By Annabelle Pollack
From business closures to event cancellations and stay-at-home orders, the coronavirus pandemic has had its way with the United States. Millions are unemployed, and millions of small businesses struggle to stay afloat in the punishing economic downturn.
The Federal Reserve, or “the Fed,” has been making headlines as it tries to limit the pandemic’s economic damage, including by lending $2.3 trillion that the government called for in its relief package, dubbed the CARES Act. This action has left many Americans wondering where the Fed got so much money, what the Federal Reserve can and can’t do, and what power the Fed has over our nation’s economy.
What Is the Federal Reserve, anyway?
It’s essential to define what the Fed is to understand its role in our economy. The Federal Reserve is America’s central banking system. Before the Federal Reserve, people panicked their bank would fail when a neighboring one closed its doors. Hordes of customers would run to withdraw their money, ultimately causing those banks to go belly up, too.
After a particularly terrible panic in 1907, Congress stepped in to create the Federal Reserve in 1913 through the Federal Reserve Act. The initial goal was to avoid these bank runs and provide banks with emergency funding. But today, the Federal Reserve System takes other measures to ensure the health and stability of the economy and a secure banking system.
How does the federal reserve work?
The Federal Reserve Act created a decentralized bank that functions without government financing or approval but still protects both public and private interests as a mixed organization.
It has three key entities:
1. Board of Governors
At the heart of the Fed is the Board of Governors, made up of seven officials appointed by the government and confirmed by the Senate. It acts as an independent federal agency, and its job is to direct the monetary policy — the money supply and interest rates. Its goal is to make sure we maintain a stable economy.
2. Reserve Banks
There are 12 Federal Reserve Banks spread throughout the U.S., each one having nine directors. Six directors are elected by commercial banks and three by the Board of Governors, protecting interests from both parties.
Reserve Banks are structured similarly to private corporations. They oversee member banks and carry out the monetary policy in their region. Reserve Banks act independently, but the Board of Governors supervises their actions.
These banks also have other vital roles like distributing currency to other banks, placing money into circulation, acting as a bank and fiscal agent for the U.S. government, and providing critical information about their local, national, and international economies to the Federal Open Market Committee.
3. Federal Open Market Committee (FOMC):
The FOMC is a committee comprising the Board of Governors, the Federal Reserve Bank of New York President, and four members from the other 11 Reserve Banks, who serve for one-year terms.
The FOMC’s primary role is to determine whether the Federal Reserve should buy or sell government bonds, known as Open Market Operations (OMO), to maintain the economy’s stability. It also establishes a target federal funds rate, which is the interest rate banks charge one another for overnight loans.
Where does the Federal Reserve fit into the government?
The role of the Federal Reserve within the government can seem confusing since it has public and private aspects. The Fed is accountable both to Congress and the public and maintains transparency in all its operations.
Ultimately, the Fed is a product of the government because it was created by an act of Congress, which still oversees the whole system and can amend the Federal Reserve Act at any time.
But Congress created the Fed to work autonomously and to be shielded from political pressures by using a privatized structure for the Reserve Banks. It also keeps a hands-off approach by letting the three entities carry out their core responsibilities independently of the federal government.
Can anyone override Federal Reserve decisions?
There isn’t a formal legal power that can supersede the Fed’s monetary policy decisions. Still, the Federal Reserve Act allows the Treasury to “supervise and control” the Fed where jurisdictions overlap.
But the Treasury hasn’t needed to do this because a system of checks and balances keeps the Fed’s operations transparent and answerable to the public and Congress. Just because the Fed can influence the economy, doesn’t mean it doesn’t have to follow the rules.
Independent public accounting firms audit Reserve Banks annually. The Board of Governors also gets audited by its Office of Inspector General and an outside auditor. The Board of Governors annually publishes the results on its website.
The House of Representatives and the Senate hold the Fed accountable by requiring it to report twice a year on its monetary policy and economic decisions. Fed officials also deliver speeches throughout the year to the public so that everyone understands the reasoning for its decisions and actions.
