So a prepaid mastercard or visa would be a valid form of collateral?
So you send the lender the prepaid MC. He sends you BTC. You then spend the prepaid MC and disappear with your newbie account....
Nice try...
Exactly. This is why gift cards/prepaid visa/MCs will never be considered to be valid collateral.
Essentially it's a doublespend. collateral is supposed to be in the sole control of the escrow holding the collateral/the lender himself(if he is trusted enough by the borrower to do so), so that in case of default, he can use it to cover the loan.
GCs can still be spent by the borrower after he receives the loan.