If you have opened this article, it is because you are most likely looking for more information on Bitcoin loans.
This is a rapidly developing sector; Over the last few months, it has had the ability to attract interest and attention within the Crypto market.
What Are Bitcoin Loans?
Talking about loans on Bitcoin essentially means talking about the possibility of using one’s own amount of BTC, to obtain a certain value in Fiat currency in parallel (such as euro, dollar, and so on).
Before continuing, it is good to keep in mind that in the world of crypto lending, with reference also to loans on Bitcoin, there are essentially two types. On the one hand, we find the active Bitcoin loan, and on the other a Bitcoin loan that can be defined as passive.
In the first case, the user will go to make their Bitcoins available to another user intending to obtain them, receiving possible interest as a return.
In the second case, the user will go to borrow Bitcoin, using other cryptocurrencies as collateral and paying the required commissions.
Just like many other types of loans, also in this case we find the presence of guarantees. These are simply collateral, essential for obtaining the loan, and variable based on the specific request.
To give an example, assuming you have a quantity of BTC available with an equivalent value of approximately $10,000, the loan request can reach a maximum of 90% of the total value you have.
In other words, using a Bitcoin package with a value (at the time of the operation) of $10,000 as collateral, you will have the parallel possibility of requesting a loan of up to $9,000 (based on the terms and conditions of the selected intermediary).
How Bitcoin Loans Work
Now that we have understood what it means to talk about Bitcoin loans within crypto lending, it is good to proceed with its operational aspects.
Contrary to popular belief, the operation of Bitcoin (or Bitcoin) loans is simple and intuitive.
All these thanks to the presence of specific intermediaries and online operators, who have greatly facilitated access to this innovative service. The same has seen constant development, leading many companies to include the lending service.
The same platforms, made available by companies included in the financial sector, represent nothing more than professional intermediaries, aimed at satisfying the needs of individual users in being able to use their own crypto stock (for example in Bitcoin), obtaining other assets (crypto or in legal currency).
What are the aspects to keep in mind about how Bitcoin loans work? Let’s see some key points right away:
Percentage of obtaining the loan
This represents the equivalent value obtainable from the issue of the guarantees. In other words, the loan’s value compared to that of Bitcoins immobilized in collateral at the time of the lending contract (it can even reach 90%).
Duration of the loan
The best Bitcoin loan platforms allow you to select and decide the duration of the loan on the basis of specific periodic periods (weekly, monthly, and so on).
Presence of commissions
This represents the last parameter that can be put into consideration within the activity of loans with cryptocurrencies. They are simply the costs of the service; They may vary based on the quantity requested, the cryptocurrencies used and the intermediary selected.
Best Bitcoin Loan Platforms
The Bitcoin lending sector has undergone important developments, all in association with crypto lending and everything that can be connected to it.
An important aspect, before proceeding with the activity, concerns the choice of the best platform; i.e. the best service made available by online intermediaries. In order to avoid running into an unprofessional and scam operator, it is good to evaluate some points.
The first concerns the presence of all information on the loan service, in a clear, transparent, and precise way. The crypto lending business is very delicate and requires preliminary assessments before being launched.
An easy-to-manage platform also allows you to proceed with more incredible intuitiveness. In this regard, we have selected two professional intermediaries with many years of experience, which allow you to obtain Bitcoin (or Bitcoin) loans in an autonomous world.
The first professional platform to be able to obtain Bitcoin loans, as well as carry out numerous activities on the same cryptocurrency, is the YouHodler platform.
This is a service made available by a colossal company, which in recent times has been able to carve out a considerable market share within the sector.
Despite being relatively young (launched in 2019), it is still a point to reference.
It is a regulated intermediary, i.e. operating in full compliance with the rules and directives imposed in the territories where it operates.
On its official page, there is an indication of the Fintech License.
The services made available on Bitcoin by YouHodler are numerous, here are the most important:
- Bitcoin loans
- Interest on savings account
The first service allows you to obtain Bitcoin loans quickly and easily. You can access all of these through the handy application for mobile devices, available for both Android and iOS devices.
The loan-to-value, i.e. the percentage value of the loan, can even reach 90% of the fixed collateral (one of the highest parameters on the market today).