Does the Federal Reserve print money?
If you’re a Bitcoiner, or you spend a decent amount of time on Twitter, you’ve most likely seen the “money printer go brrrr” meme that went viral in March of this year. It cropped up in response to the Fed’s announcement on March 12, 2020, that it would offer $1.5 trillion in short-term loans to banks to help combat “unusual disruptions” in financial markets as a result of the coronavirus. The meme, while more of a social commentary than an accurate depiction of the Fed’s responsibilities, expresses frustration regarding the government’s role in inflation and the devaluation of the US Dollar — as evidenced by the meme’s numerous likes and shares, many Americans share this same sense of frustration. While the meme is accurate in many ways, it unintentionally brings to light the common misconception that the Fed prints money. In reality, printing money is the responsibility of the U.S. Treasury. The Bureau of Engraving and Printing prints paper currency, while the U.S. Mint makes coins. The Treasury oversees both offices.
While it doesn’t print money in the literal sense, the Fed does buy cash as needed from the Bureau at cost to put into circulation, but the monetary base in circulation and at central banks typically stays the same.
The Fed manages the money supply by creating and destroying money. It swaps old, ragged bills for fresh ones or adds and deducts from digital balances. But it also manipulates the amount of money in circulation. The FOMC decides on whether to add or remove cash from the economy by buying or selling government bonds and other securities. This influences the amount banks will lend out and keep on deposit, which then affects interest rates.
That being said, where the misconception holds some truth is in the way the Fed puts more money into circulation; the Fed can’t print money, but it does have the power to essentially create money out of thin air. As a banker’s bank, it does so by making “large asset purchases on the open market and adding newly created electronic dollars to the reserves of banks.” In exchange, the Fed receives large amounts of bonds including US Treasury securities, mortgage‐backed securities, corporate debt and other assets. Rather than paying for these bonds in cash or gold bars, the Fed instead credits the account of the bank selling the bonds so that digital money moves from one place into the other.
The process is like taking out a personal loan of $10,000 at the bank. The bank doesn’t give you a suitcase full of cash. What you get is a credit that shows up as some numbers on a screen, reflecting your new account balance.
Because the Fed operates digitally, it can create money with a few keystrokes and use it to purchase assets or lend money. On a televised interview with “60 Minutes,” Former Fed Chairman Ben Bernanke said, “To lend to a bank, we simply use the computer to mark up the size of the account they have with the Fed. So it’s much more akin, although not exactly the same . . . to printing money, than it is to borrowing.”
The Fed did this when it promised to lend Americans $2.3 trillion, as called for in the CARES Act for economic relief and stability across the nation for those who were struggling because of the pandemic.
What can the Federal Reserve do or not do?
If the Fed can make money but not print it, what other actions is it able to take or is prohibited from taking?
What can the Federal Reserve do?
The Fed is an emergency lender for banks in financial distress, so it can lend money to failing banks to keep them afloat. But the Fed’s core responsibility is to manage the money supply, which has far-reaching effects on regulating the financial market.
It’s permitted to use four main tricks to change the amount of money in the economy:
1. Changing the reserve requirement
The Fed dictates what percent of deposits banks have to keep on hold. It usually ranges from zero to 10 percent and is currently set at zero because of COVID-19. The more banks have to keep on reserve, the less there is to go out into the market.
2. Changing interest rates on reserves
The Fed pays commercial banks interest rates on their required and excess reserves, a rule that went into effect in 2008. When the Federal Reserve wants to speed up the economy, it lowers the interest rate so that banks have less of an incentive to hold on to money.
3. Changing the discount rate
The Fed encourages and discourages banks from borrowing money from it by raising or lowering its lending interest rates. When the discount rate is low, banks borrow more to lend to each other and the public.
4. Conducting open market operations
The FOMC decides how many bonds to buy or sell. When it wants more money in the market, it buys these bonds from banks to put more money into their account. When it wants to slow down the economy, it sells the bonds to take away bank money.
