The development of technology has paved the way for a new form of currency that enables online financial transactions without using actual money. Most popularly known as cryptocurrency, this digital money has changed the online arena and is currently a hot topic among investors and corporations. But can we really replace the use of money into using cryptocurrency?
In the online sphere, most people would definitely agree that sometime in the future, cryptocurrency would become a digital norm. However, since the accessibility of cryptocurrency is only limited to online users, not everybody can use this kind of financial platform.
In this digital age, it is no surprise that some people will choose the use of cryptocurrency because it makes online transactions much easier. What makes it so interesting is how people are using to manage and grow their assets.
It is believed that the use of cryptocurrencies does not only engage in buying, selling, or trading. The crypto world has now engaged in very specific financial manner and that is cryptocurrency-backed loans system used by Nexo. But before indulging in this kind of system, here is a useful background about cryptocurrency relating to Nexo technology.
What is Cryptocurrency?
Cryptocurrency is basically a digital money used in numerous financial transactions online that uses cryptographic system. Because it is widely recognized now in the internet and in the global financial system, knowledge about it is crucial to keep up with the changing world.
There are a few things you need to know about this digital cash. Here are some basic ones to fill your curiosity of this intriguing digital world of money:
- Unlike physical cash that is regulated by the central authority or a central bank, this electronic money is not controlled and the price equivalent of each is determined by the supply and demand of the digital market.
- The ownership of this asset is determined and proved through an encryption or what they call as cryptography.
- Because it is in the digital world, fraud is imminent therefore the authenticity and security may be at high risk.
- Financial transactions are internet based so there is a need to constantly update your crypto money to see how it is faring in the digital world.
Cryptocurrency is an intriguing system even amongst the most successful businessmen since its technicalities might be too intimidating and there is still so much to unearth from it. Even bankers who handles money are still having a hard time grasping its system and framework.
Because of the emerging progress of the digital currency, inventors have created different types of cryptocurrency. In the process of purchasing a Nexo token, we can use different types of cryptocurrencies but most of the conversion they use are the two popular crypto currencies, Bitcoins and Etherium, since one could not exchange the fiat money directly to a Nexo token. To help satisfy your curiosity, you need to know about these cryptocurrencies first since they are used in converting it to a Nexo token.
What is Bitcoin?
Bitcoin is a peer to peer electronic cash system that needs no intermediary platform where each transaction is recorded through a ledger called blockchain. Blockchain records bitcoin transactions where web users can access and transfer information in a ledger. This means that bitcoin protects you from double spending your cash in your internet transactions.
One advantage of this blockchain tool is making your financial transactions so much easier since you can get rid of registering, identity verifications, and even banking fees. It is much faster since transactions are dealt peer to peer and that is why the inventor of bitcoin, Satoshi Nakamoto, quoted that “bitcoin would be convenient for people who don’t have a credit card”. There is therefore no need to sign up in a bank when you know how to acquire and use bitcoins.
What is Etherium?
Another type of cryptocurrency is Etherium, it uses a software program called smart contract which simply makes the agreement between parties, the buyer and the seller. This kind of software keeps you from asking services from a lawyer to keep your agreement safe since it uses a computer encryption.
Negotiations and conditions are set by the two parties and are recorded in the contract while the computer software directly controls the transfer of digital currencies or assets agreed. For example, renting a house gives you the obligation to pay for rental fees every month.
So, instead of having a binding contract through a lawyer, you can have smart contract that keeps your agreement and controls your payment which means you do not need to go to the bank to make a transaction nor should you get a lawyer.
Should you worry that records will be compromised? No, because transactions done in the computer software are irreversible, documents are recorded in the ledger with encryption, and getting a copy is easy so no one can say that there is no record of you paying your bill.
Nexo is very interesting since it is a new way of playing with your assets. These assets also can be a collateral for you to have an instant loan using Nexo. It may sound difficult and sketchy since online loans are generally still not a safe venture. There are several information that is needed to get a loan and this includes:
Banks will always find a way to dig your own credit history. They always prefer a person with clean credit habits. If you have a healthy record, you will naturally have a higher change of getting your loan approved.
Employment or your source of income.
This factor is highly important since this is where banks will base your repayment capacity. Your work is considered as your collateral which assures them that you can pay your borrowed funds in the time given.
Age matters since only people on the legal age are lawfully entitled to acquire a loan. In addition, it is the basis of your working years where the banks will consider your financial stability throughout the years to repay your loan.