The level of LTV obviously varies according to the duration of the loan, which starts from 90% up to 30 days, reaching 50% for 180 days.
By doing so, by inserting collateral in Bitcoin, you will have the opportunity to obtain Fiat currency, which can be selected directly on the official page from those available in the database.
The second service, on the other hand, concerns the possibility of obtaining interest on a savings account.
This is a real alternative to Bitcoin Staking (which by its very nature does not exist as an asset proof of work). The platform exhibits interest estimates of 4.8% per annum on BTC.
A second professional platform, a full-fledged exchange, to allow cryptocurrency loans, is the official Binance website.
The exchanger represents an intermediary with many years of experience in the market and many features for its registered users. It has record trading value and thousands of online reviews (with real testimonials from registered users).
Beyond its functioning as a pure exchanger, i.e. valid for buying cryptocurrencies, we find unique services to be able to use your own cryptocurrencies in stock. Among the same, to be relevant, we find lending and staking.
The Bitcoin loans made available by Binance allow users with an account to be able to select a specific amount of BTC, insert it as collateral, and obtain the loan in parallel.
In any case, there is the possibility of being able to insert different durations based on the person’s needs and requirements. Specifically, even for Bitcoin loans, it starts from a minimum of 7 days, up to a maximum of 180 days (with intermediate levels).
Bitcoin Loans Risks
Whether it is crypto lending (i.e. lending Bitcoin and other cryptocurrencies) or staking, the presence of risks must always be taken into consideration.
Since Bitcoin is a cryptocurrency with its own value and trend, the parallel unpredictability of fluctuations (upward and downward) ensues.
In this case, one of the possible risks concerns the changes in the value of the cryptocurrency during the activities carried out. A second connected aspect, on the other hand, concerns the still poor regulation of various aspects in the crypto sector.
Also, in this case, we remind you to rely exclusively on professional intermediaries, with years of experience behind them and who expose all pertinent information in a precise and transparent way.
Staking: Bitcoin Loans Alternative
Beyond Bitcoin loans, an alternative solution to be able to use your own cryptocurrencies in stock is the staking process.
Also, in this case, the interested user has the possibility to exploit unused cryptocurrencies, present within the wallet, trying to obtain variable percentages based on what has been entered.
AQRU, which has been called the best cryptocurrency savings account on the market by many experts is one of the most famous intermediaries in the cryptographic sector for Staking.
The main advantages of Aqru and its cryptocurrency deposit account are various, among these, we underline the flexibility in choosing the asset to block to generate interest. Furthermore, with Aqru it is not necessary to select a minimum deposit term in months, giving the user extreme flexibility regarding the deposit time of their cryptocurrencies.
Speaking of costs and commissions, Aqru appears extremely advantageous for investors, in fact, the commissions from which the platform earns do not in the least interest the savers who deposit resources on the platform.
Finally, another strong point of the best Aqru cryptocurrency deposit account is the mobile app. The app is available for both IOS and Android systems. Also, the application stands out for its ease of use and the convenience it brings to the users’ savings experience.
Bitcoin Loans: Pros & Cons
In the course of this article, we were able to discover in detail Bitcoin lending or bitcoin loan advantages and disadvantages.
In light of the foregoing, here is a summary table containing the main strengths and weaknesses of the lending business.
|New generation system born over the last few months||General risk of market volatility|
|Manageable comfortably thanks to its online platforms||Presence of any platforms that are not yet regulated|
|It allows you to use cryptocurrencies in stock|
|Possibility of obtaining Fiat currency, leaving a collateral|
Bitcoin Loans: Conclusions
In conclusion, Bitcoin loans represented a rather singular system, based on the possibility of being able to obtain interest by lending BTC, or by obtaining Fiat currency by making one’s own assets available.
In this regard, after having discovered the main features underlying its operation, some of the best platforms were exposed to be able to obtain loans in Bitcoin or using BTC as collateral.
Finally, as a concrete assurance; always ensure to use the best and trusted Crypto Platforms to acquire your Bitcoin loans in order to reduce risk.
You can also read: What Is Binance Smart Chain Wallet (BSC)