This is the Fed’s most common tactic to influence the economy. For example, from 2008 to 2009, it bought over a trillion dollars of government bonds to inject money into the stumbling financial market. This lowered interest rates on short-term loans to almost zero percent.
But the recession went too deep. So, the Fed did something it hadn’t done before. It started buying long-term assets from banks in a process that’s known as quantitative easing (QE), boosting the money supply further and stimulating lending and investment.
What can’t the Federal Reserve do?
The Fed can only indirectly influence the nation’s economy. This means it does not have the power to take any of the following actions:
Set the federal funds rate
The federal funds rate is the amount of interest banks charge to lend their excess cash reserves overnight to each other. Banks frequently do this to meet the Fed’s reserve requirement.
While the Fed can’t set this number directly, the FOMC sets a target federal funds rate depending on what direction it wants the economy to go. Then, it works within what it’s permitted to do to influence banks and reach the benchmark rate.
Set the prime rate
Banks use the prime interest rate for commercial and consumer borrowing for things like credit cards and personal, car, and home equity loans. Banks often set the prime rate based on the Fed’s target federal funds rate.
Hike up mortgage and student loan rates
Mortgages and student loans are long-term assets whose rates are determined more by market-driven factors than FOMC decisions.
That said, the Fed purchased mortgage-backed securities to lower long-term rates on mortgages in 2008 so that banks wouldn’t need to borrow from each other to meet the reserve requirement. But these actions still affect federal funds rates significantly more than mortgage and student loan interest rates.
Use taxpayer money to fund its operations
The Fed doesn’t get any funding from taxpayers because its money comes from interest accruals on government securities and treasuries purchased through its OMO. There are other sources, too, such as foreign currency investments. After paying its expenses, the Fed turns any extra money over to the U.S. Treasury because it’s not operated for profit.
What’s the potential impact of the Federal Reserve’s powers on the economy?
Although the Fed can only work behind the scenes to stabilize the economy, it exerts a massive influence on its operations.
For example, the Fed can speed up or ease the economy by manipulating the money supply to increase or decrease consumer spending. It starts by influencing bank lending rates through selling and buying government bonds.
When banks have more excess reserves, there’s more to lend to the public, so interest rates are lower. Lower interest rates encourage people to borrow money, which is then spent on goods and services. More consumer spending generally means a better economy, while “even a small downturn in consumer spending damages the economy” and can even lead to a recession. Below is how the Fed’s actions impact specific aspects of the economy.
The Fed uses a trickle-down effect to influence interest rates. Remember, they can’t set federal funds or prime interest rates, but they can bend them to their will through OMO.
The Fed buying back government bonds from banks leaves more money for banks to play with while selling them means banks have to be more cautious about lending out their reserves. The economics of supply and demand shows excess cash in the market will drive down the interest rates banks charge to each other and the public, while a lack of money has the opposite effect.
The Fed also raises or lowers the discount rate and reserve requirements to change the interest rates commercial banks ultimately offer customers.
Inflation and deflation
When federal funds rates drop because of the Fed’s actions, prime rates usually drop with them. Consumers then borrow money for business and personal purposes to take advantage of lower interest rates. With greater amounts of money in their pockets, people spend more on goods and services, creating a spike in demand.
The larger demand pushes wages and costs higher to meet the production necessary to keep up with supply, causing a ripple effect. Prices increase across sectors, leading to reduced purchasing power. This is inflation and explains why a dollar today is worth less than a dollar last year.
Some annual inflation is good. It’s a sign the economy is doing well because consumers are spending. The Fed has a target core inflation rate of two percent. When inflation goes above or below the benchmark amount, the Fed steps in and works within its limits to move the needle toward inflation or deflation.
Although directing the U.S. monetary policy for the nation’s economic benefit is a crucial part of the Fed’s job, it also has foreign concerns.
Financial crises within our borders often have a global impact. The 2008 recession strained international markets because many countries have at least some assets and liabilities dominated by the dollar, causing them to sometimes borrow and lend in dollars.
