Bitcoin Loan: The A – Z Of Bitcoin Lending

Making instant profits from cryptocurrencies is the new normal in today’s financial world. People from various countries invest in Bitcoin and other leading cryptocurrencies to make profits from volatile market movements. In 2020, the price of Bitcoin (BTC) started at $3,200 and gained almost 400% growth over the year, reaching $30,000 by December. Doesn’t this phenomenal price growth of Bitcoin make it worth an investment? However, most people try to make profits by buying or selling BTC assets at the right market price. They forget that, like every financial asset, Bitcoin is also profitable via lending and financing options. This is how one gets introduced to crypto lending, where a Bitcoin loan brings profits.

Instead of selling Bitcoin, people can get a Bitcoin loan to meet their financial goals. In the crypto space, several financial corporations are offering an instant Bitcoin loan to every crypto investor. In principle, a Bitcoin loan works just like any other loan. By lending BTC, the borrower gets a loan with feasible interest. With such crypto loans, making profits in fiat currencies becomes quick and easy.

An instant Bitcoin loan is the fastest way to convert digital wealth into real money. To get a Bitcoin loan instantly, you can visit a digital platform that offers crypto loans at cheap interest rates.

What are the categories of crypto loans?

Bitcoin loans are helping common people gain financial freedom with profitable crypto lending services. In the cryptocurrency lending domain, there are two ways of getting a Bitcoin loan. The main crypto loan categories include:

  • Custodial crypto loans (CeFi loans)
  • Non-custodial crypto loans (DeFi loans)

These two crypto loan categories are based on the type of financing provided for the cryptocurrency assets. A Bitcoin holder gets custodial crypto loans based on Centralized Financing (CeFi). In this crypto loan, the holder enables a business to manage BTC funds and execute its services based on trust. In custodial Bitcoin loans, the BTC assets are in the custody of this business, and the BTC holder entrusts them to use these funds wisely. In exchange for these funds, the holder gets a loan at steep interest rates in fiat currencies.

Non-custodial crypto loans are based on Decentralized Financing (DeFi). In this type of crypto loan, the user lends its BTC assets to technology services that perform valuable functions in DeFi projects. Non-custodial Bitcoin loans offer a wide range of financial options as the user can lend BTC across all the applications of the DeFi technology.

What is a Bitcoin Loan?

What is a Bitcoin Loan

About Bitcoin Loan

A Bitcoin loan can be defined as a financial credit facilitated by BTC owners. If user lends BTC assets to a borrower, a Bitcoin loan can be issued in favor of the user at specific interest rate. This loan amount is primarily issued in fiat currencies such as USD. In Bitcoin lending, the BTC holder can lend these funds for different types of technology and finance projects. In the meantime, the price of Bitcoin keeps changing as per the market movements. Being one of the fastest-growing financial assets in the world, Bitcoin will continue to grow in value. As a result, this Bitcoin price growth turns profitable for the lender and helps the borrower get a significant loan in cash.

Bitcoin lending is profitable for both – lenders and borrowers. BTC lenders can allow their coins to be used as collateral for getting the desired loan in cash. Similarly, businesses can borrow these collaterals in return for cash loans and charge interest on these loans. In simple terms, Bitcoin lending is a transaction of borrowing and lending the Bitcoin cryptocurrency at suitable prices and interest rates. In this process, investors use BTC lending platforms to lend their fiat money to Bitcoin holders. In return, Bitcoin holders use their BTC assets as collateral to get the loan and create an income stream of real money, which gets recouped with interest.

How Does Bitcoin Lending work?

The Bitcoin lending platform plays a key role in orchestrating this lending and borrowing process in Bitcoin lending. This digital platform helps its users with solutions to queries like “What is Bitcoin lending?” or “How to get a Bitcoin loan instantly?” The platform decides the Bitcoin lending rates, which are the interest rates levied on Bitcoin loans. To begin with, the Bitcoin lending platform borrows BTC assets as collateral deposits from the Bitcoin holder. In return for this collateral, the platform helps the holder find a suitable lender of funds in fiat currency. This way, the Bitcoin holder can get an instant cash loan at an interest rate from the platform.

