Here’s how you can now rent, lend or mortgage NFTs
In the crypto space, there is no shortage of creativity when it comes to using an NFT. In this video clip from “The Crypto Show” on Motley Fool live, recorded on March 23Fool.com contributors Travis Hoium, Jon Quast, and Chris MacDonald outline several interesting ways NFTs could work as collateral in certain financial transactions.
Travis Houm: Yeah. This site talks about NFT rental, loan and mortgage. If you think about it, if an NFT is a valuable asset, then I should be able to borrow against it somehow. This is, I think, one of the first places you can go to do that. Some larger assets have been pooled to provide collateral. I think it’s interesting that it’s called no collateral loan because you have, I believe, collateral, but it’s a different type of collateral than a house, it’s a digital asset.
This could be a really interesting concept, in the long run, as people have more and more digital assets. If I have, say, a million dollars in NFTs, but I don’t own a house, maybe I can use my NFTs to borrow or mortgage to buy a house. At least one other interesting funding option coming out of the crypto space, so we’ll see where this one goes in the long run.
Jon Quast: Will it be like a ReFi cash-out? [laughs] You own the thing now that you put a mortgage on it?
Hoium: Yeah, basically. Or take a margin on your brokerage account. If you have a lot of earnings but don’t want to sell all your shares, you take out a margin loan and use those funds elsewhere.
Chris McDonald: There seems to be real utility that could be derived from digital real estate. Metaverse space too.
Hoium: We just had a question about livestock. If all of your livestock is on the blockchain and it represents a real live piece of livestock and you are borrowing against that, and I as a lender know information based on that blockchain asset, that could be a case interesting to use. I think this is another case of the industry starting to mature and understand, what are the real utilities that we can have here? I think we’re going to see more and more of that.
Quest: Travis, I don’t know how much you got into the details here, I’m just curious. I’m buying a house with a 30 year mortgage. It’s a 30-year amortization plan. What I pay in principal and in interest is already determined from the start when I take out this mortgage. I don’t know if it’s the same thing. Over what durations can I mortgage an NFT?
Hoium: It belongs to the person who rents or mortgages this asset. I think a potentially interesting use case for this is that there are starting to be cases where an NFT gives you access to something. Like the Bored Ape Club held a big event last year. Well, to access it, you had to have an NFT.
What if I can’t go, but one of you wants to go rent my NFT for a few hundred bucks or whatever for the day to go to that event? I think that’s something we’re starting to see, so maybe that could be a centralized place for that. But from everything I’ve seen, the terms are set in advance and it’s, at least on a smaller scale, take it or leave it.