To address the dollar scarcity, the Fed started swapping currencies with foreign economies in dire need of U.S. currency — over 583 billion dollars’ worth — at a predictable and fixed rate to keep struggling foreign banks afloat and prevent their economies from plummeting.
As the pandemic continues to threaten the nation’s physical and financial health, the Fed is getting creative with its strategies, as it did in 2008 when it began buying long-term assets from banks.
Historically, the Fed has only purchased government securities. This time it’s buying 250 billion dollars’ worth of corporate bonds through exchange-traded funds (ETFs) to keep business up and running and workers employed. While this is good news in the short term, the long-term effects of this unprecedented move on the economy are uncertain.
The Federal Reserve: A system of the People, by the People, and for the People?
The Federal Reserve’s power and influence over our economy leaves many asking if it’s an unconstitutional entity. Though Congress takes a laissez-faire approach to the Federal Reserve, the system teeters between public and private domains.
The effect of its present monetary policy decisions on the future economy could determine which direction future reform sways. It could also decide if the century-old institution modernizes into a structure more accurately reflecting the concerns and voice of the people, and one maintaining greater transparency while ensuring the long-term economic stability of the nation.
How Financial Firms Navigate the Markets to Grow in Any Climate
SALT was featured on Adroll’s blog alongside Catch Benefits and Hippo Insurance. Learn how we’re navigating the markets and changing the way people interact with money in the full blog post here.
Read Adroll’s full blog post here
ICYMI: SALT Announces Justin English as Chief Executive Officer
In case you missed it, we recently announced that Justin English has been named chief executive officer at Salt Blockchain Inc., parent company to SALT Lending. Co-presidents Rob Odell and Dustin Hull, who have been working together for the past six months to fill the CEO role and onboard English, will remain co-presidents and will continue to support SALT in their respective roles as chief product officer and chief financial officer.
Read the full announcement here.
Creative Wealth Preservation with Blockchain Center
Our CPO Rob Odell joined Blockchain Center’s VR Crypto Mondays to talk with their CEO about crypto lending and creative ways to preserve your wealth.
Watch their full discussion here.
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Black Lives Matter
As operations at SALT carry on, it is not lost on us, as a company nor as individuals, that Black Americans continue to fight for racial justice. We are committed to hearing, learning from, and supporting our Black customers & communities in this fight for a more inclusive world.
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Need something new to binge watch?
Catch up on Season 2 of Worth Your SALT to see our discussions with industry leaders including Bill Barhydt, Shira Frank, David Chaum, and many more.
CoinTelegraph: French Court Moves the BTC Chess Piece — How Will Regulators Respond?
“France is the 7th largest economy in the world by GDP, so it certainly is likely to influence other markets, especially in the EU, initially. In such a new and emerging market and technology like Bitcoin, regulators around the world do look to how other countries’ regulators are viewing cryptocurrencies. So, any ruling France makes will be closely observed by regulators worldwide.”
— Rob Odell, co-president and chief product officer, SALT
For full text article, click here.
Crypto Chat: Q&A with Dustin Hull, Co-President & CFO, SALTAs one of Cadence’s latest originator partners, we sat down with Brian Guerra of Cadence to discuss SALT’s business and how we’re able to contribute to Cadence’s efforts to give investors exposure to private credit assets linked to cryptocurrency. For full Q&A, click here.
Finance Magnates: Coronavirus & Crypto Lending: Could the Crisis Bring New Clients?
“Crypto-backed lenders are likely faring better than other crypto businesses during the global pandemic, as they offer a way for crypto holders to get cash without having to sell their cryptoassets.”
— Rob Odell, co-president and chief product officer, SALT
For full text article, click here.
Updated Sign-up Process
Our 2-step verification process has been updated to make it faster and easier for you to complete the sign-up process and explore our platform. Learn more about the update by logging into your account.
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We’re excited to announce our partnership with Uphold — the leading digital money platform democratizing access to investments and payments using blockchain technology — to provide Uphold users with seamless cash or stablecoin loans using cryptocurrencies as collateral. Uphold users can now secure loans through SALT in as little as 24-hours against their holdings in Bitcoin, Ether, Litecoin, Bitcoin Cash, Dash, and as of today, XRP. The integration of the two platforms provides enhanced access to liquidity, enabling users to unlock additional value in their holdings.