In the latter part of the Bitcoin lending process, the BTC holder repays this cash loan along with interest, and the platform releases its BTC collaterals. At the end of repaying the loan with interest, the Bitcoin holder receives back all the BTC assets used as collaterals. Towards the end of the process, investors who lend their real money as deposits for funding these Bitcoin loans are repaid with their deposited money and a handsome interest. In this way, Bitcoin lending helps them create a passive source of income. During this process, the Bitcoin lending platform gives the fiat lenders the best interests on their deposits. In addition, the platform also provides crypto lenders with the best cash loans based on their BTC collateral.

Pros and Cons of Bitcoin Lending

Pros Cons
  Bitcoin lending involves borderless online transactions. Bitcoin is one of the pioneering cryptocurrency to be accepted in almost every part of the world. Bitcoin can be sent and received easily across borders. As a result, there is no delay in moving this globalized crypto currency in the form of collateral for loans.    Bitcoin lending faces tough competition from other emerging crypto lending services. 
  Bitcoin runs on decentralized blockchain and is not controlled by any central authority. Due to its decentralized nature, BTC assets are not vulnerable to the governance-based manipulation of political bodies, banks, and other financial institutions.    Bitcoin lending faces issues due to the infamous volatility of BTC prices. If the price drops dramatically to an all-time low, the Bitcoin lending platform faces complications in serving its lenders and borrowers. Therefore, this unpredictable price swing  makes Bitcoin lending risky for investors. 
  Being the world’s most popular cryptocurrency, Bitcoin is more reliable and has a great market value as the first choice on every Bitcoin lending platform. 
  The security of Bitcoin lending is built with blockchain technology. The transactional data involved in Bitcoin lending is protected with advanced cryptography, designed to fortify the end-to-end transaction process.

 

How do you get a Bitcoin loan?

How do you get a Bitcoin loan

How To Get Bitcoin loan

To get a Bitcoin loan, one can browse through multiple Bitcoin loan sites. These websites are the Bitcoin lending platforms that can provide an instant Bitcoin loan to their users. In these platforms, the process of lending Bitcoin in the form of cash loans is simplified in many ways. This is done to make Bitcoin loans more accessible for the greater public. By following these steps, one can get a Bitcoin loan without losing time on traditional loan procedures.

On Bitcoin loan sites, the process of lending Bitcoin has been optimized as per the market dynamics. Most applications for instant Bitcoin loans come out from an impulsive action of the user. Some users apply to get Bitcoin loans at cheaper interest rates, while some apply to get the cash loan in high amounts and at feasible repayment terms. Either way, lending Bitcoin is fairly an easy process on most of these platforms.

  • Step 1 – Select a Bitcoin lending platform
  • Step 2 – Create a user account by verifying the trust score and cryptocurrency support
  • Step 3 – Select the type of Bitcoin loan based on the collateral requirement, interest rate, DeFi/CeFi, etc.
  • Step 4 – Submit the loan application or accept the loan offer and get the loan in a few hours after the borrower accepts the loan terms

In order to get a Bitcoin loan at the lowest available rate, some Bitcoin loan sites have modified these steps with customizations. Hence, the users can configure the loan application by selecting the desired lending rate and changing other factors to get the lowest interest rate. Therefore, it is important to check the configurability of the given Bitcoin lending platform.

How to apply for a Bitcoin loan?

Each application for Bitcoin loans is verified by the lending platform on multiple levels. To begin with, the identity of the application holder is verified digitally via eKYC. This process is completed with email verification and OTP authentication on phone numbers. After the user is verified, the application gets approved for further processing. In most Bitcoin loan sites, the registered users can save time on this identity verification process. Being registered users, they are also identified as verified users by the Bitcoin lending platforms.

