collateral and also enforces lending terms.

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Loan Repayment: A borrower can make a timely, periodic payment just like any traditional bank loan system.

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Loan Completion: Upon repayment of the loan all the collaterals of the borrowers are returned.

Collateral remains under the ownership of the borrower and any price appreciation or depreciation belongs to the sole owner of the assets. (Roger Aitkens, 2017)

Case Study Analysis on a Specific Blockchain Analysis

Blockchain Technologies Used in SALT: (from week 2) 

Distributed Ledger: The SALT is built on a distributed ledger. This empowers it with a feature that can transfer an asset from one person to another but still contain the ownership. Which in turn helps in peerto-peer lending. This makes the whole process easier and drastically reduces the time the lending and borrowing takes. What adds more value to the whole system is that the location of the lender and the borrower is no limitation which further enhances the system and gives competitive interest rates.

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Smart Contracts: The SALT uses Smart Contracts in several ways. As the lenders can check transactions and also check the trueness of the other parties. While doing this everyone can perform everyday account auditing tasks. This is whole not only reduces the costs but also gives a boost to the whole lending process. Plus, there is no need for any third party for background checks.

Salt: Benefits 

No need for liquidation: Many of the blockchain asset holders liquidate their assets when in need of cash. So, having a platform to provide collateral-based loans and also maintaining your ownership gives blockchain-based asset holders and the assets itself whole new powers. (Roger Aitken, 2017)

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Security: According to SaltLending.com they follow a security-first approach as: a. Real-time detection of all vital activity b. The holding of the all crypto collateral in offline cold wallets c. No co-mingling of funds or re-investment of holdings d. All the key management controls are CCSS (Cryptocurrency Security Standards) compliant Advanced multi-signature process for the release or transfer of funds.

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Community: As a large community of both lenders and borrowers you both parties get competitive interest rates which are beneficial to both.

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Asset Focused: Blockchain-based assets are given importance rather than the credit score while the time of giving collateral loans.

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Ownership: Till the collateral loan is not replayed the borrower has the ownership of the blockchain asset. Even in situations like changing the value of the blockchain asset the decision is made by the borrower only.

Case Study Analysis on a Specific Blockchain Limitations:

Analysis

It’s no doubt true that the Salt Lending is providing collateral loans and the borrower maintains the ownership of the blockchain assets. And the whole platform is gaining praise from the investors of crypto assets. But as every coin has two sides the Salt also has some limitations and exposed corners of its own. As the location is no limitation for the crypto-backed loans. So, there must be a system that is widely accepted to counter illegal practices. And for the time being there isn’t any. Moreover, history proves that the block-chain assets are highly volatile. The value of the assets can change drastically in a given time frame. So the lenders who give money to the borrowers need a very high incentive as they are collateralizing very volatile assets. (Rakesh Sharma, 2017) Also, most of the members of the platform don’t know each other and it’s very hard to know people and establishing faith in the existing and new incoming members. Moreover, if the platform wants to grow to the world market it needs a framework that is accepted everywhere. We know a lot of countries have not legalized the use of cryptocurrency. So there the basic block of the collateral is not valid which makes the whole platform of no use. And, many of the courts don’t take smart contracts as a legal document. Which again questions its enforcement. So, no doubt that the distributed ledger records the transaction but the evaluation and management pose a very big question on the global front. (Jane Wozniak, 2018)

Case Study Analysis on a Specific Blockchain Conclusion

Conclusion

SALT provided by the blockchain asset holders to convert their assets into cash while still maintaining their ownership. Since its launch in June 2017, SALT Lending has issued over 50 million USD in asset-backed loans to borrowers. Salt’s features like attestable, divisible, and mutually interchangeable makes it a perfect blockchain asset to trade for cash. (https:/ www.saltlending.com) Salt is currently the biggest player in blockchain lending sitting on a market cap of 17 million USD and around 65,390 holders. The merits that the Salt brings with itself include the advanced level of security, competitive interest rates, and decision making if any change in price happens with the collateral. Although some investors point out some drawbacks of the crypto-based lending platform but haven’t got large support. No doubt Salt sticks to its tagline, “Keep Your Crypto, Get Your Cash”. (https:/ www.saltlending.com)

References

References 

Salt_Lending_Community, (2018), www.medium.com

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Jake Frankenfield , (Jun, 2019), Is SALT Blockchain-Based Lending the Future of All Personal Loans?,

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Rakesh Sharma, (Dec, 2017), Now You Can Use Bitcoin As Collateral For Loans,

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Roger Aitken, (March, 2017), Disruptive Blockchain-Backed SALT Loans Platform In Launch To Leverage Bitcoin Assets,

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JaeShup Oh, Ilho Shong, (December, 2017), A case study on business model innovations using Blockchain: focusing on financial institutions, Pacific Journal of Innovation and Entrepreneurship,

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(Feb,2018), Addressing Demand, Salt Lending Medium,

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Why Salt?,

Avi, Uphold Users Gain Access to Salt’s Crypto-Backed Loans, Steven Buchko, (Dec, 2018), What is SALT Lending? Jan Wozniak, (Apr, 2018), Lending and borrowing on the blockchain – should banks be scared?,

(Aug, 2018)Salt Lending Extends Blockchain-Backed Loans,...