In addition to bringing leading credit solutions to Uphold users, we’ve integrated Uphold wallets into our platform, allowing the company’s large and rapidly growing user base to access Uphold’s products through their dashboard. The integration streamlines the lending experience for shared users through seamless collateral transfers and loan proceed payouts.
“SALT has given its users the flexibility to access loans using their cryptocurrency holdings. Our integration with the SALT platform allows us to grow our service offering and provides another real-world use case for Uphold members,” said Robin O’Connell, Chief Revenue Officer, Uphold.
With a crypto-backed loan from SALT, Uphold users can unlock liquidity from their crypto assets without having to sell them. Unlike traditional financial institutions, we allow customers to use their crypto assets as collateral to secure a cash (USD) or stablecoin loan in as little as 24 hours, providing them with the opportunity to reach their personal financial goals including but not limited to funding a large purchase, consolidating debt, or accessing working capital to scale their business.
When applying for a loan through SALT, Uphold users can customize their loan by choosing their preferred loan type, loan amount, duration, and Loan-to-Value (LTV) ratio with options ranging from 30%-70%. There are no credit or income checks required and no origination or prepayment fees. With a crypto-backed loan from SALT, Uphold users can keep their crypto and get cash.
“Uphold has built an impressive platform that provides a seamless on-ramp into the digital economy and a simple method to transact across diverse asset classes. We’re excited to bring our leading crypto-credit products to Uphold’s global customer base and enhance our borrower experience through a direct integration with Uphold wallets on our platform,” added Jarrett Abraham, Director of Corporate Development, SALT. “Together, we’ll provide ultimate flexibility for crypto holders who need access to liquidity across a range of crypto assets and fiat currencies. This is an exciting strategic partnership for us that helps further our mission to accelerate the world’s ability to embrace crypto assets and participate in the token economy.”
About Uphold Uphold is a digital money platform democratizing access to investments and payments using blockchain technology. With more than 1.5 million users globally, Uphold has powered ~$5.3bn in transactions (9/30/19). Uphold provides both retail customers and businesses worldwide with easy access to fiat and digital currencies, as well as precious metals. The San Francisco based firm is opening up global access to financial services that are either ‘hard to reach’ or simply not available in certain regions. Available through the web, iOS, and Android, Uphold is the only financial platform to publish its reserve holdings in real time. The company also has offices in New York, Portugal and London. More information can be found at www.uphold.com, or follow us on Twitter, Facebook, and LinkedIn. Uphold is registered with Fincen in the United States and is an EMD agent of an FCA licensed e-money institution in Europe. Uphold is not a lender, loan broker, or loan arranger and is not offering anyone advice or assistance in obtaining a loan.
We’re proud to announce that beginning October 1, 2019, we will offer the just released PAX Gold (PAXG) as our latest collateral type for clients seeking to use their digital assets as collateral to secure a USD loan. PAX Gold, an asset-backed digital token on the Ethereum blockchain is Paxos’ first blockchain asset to represent precious metal; its value is tied directly to the spot price of gold quoted by the London gold market.
By tokenizing gold, Paxos is bringing the benefits of physical gold ownership to the cryptocurrency community. PAX Gold is built as an ERC-20 token on the Ethereum blockchain network. As a digital representation of physical gold, PAX Gold has the potential to increase the overall liquidity of gold by connecting traditional markets with cryptocurrency markets.
“Precious metals are ideal for tokenization. Gold, as an example, has well-established institutional physical custody and a broad base of investors familiar with the asset class,” said Jenny Shaver, Chief Operating Officer at SALT. “Gold has traditionally been held as a hedge against inversely correlated assets like stocks and fiat currency, so it provides digital token holders with familiar asset diversification options. By offering PAX Gold as our newest collateral type, we’re adding value for our customers by combining the benefits of gold investing with easy access to funds via crypto-backed lending.”