The BTC loan application moves to the eligibility phase. Based on the application, the user needs to be over 18 years of age. The user needs to have documented proof of its Bitcoin holdings. This can be done by sharing the crypto wallet statements where the user is storing BTC assets. In terms of documents, the platform does not require any additional documents for approving the application.

Important things required for Bitcoin loan application:

  • Proof of being a registered user of the lending platform
  • Documented proof of age (18+ years)
  • Digital verification of email and phone number
  • Documented proof of Bitcoin holdings (crypto wallet, crypto exchange, etc.)

Applying for Bitcoin loans is easier for registered users of crypto lending platforms. Moreover, it is easy for registered users of leading cryptocurrency exchanges such as Binance. Such users have enough verified data to prove their identity during the application. While borrowing crypto loans, it is equally important to check the cryptocurrencies and the fiat currencies supported by the Bitcoin lending platform. For example, some platforms offer Bitcoin loans in the form of USDT and USD currencies only. Similarly, some Bitcoin loan sites use only Ethereum (ETH) and BTC assets as collateral. Therefore, it’s important to read these loan terms and lending information before submitting the application.

How to Choose a Lending Site for Bitcoin?

How to choose a lending site for Bitcoin

How to Choose a Lending Site for Bitcoin

While selecting a suitable Bitcoin lending platform, the first step would be browsing through the best Bitcoin lending sites online. By doing so, one can understand the pros and cons of these lending platforms and study them comparatively. This comparison of the best Bitcoin lending sites helps narrow down the ideal Bitcoin lending platform as per the user’s needs.

The first thing to consider in this selection process is the loan terms and conditions specified by the Bitcoin lending platform. If these terms match the loan expectations of the user, then the platform can be selected. In this step, the user must also confirm the loan tenure and the interest rates. Next, the platform can be selected based on the banking regulations it adheres to. The platform needs to follow basic loan regulations like other banking institutions.

Network security and crypto security of the lending platform is the most important deciding factor. The security features help in understanding the safety of crypto funds in the custody of the platform. Moreover, if the platform has investment partnerships with some major banks or financial institutions, it can be selected.

List of Top Bitcoin Lending Platforms

Bitcoin Lending Platforms Best Known for
BlockFi Best known for person-to-person payments
Celsius Network Best for Passive investors
Nexo  Best for Long-term cryptocurrency investors
Crypto.com Best for Mobile investors
KuCoin Best for beginners
xCoins Best for conducting business
Kiva Best for microloans
SALT Lending Best collateral for the loan
CoinLoan Best-in-class service
SpectroCoin Best for customer service

Bitcoin lending platforms are digital marketplaces where users can lend Bitcoin to borrow cash and vice versa. The idea of Bitcoin lending platforms emerged from the growing transfer of BTC assets across financial organizations. Leading banks and fintech companies have started investing their fiat money in some of the best Bitcoin lending sites in the market.

Here are the top ten best Bitcoin lending sites for Bitcoin loans:

BlockFi

Most crypto investors consider BlockFi as the biggest crypto lending platform, particularly for Bitcoin loans. The BlockFi platform is one of the best lending sites in the crypto space and has been operational since 2017. Developed by Flori Marquez and Zac Prince, this platform has raised more than $20 million from leading crypto investment firms such as Coinbase Ventures.

Pros Cons
  BlockFi enables lenders to withdraw their money at any time   The maximum loan duration is limited to 12 months
  There is no maximum or minimum limit on deposits   The interest rate on lending less than 5 BTC coins is 6%
  The platform accepts multiple cryptocurrencies and fiat currencies

BlockFi lending platform allows one free withdrawal every month. Following that, the platform charges a 0.0025 BTC fee per loan. BlockFi is also the only platform in 2021 to offer compound interest on Bitcoin loans.

BlockFi Review

Celsius Network

Celsius Network is one of the most popular Bitcoin loan platforms in the world. Founded in 2018, Celsius Network runs on an actual blockchain-based network. It provides various financial services to crypto holders, particularly to BTC holders. Celsius Network is owned by the inventor of Voice-over IP (VoIP) technology, Alex Mashinsky.