Banks will always ask the reason why you are borrowing money from them. It is important to be reasonable since they are very aware to know where their loaning money will go to.
Getting a loan from a bank is definitely difficult especially for those who are still starting to be financially independent. That is why the world of digital currency made it easier. To help you have a better loan experience, Nexo was invented.
What is Nexo?
Nexo is created by European Fintech Company, Credissimo. It is a kind of crypto loan system that uses crypto coins as collateral, in other words, it is an online lending platform. Nexo loans are then converted to a fiat cash. Loan terms are made by Nexo oracle and stored through the smart contract as mentioned earlier.
What is a Nexo token?
Nexo token is an ERC-20 token. It means that before exchanging it to Nexo token, the fiat money should be exchanged first to either bitcoin or etherium then the deposits converted will now be downloaded to the crypto wallet.
The Nexo tokens in your crypto wallet are used as the crypto collateral when using a loan rather than selling your cryptocurrency to have available cash, this means you are loaning against your crypto assets. The advantage of this is that you are maintaining your crypto assets that will somehow be converted into a higher rate since digital market is volatile.
How much is the interest of the loan?
The good news is you can avail for interest discounts. Interest adjustments apply since it depends on the total market value of the Nexo tokens. The maximum interest discount may rise up to 50%. The maturity of your Nexo loan lasts for a year and it starts on the day of the first withdrawal.
How do I repay my loan?
Loan repayment is flexible since you can repay at any time. You either can pay the whole amount of the loan or part of the loan using fiat or cryptocurrencies.
Does this type of loan needs background check?
Nexo is not like other banks where borrowers undergo a thorough background check. It does not have a criterion that should be met before allowing you to borrow money. It is the fastest way of approving your loan and it is the easiest way of solving your problem of borrowing money.
It is not time consuming since it can be done only in minutes. Nexo, basically is giving you an opportunity and a hassle-free way to borrow funds for your housing plans, car, or travel plans.
How to buy Nexo tokens?
Since you cannot directly purchase Nexo tokens, you have to exchange first your fiat money to a cryptocurrency which is either Bitcoin or Etherium. However, you have to make sure that the application chosen also has an exchange that lists Nexo.
Here are the steps to know how to exchange your fiat amount to a Nexo token:
- You may use any application as your web base to buy cryptocurrency like Hotbit but make sure that Nexo tokens are listed on the trading pairs. It is wise enough to check the crypto exchange sites to compare fees and rates.
- You need to create an account where you can check your balance anytime and make sure to have a strong password to keep it safe or either wise hackers can infiltrate. Read the terms first before you agree to make sure you have fully understood what you are entering to.
- Then you find a button that says “buy” which means that you are now ready to process your fiat money into a digital currency, but you have to input your debit or credit card account details before the application can process the exchange. Before hitting the buy button, make sure you are decided enough with the amount of money you will be exchanging for. Every digital currency has its own value, you can check the exchange rate before deciding to confirm it.
- Once everything is checked, then you can confirm the transaction and you are now a cryptocurrency holder. You can also check your bank’s debit or credit account to verify the transaction.
- After exchanging your fiat money to bitcoin or etherium, you can now trade it to a Nexo token. Just enter the amount of Nexo token you want to buy.
Is Nexo legal?
The status of legality of every cryptocurrency is still in question since not all countries are allowing the use of this kind of monetary value. Some country has permitted this currency, but a few noted countries totally banned the use of this currency. Total ban has been implemented by some countries like Algeria, Bolivia, Egypt, Morocco, Nepal, Pakistan, and United Arab Emirates.
There are arising legal concerns, but the government remains to be careful in handling this technology. Nexo on the other hand is licensed and regulated by a financial institution. It is compliant with rules set by the Securities and Exchange Commission (SEC) since it regulates securities either a market stock or digital tokens.
Modernization of the computer world is vastly appreciated by web lovers. It opens the gate for the opportunity of an entirely new era of digital opportunity. Most people always ought to have a simple and unrestricted life, but it does not mean that we would always be open ourselves to some things that are not yet proven safe for us.
However, the NEXO technology has been voicing out its edge in the digital world, and it is fair enough to try it somehow. The government has been warning us about cryptocurrencies but at the end of the day, the world is changing, and it is important to keep up with the times in order to not get left behind. Cryptocurrencies is starting to blow up in the digital sphere which is why it is important to get to know it first before everyone starts investing in it.