With the addition of PAXG, SALT customers will not only have a wider variety of collateral options, but by using PAXG as their primary collateral, they will be able to maintain a more stable Loan-to-Value Ratio for the duration of their loan.
Founded in 2012, Paxos is a regulated financial institution with a suite of products including the most traded alternative USD-backed stablecoin, the PAX Standard. By integrating PAX Gold as the first widely available physical asset available on a blockchain, we’re taking a step toward realizing our financial vision of a blockchain-based system where the value of traditional assets can be unlocked and used in manifold ways.
“PAX Gold is the first regulated digital asset that allows holders to own the underlying physical gold,” said Scott Simpson, VP of Strategic Partnerships at Paxos. “Unlike fiat currencies, gold has intrinsic value and Paxos allows users to physically redeem their PAX Gold tokens for actual gold. With PAX Gold, people can more easily access this market and with SALT, customers can easily leverage gold like never before.”
“We as a community have been discussing the tokenization of commodities for quite a few years, but Paxos has been the first to make it a reality by representing gold on the blockchain. This is a big step forward for the crypto industry. This brings a new level of transparency to traditional investors by enabling them to see their physical gold represented on the Ethereum blockchain, meaning they can immediately verify ownership,” said Rob Odell VP of Product and Marketing for SALT. “SALT is proud to be a part of this advancement by offering PAXG as a collateral option for crypto-backed loans. Not only does it invite traditional investors to become SALT customers, but it will enable us to be more flexible and creative with our LTV options and loan terms. In fact, if we see significant demand for this product, I think SALT is prepared to re-evaluate our interest rate calculator and open the doors to LTV options as high as 85%.”
Gold has historically been a popular store of value, with the price of Gold increasing by an average of 10% per year since President Nixon took the US Dollar off the gold standard in 1971. With a worldwide market capitalization above $3 trillion, gold is physically scarce, widely traded and offers high liquidity — three key factors that make it not only a viable asset to lend against, but a salient collateral choice for us. Given the current instability in the bond and currency markets, gold’s long-term returns are more comparable to stocks and higher than bonds or commodities.
With the addition of PAX Gold, we now offer loans collateralized by Bitcoin, Litecoin, Ether, Dash, DOGE, BCH, PAX Standard, USDC, and USDT.
As part of our commitment to supporting the Dash community, we’re excited to announce our partnership with NODE40, the blockchain masternode hosting and monitoring provider. The partnership will provide expanded loan options for DASH masternode owners in tandem with the Dash community’s first masternode hosting service.
Given its long-term viability, its numerous use cases, and its level of adoption, Dash is an appealing collateral form for SALT’s platform. In our April 2019 announcement, we affirmed our commitment to support the Dash community and its mission, noting our respect for Dash’s two-tier network that uses masternodes to maintain the viability of its blockchain.
“Our development team has made a technological breakthrough and has advanced our mission by unlocking value and liquidity in cryptocurrency assets through collateralizing the Dash connected to masternodes,” said Rob Odell, VP of Product and Marketing at SALT. “Dash has quickly become our second most popular collateral option behind bitcoin and the community has reacted positively with a high volume of loan applications. We’re excited to work with NODE40 to increase our support for the Dash community and provide innovative solutions and services for masternode holders to get the most out of their assets.”
A Dash masternode serves to expedite transactions and scale the network by relaying them over a second-tier network. While Bitcoin’s second layer is an off-chain solution to scale, Dash runs an on-chain second layer using masternode operators who are incentivized by the network like miners in bitcoin. In March 2015, NODE40 was the first company to provide network infrastructure to host masternodes. According to dash.org, each masternode pays out approximately six Dash (currently just over $1000 USD) per month in mining rewards.