Pros Cons
  The platform charges no fees on the Bitcoin loans   There is no free trial available
  Celsius Network offers Bitcoin loans from 6- to 12-month terms   The interest rates are only determined on the loan-to-value ratio
  The interest rates start at 4.95%

Celsius Network, since its establishment, has created a network of over 50,000 members. It holds the potential to disrupt traditional banking with its Bitcoin loans.

Celsius Network Review

Nexo

Nexo is an advanced crypto lending platform developed by Nexo Capital. It is precisely designed as a multi-function crypto lending platform. Nexo is also the brainchild of TechCrunch founder Michael Arrington. Since 2017, this platform has been providing P2P financing services to crypto holders. It is also combining collateralized loans with LTV loans for Bitcoin holders.

Pros Cons
  The platform does not charge any fee on Bitcoin loans   It only offers a flat interest rate of 5.9% per year
  There is no loan duration limit, allowing repayment at any time   The platform also charges APR on the interest
  The platform also has limitless deposit options

As of 2021, Nexo provides Bitcoin loans to nearly two million users worldwide and supports lending for more than 40 fiat currencies.

Nexo Review

Crypto.com

Crypto.com is a website offering various types of cryptocurrency services, from crypto trading to digital wealth management. As a Bitcoin lending platform, Crypto.com is primarily used by large investors. The platform aims to accelerate the transition of traditional ways of financing to the crypto funding trends.

Pros Cons
  The loan gets credited directly to the user’s crypto wallet   The platform offers a relatively high-interest rate of 8% p.a. on all Bitcoin loans
  There are no deadlines for loan statements or late fees   The minimum deposit limit is $10,000
  The platform has more than $40,000 worth of staked CRO

Crypto.com platform is also known for monetizing Bitcoin and other crypto assets by staking CRO.

Crypto.com Review

KuCoin

KuCoin is an emerging platform for lending Bitcoin and other cryptocurrencies. It has been offering crypto finance services since 2017. The KuCoin platform has been able to establish a trusted reputation quickly. The website is also a global exchange platform for new digital assets such as NFTs.

Pros Cons
  KuCoin allows lenders to withdraw money at their convenience   KuCoin Bitcoin loans come at daily interest rates of nearly 0.2%
  The platform is designed for short-term Bitcoin loans   The platform limits the loan repayment duration to 28 days
  There are no deposit limits on the lending options

In addition to this, KuCoin offers convenient crypto lending by executing the Bitcoin loans via secure exchange services.

KuCoin Review

xCoins

xCoins is a fast peer-to-peer platform that offers Bitcoin loans via crypto-friendly bank accounts and credit card payments. PayPal users and crypto traders primarily use the platform. The xCoins platform is popular for offering Bitcoin lending services via PayPal. It is also equipped with an advisory board that executes financial services for high-end market dealings.

Pros Cons
  The platform does not have a deposit limit for the lenders   The borrower can keep the BTC collateral if the lender does not repay as per the terms
  Lenders determine the interest for Bitcoin loans on xCoins

The xCoins platform is fairly new in the market. Since 2018, it has been capturing the PayPal user base into the crypto lending space.

xCoins Review

Kiva

Kiva is a unique crypto lending website, which runs on an open ecosystem of networking lenders and borrowers. The crypto lending platform creates opportunities by helping lenders meet borrowers from around the world. The Kiva project is accepted in over 80 countries and has partnered with several microfinance institutions and public enterprises.

Pros Cons
  The borrowers are allowed to charge 0% interest rates   The maximum deposit limit is $10,000
  Some field partners pay only a small fee for Bitcoin loan services
  The loan duration is based on the borrower’s repayment ability

With its crypto lending services, Kiva aims to offer instant Bitcoin loans as credit lines to users. The platform is also offering Bitcoin-backed loans on education, healthcare, and agriculture.

