Bold Credit Card: Spend Against Bitcoin Collateral

Bitcoin company Bold announced on Thursday it would launch a credit card to enable customers to spend against bitcoin held as collateral and earn BTC rewards on every purchase.

The offering differs from products made popular over the past couple of years because instead of allowing users to spend their bitcoin, it encourages them to HODL their coins and spend fiat money, like U.S. dollars, instead.

“The Bold card lets you spend on a line of credit collateralized by bitcoin held in collaborative custody,” the offering’s web page reads.

Bold leverages a 2-of-4 multisignature setup to secure users’ funds, a collaborative custody method that is more secure and transparent than completely centralized alternatives as the customer can independently verify the condition of their funds. The setup also changes what has become an industry standard.

While some providers of bitcoin-backed loans leveraging collaborative custody have commonly opted for a 2-of-3 setup – in which the user holds one key, the company another, and the capital agent holds the third – Bold chose to add a fourth key held by a law firm that can function as a neutral arbitrator.

“This key never gets touched unless there is some doomsday scenario,” Bold founder Zack Pardey told Bitcoin Magazine. “In that scenario the arbitrator can allocate the collateral to its rightful owner.”

Source link Bitcoin Magazine

Be the first to comment

Leave a Reply

Your email address will not be published.