“Our companies’ shared dedication to customer service naturally brought us together when a mutual client wanted to take out a fiat loan using their masternode’s Dash. What attracted us to SALT was the caution with which things are done; they have a solid reputation of doing things by the books,” said Perry Woodin, Co-Founder and CEO of NODE40 and a Dash Trust Protector. “Having been a part of Dash from early on, we tend to do things conservatively, and that was important to us when evaluating how a loan is backed and if our customers would be protected in the case of an audit. With SALT we share the vision of being cutting edge while playing by the rules not only to protect ourselves, but to bring legitimacy to the industry.”
DASH holders must prove ownership of 1,000 DASH to obtain masternode status and have the right to vote on treasury proposals and receive recurring payouts. However, if at any point, the Dash is moved, the node will be brought offline and will downgrade immediately, stripping the node of its master status. With SALT’s new system, Dash holders can move their Dash to our platform and maintain their masternode status as well as their voting and payout rights, all while using the associated funds as collateral for a loan.
The key to this software integration comes from a recent Dash update, DIP3, which introduces pro registration transactions. Instead of referring to another transaction from the network to sign a message as proof, a “proreg tx” refers to an output produced by the transaction itself, which in turn acts as proof of ownership. Dash holders can now collateralize the Dash connected to their masternodes by parking their funds in our insured cold storage — the signature used to move those funds validates ownership, allowing users to continue participating in the network.
If you’re interested in using your Dash to secure cash loan with us, visit https://saltlending.com/dash/ to get started.
We’re proud to announce that we now accept DASH as collateral.
Better yet, if you own DASH that’s being used for a masternode, we’ve also developed a way for you to maintain your masternode status, voting rights and payouts and still use it as loan collateral. To do so, follow these instructions before you deposit your DASH into your SALT collateral wallet.
Like other cryptocurrencies, Dash enables anyone, anywhere in the world to make quick, easy and cheap payments at any time without going through a central authority.
Given its long-term viability, its numerous use cases, and its level of adoption, Dash is an appealing collateral form for our platform. Aside from that, we chose Dash as our next collateral type for two primary reasons:
- We support the Dash community and its mission
- We respect Dash’s two-tier network and use of masternodes to maintain the health of their blockchain
The Dash Mission
In his interview with Cointelegraph, CEO of Dash Core Group Ryan Taylor notes that Dash offers “tremendous value to society,” particularly for people that live in areas with minimal financial freedom and poor quality financial systems: “I would love to see Dash first adopted in some of the poorest and most financially oppressed markets in the world, so that as Dash grows, we bring those people up with us.”
By providing increased financial freedom, secure technology, and irreversible, speedy transactions, Dash is increasing access for people to participate in the global economy regardless of where they’re based. We support this mission and recognize it as one of the most significant ways blockchain technology can change people’s lives — and the world — for the better.
The Dash Network and Masternode System
In a separate, more recent interview with Anthony Pompliano, Taylor explains the concept of masternodes and how unlike the Bitcoin protocol, which allocates 100% of the network’s revenue toward mining, the Dash protocol is designed such that the block reward is split into three parts: 45% of the revenue goes to miners and 45% goes to masternode operators who service the network. The remaining 10% goes to a proposal system where the proposals are voted on by the masternode operators and the highest ranking proposals pay out as part of a monthly budget. This two-tier infrastructure ensures that network participants are incentivized to “keep the network happy.” Masternode operators in particular have a vested interest in doing what’s best for the network to maintain its health.
In explaining the masternode system further, Taylor notes that you have to prove ownership of 1,000 DASH in order to obtain masternode status, though he makes it clear that “as soon as that money is moved, your node downgrades immediately.” While that’s true in most cases, we’ve developed a way for you to maintain your masternode status even after you move your Dash to the SALT platform.* With these step-by-step instructions, you can custody your Dash with us and still run your masternode.
For questions about taking out a Dash-backed loan or to custody your Dash with us, visit us at https://saltlending.com/ or call us at +1 720–897–3710.
- Dash used as collateral for a loan with SALT may be liquidated, in whole or in part, according to the terms of your Loan Agreement. SALT is not responsible for maintenance of a masternode or any disruption to or downgrade of any masternode for any reason, which may result from a liquidation of loan collateral or any other applicable term or terms of your loan agreement.
