Here it is an excellent summary of what is, and is not, a valid collateral.
If you click on quoted part you can read the whole post on how to be a reliable lender/borrower.
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.Collateral:The question of what constitutes valid collateral often comes up, and is often met with some debate. Only the lender can decide what collateral suites his risk profile, however the following guidelines can help borrowers assess the likelihood of their secured loan request being accepted.
The most likely asset to be accepted as collateral by the majority of lenders is a cryptocurrency other than the one you want to borrow. The currency, coin, or token must have sufficient trade volume, and be traded on reputable and accessibly exchanges. For example, a borrower who is bullish on BTC but needs some USDT to pay for a service may request a USDT loan with BTC posted as collateral. Often the lender holds the collateral in an address he controls, but the lender and borrower may agree to have the collateral held by an impartial third party or escrow agent.
- Non-Fungible Digital Assets:
Non fungible assets are rarely accepted as collateral, and depending on the request can often be seen as an attempted scam or deceptive sale of the asset. Despite some debates regarding the validity of digital assets and collectables (such as NFTs, domain names, or websites) as collateral, it's worth noting that they are frequently offered but rarely accepted. Again, the lender needs to evaluate the legitimacy of the asset's proclaimed value, and the risk inherent in such offers. Some escrow agents can help with non-fungible assets, in the event an offer is accepted.
Physical goods can be deemed valid collateral by some lenders, but often the logistics of transporting the items to and from the lender or escrow agent can be time-consuming and cost-prohibitive. Borrowers who are within a close geographic area to the lender or a trusted escrow agent may have an easier time having their offer accepted. Lenders will not accept photos or video evidence of the existence of the asset in leu of having the collateral physically in their possession. If it's not in the lender's or escrow agent's hands, it's not collateral. Borrowers who offer only proof of the existence of the asset, and are unwilling to relinquish possession are often seen as attempting to scam.
- What is not collateral:
- Identification documents are not collateral. IDs can be faked or forged, and do not guarantee the identity of the borrower. Nor do they guarantee recourse in the event of a defaulted loan. Even if the documents are authentic, law enforcement agencies could take years to make any progress on a reported case.
- Fiat sent through PayPal or other reversable payment methods should never be offered or accepted as collateral. The borrower could charge-back the collateral as soon as the lender sends the loan, leaving the lender empty handed and at a loss.
- Social media accounts and service provider accounts (such as exchange or casino accounts) are not collateral. Any account that can be recovered by social engineering is a high risk for the lender to accept as collateral.
- Bitcoin Forum accounts should not be offered or accepted as collateral. If a lender attempts to sell a Bitcoin Forum account in the event of a loan default, he risks being red-tagged as an account seller. Selling and buying of Bitcoin Forum accounts is frowned upon by many members of the community.
- Items the borrower has listed for sale. If the borrower is looking to sell the item he's offering as collateral, odds are he's not going to return the loan and is trying to trick the lender into unwittingly buying the item.
- Virtual credit cards, gift cards, access codes, game codes, VPS codes, or any similar type of item that holds digital value should be avoided. These can easily be retrieved by the borrower through social engineering, or drained of their value immediately after the loan is issued.
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