SALT Lending

SALT Lending is one of the oldest crypto lending platforms in the world. It follows the traditional practices of financial services in the crypto space. The platform, which started lending Bitcoin in 2016, gained major traction after the success of its SALT project. The Secured Automated Lending Technology (SALT) has been instrumental in the Bitcoin market, driving the success rate of BTC loans extensively.

Pros Cons
  The platform does not charge prepayment or origination fees   Interest rates can go up to 12.95%
  SALT Lending offers a 12-month loan duration

SALT Lending mainly recognizes the need to hold BTC assets and spend cash, which is the key trend in Bitcoin lending businesses.

CoinLoan

CoinLoan is one of the first crypto lending platforms to start P2P Bitcoin loans. It deals with other crypto assets besides BTC. But, the platform helps in managing these digital funds with a high level of security. The CoinLoan website is also designed for big crypto investors, who can lend digital assets as collateral for big loan amounts.

Pros Cons
  CoinLoan has no platform fees   The minimum deposit limit is $100
  The loan duration ranges from 1 week to 36 months
  Interest rates are not fixed

CoinLoan has several services to offer, one of which provides the best crypto interest rates to help the borrowers insure their repayments on time.

SpectroCoin

SpectroCoin is a UK-based crypto wealth management company. Since its launch in 2013, SpectroCoin has provided all-in-one solutions for investors in the European cryptocurrency market. Currently, SpectroCoin offers Bitcoin loan services for people from over 150 countries. It also offers crypto wallet services and currency exchange services.

Pros Cons
  The platform does not charge fees on Bitcoin loans   SpectroCoin BTC loans have the loan duration limit of 1 year only
  SpectroCoin allows lenders to withdraw money according to their convenience

As a cryptocurrency brokerage, SpectroCoin has several tools to provide financial services with partnerships such as Bankera Loans. The platform also provides blockchain-based Bitcoin loans to small-time investors.

Advantages of Bitcoin Loan

Here are the key benefits of Bitcoin loans:

Advantages of Bitcoin Loan

Advantages of Bitcoin Loan

Highly Accessible

To apply for a Bitcoin loan, the facility needs to be easily accessible to the public. Most traditional financing services are not as accessible as Bitcoin loan services. In a traditional bank, the loan department does not entertain the demands of each and every bank account holder. Instead, it is accessible to only those who have a great credit line history or are ready to provide high-value collateral. On the contrary, Bitcoin lending platforms are online websites available via the internet to everyone around the world. Hence, it is easy to access Bitcoin lending services and apply for instant BTC loans.

Faster Approvals

Bitcoin holders who apply for Bitcoin loans are looking for quick and instant funding. This is why most crypto lending platforms offer instant approvals on BTC loans. In other financing options, the verification of the applicant takes days, where the proof of address and the proof of identity is checked beyond documents. However, the digital process of verification, involved with Bitcoin loans, makes the approval process faster. In the process, there is barely any need for uploading documents. As a result, the BTC loans are approved within hours, and the cash is deposited instantly into the crypto-friendly bank accounts of the borrower.

Flexible Loan Durations

Bitcoin lending platforms are distinct from each other, wherein different loan terms may apply. For Bitcoin loans, the flexibility of loan duration varies across most platforms. In general, the loan duration for BTC loans is more flexible than that of traditional loans. In terms of flexibility, some Bitcoin loans are available for a 7-day period as well. Due to the volatile price movements of BTC assets, such short-term loan durations are turning out to be more profitable. Long-term Bitcoin loans are also available with loan duration from one year to two or three years. Besides, some top Bitcoin lending platforms also offer complete flexibility on the repayment schedule. Hence, the borrower can repay the loan at any time.