Having participated this week in the ADC Global Blockchain Summit held in conjunction with the South Australian Government and the Australian Digital Commerce Association (ADCA) in Adelaide, SALT is actively incorporating its technology services into the burgeoning Australian market. With a particular focus on strategies and practical applications for business growth via blockchain technologies and systems, SALT spoke to the Summit’s key topics from experience intersecting business, public policy, and the regulatory environment.
Australia has demonstrated a keen interest in developing its blockchain industry. The Ministry for Industry, Science and Technology today announced a blockchain roadmap with AU$100,000 in federal funding for “regulation, skills and capacity building, innovation, investment, and international competitiveness and collaboration.” Working directly with blockchain businesses at the ADC Summit, SALT is deploying its Software as a Service packages, which allow traditional companies to easily add cryptocurrency and blockchain offerings into their product portfolio including lending technology, wallets, monitoring, and blockchain analysis. With Australia’s continued commitment to developing blockchain services responsibly, SALT looks forward to working with interested parties and stakeholders across the Australian market to bring their vision into reality.
Crypto companies looking for extra liquidity to expand their businesses, such as exchanges or mining companies, can join SALT and apply for a crypto-backed loan.
As SALT continues to grow, we remain focused on further expanding our technology products, allowing both crypto and traditional companies to integrate blockchain services into their software stacks.
While in the past couple months we’ve expanded globally, we’ve also expanded our executive team to include its newest member and Chief Financial Officer, Eric Spencer. Eric brings more than 10 years of finance experience in the lending and real estate industries, which will enable him to build out SALT’s infrastructure by establishing key banking relationships and developing a framework for the company’s reporting process.
Prior to his role at SALT, Eric spent five years as SVP Controller for Computershare Loan Services where he oversaw the accounting, finance, treasury, billing, A/P and A/R units of the business, as well as managed seven credit facilities and coordinated “Big 4” audits. Before that he served as VP of Finance and Accounting at Broe Real Estate Services where he was responsible for all 80 real estate assets, which totaled more than $400 million in gross value. Eric also held previous finance positions at AIMCO and Capmark/GMAC.
Despite his primarily traditional financial background, Eric is an avid follower of all things blockchain and is excited for its potential even outside of the financial services industry. “There are so many interesting uses for blockchain tech and the one that stands out to me most is the concept of leveraging it for foodbanks in communities where there’s no cash or currency,” Eric shared. “Blockchain tech has the potential to fight corruption, bring greater equality to certain areas, and hopefully eventually solve some of the world’s largest problems like starvation. It’s a mind-blowing mechanism that if leveraged correctly, can make the world a better place.”
Until then, Eric is looking forward to seeing blockchain tech play a greater role in the financial services industry, especially as it relates to SALT. “I’m most excited about SALT’s growth potential and all that we’re trying to accomplish in the next 12 months,” he said. “We’refocused on some major goals within the organization, and I’ll be working cross-functionally to ensure we have the strategy, infrastructure, and people required to bring our vision to life.”
As Eric focuses on SALT’s goals, he says he’ll keep in mind a philosophy he’s learned from spending time on the golf course — one that will help him and his team not only achieve these goals but also enjoy the journey doing so. “Golf has taught me that sometimes it’s better to not go 120 percent but to go at an even pace,” he said. “It applies to work and life in that sometimes you find yourself working so hard that you lose sight of things, and you don’t enjoy the journey. When you go at an even pace, not only is it more fun,
but you also get better results.”
When he’s not golfing or thinking about blockchain tech, Eric enjoys riding roller coasters, playing sports with his two sons, and going to concerts with his wife (their next one is Justin Timberlake). He also reads a ton. His favorite recent read? The Big Short (pretty fitting for a CFO, right?).
Not only does Eric have an incredible financial background and a passion for life-long learning, but his leadership style has mentorship at its core — all signs of a strong leader. SALT is proud to have him on board as our CFO, and we’re are confident that between his expertise and enthusiasm, he’ll help guide us to where we want to be.