This interview is part of our new Blockchain In Lending series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and lending.
In this interview we speak with Darshan Bathija, CEO of Bank of Hodlers, to understand how his company is using blockchain to transform the lending business, and what the future of the industry holds.
1. What’s the story behind Bank of Hodlers? Why and how did you begin?
DB: Since I’m an investor, I have been closely monitoring innovative fintech companies. A strong commonality that I observed was that a lot of the best companies were leveraging permissionless blockchains. I spent some time studying these companies and how they were driving the next wave of disruption in finance. It was around the same time that the word ‘cryptocurrency’ began garnering attention, especially in tech communities. The potential that the sector showed led me to leave my job and build an innovative crypto company.
While I owned multiple sets of cryptocurrencies, I noticed that the invested capital was not being used and I couldn’t do anything with the tokens other than hope that its value would increase over time. I realized that there were a lot of other crypto holders or “hodlers” who were in the same situation as I was and that many of them weren’t ready to liquefy their funds. That’s when I realized that a platform for users to borrow and lend against the asset class would be very valuable and decided to pursue building such a platform full time.
2. Please describe your use case and how Bank of Hodlers uses blockchain:
DB: If you owned an asset and you need liquidity, you typically have two options:
- Sell the asset, pay your capital gains tax and spend the rest, or
- Go to a bank, get a loan against the asset.
We’re opening up the second option for digital assets. The first asset we start with is cryptocurrencies. We intend to support any asset whose price we can verify in real-time.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
DB: A large number of crypto holders had invested in the asset during the 2017 bull run in order to make a quick buck. Once the market took a turn, many of them either sold their assets or kept holding on to them. This latter group of people believes that the market will eventually rise and they can make a significant profit with their holdings. However, there are moments where they are in need of fiat currency but are not ready to exchange their cryptocurrencies.
A system to borrow fiat and not lose ownership of one’s asset is made possible by our asset-backed lending platform. A customer can use their ethereum (or any of the assets they own) as collateral and borrow the equivalent amount in the form of fiat or stablecoins, thus, allowing them to gain access to the currency of their choice while still gaining any potential profits on their digital assets.
4. What other blockchain lending use cases are you excited about?
DB: Blockchain gives a user the ability to send and receive funds from one point to another allowing for peer-to-peer interaction without the need for a third party. This will slowly remove the need for banks and financial institutions to play any role in managing a user’s funds. Together with smart contracts, lenders will be able to verify and validate transactions, reducing time and costs involved in the process. Blockchain lending, at its core, stands to disrupt the banking industry.
5. Where will Bank of Hodlers be in 5 years?
DB: We would like to be the default retail bank for people who want to use permissionless blockchains for its advantages and empower over 100 million underbanked users to a robust and customer-centric bank.