Low Fees

To apply for a Bitcoin loan, it is important to pay transactional fees and service charges as per the lending platform’s terms and conditions. However, in most cases, these Bitcoin lending platforms do not charge any fees for their services. Each loan transaction is executed by the lending platforms free of charge. Some Bitcoin lending platforms may charge a fee for their services. However, it stands at a very low amount in comparison to the price of BTC assets. These low fees are possible because the platform is able to stay profitable by using the BTC collaterals for its DeFi projects. In this way, there is no need to charge heavy fees on Bitcoin loan applications.

Safer Transactions

Every user who wants to apply for a Bitcoin loan is concerned about the safety of these Bitcoin lending services. The biggest concern is protecting the BTC assets provided as collateral. If the platform or the borrower cannot protect these collaterals, it would cause a major financial loss for the Bitcoin lender. However, Bitcoin lending works on the blockchain. Hence, the lending platforms use end-to-end data encryption to protect the transactional data flowing in and out of the platform. All BTC assets kept as collateral are stored in offline storages (cold storage). The security of Bitcoin loans remains intact, which also drives its adoption in the financial world.

Is it Safe to get a Bitcoin loan?

The safety of Bitcoin loans is perhaps one of the main reasons why it is in demand. Nowadays, blockchain technologies fortify each Bitcoin loan with high-level multi-layered encryption. As a result, Bitcoin lending services cannot be manipulated by malicious activities or external factors.

In the same sense, Bitcoin loans are collateralized loans. This means that the security of the loan is purely dependent on the value of the collateral. In time, the price of BTC collateral may increase beyond expectations. In such cases, the loan amount and the interest rates stay the same. Hence, the lender does not face any financial loss while providing BTC assets as collateral for fiat currency loans.

Furthermore, a Bitcoin loan is an overcollateralized financial service. It reduces the credit risks for borrowers. As a result, the over-collateralization of Bitcoin lending services makes the situation better for creditors by enhancing the credit ratings.

How to Get Bitcoin Loan Without Collateral

A Bitcoin loan is a collateralized loan. Lending with Bitcoin as collateral is a market-wide practice. However, some lending platforms claim to help users get Bitcoin loans without collateral. It is important to stay away from these scams as there is no such thing as a “Bitcoin loan without a deposit.” As per the financial dynamics of cryptocurrencies, Bitcoin loans with no verification or collateral are impossible. If such offers are applied, it would be as good as offering free Bitcoin loans to the public. This will disrupt the financial fabric of society and dilute the available Bitcoin resources.

There are no crypto loans without collateral; however, most people fall victim to such scams. They end up providing their personal information, including the credit card details, to get such “non-collateralized” Bitcoin loans.

One important thing to consider is that Bitcoin is profitable. Why would a lending platform cease accepting assets of the most profitable cryptocurrency in the world as collateral for loans? Hence, lenders prefer giving Bitcoin loans at low-interest rates as they can use the BTC collaterals and make handsome profits on them. As the price of BTC increases, the collaterals of Bitcoin loans become more valuable for the platforms.

Conclusion

It is easy to understand how crypto lending works and how Bitcoin loans can be obtained from the lending platforms. 

The advantages of the Bitcoin loan highlighted how crypto lending could soon replace traditional lending and make the financial domain more free and accessible. By this, one can save money and receive interest by lending their stash of BTC coins as collateral. The lenders can unlock a great value of Bitcoin and other digital assets. And, similarly, the borrowers can earn lucrative interests in fiat currencies and receive their BTC collateral back after repaying the loan flexibly.

FAQs on Bitcoin Loans

How do you get a Bitcoin loan?

To get a Bitcoin loan, you can visit a trusted Bitcoin lending service website and follow the steps to register and apply for BTC-backed cash loans.

Can you lend Bitcoin?

Yes, Bitcoin is a lendable financial asset. BTC assets can be lent in return for cash loans and interests on these loan amounts.

Can you lose money lending Crypto?

One may lose money in crypto lending only when the market falls drastically. In such cases, the price of crypto collaterals plummets.

How much can you borrow Bitcoin?

According to most Bitcoin lending platforms, the maximum loan amount borrowed by lending BTC assets is $100,000.

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