The concept of cryptocurrency powered by blockchain technology has led to the evolution of a new financial ecosystem across the globe. You can make transactions using cryptocurrencies, use digital coins in cryptocurrency exchanges for various investment purposes, and even get loans against your digital assets. The latter service is catching up with customers as more and more cryptocurrency holders are taking loans using digital coins as collateral.
Taking the loan against cryptocurrency is a very convenient process and unlike other traditional banking practices, one needs not put much effort into applying for the loan, processing the loan, and finally receiving the loan. This is specifically convenient if you are in urgent need of money and want fast processing of your loan.
How to avail crypto-based loans?
The process of availing crypto loans is quite simple. One needs to open an account with the loan providing agency and then deposit the required crypto assets in the account of the service provider. Once the crypto assets approved, then a credit line will become visible on your account. This credit line can be used to apply for the loan of the requisite amount with many service providers also give the option of direct withdrawal of the money to the beneficiary’s bank account.
Advantages and Disadvantages of Crypto-based Loans
There are many advantages associated with crypto-based loans. First and foremost, it is a rapid process and you need not wait for long in order to get the money. The second advantage is that there is no requirement of any other collateral except your cryptocurrency assets. You can apply for the loan and depending upon the value of your cryptocurrency, you will be sanctioned the amount by the approving authority.
Another important benefit of availing cryptocurrency-backed loans is that you continue to remain the owner of your cryptocurrency assets and once you return the loan amount, you can take back the ownership of your digital assets. The high safety and security standards offered by cryptocurrency-based loans are also among the important advantages of this type of loan.
On the flip side, there are certain disadvantages associated with a loan based on digital assets. First is the narrow coverage and scope of the service, which means this facility is available only in select states and countries, thereby ruling out a large proportion of the population from availing this service. Another demerit is the high loan amount that is the threshold for availing the service. Unlike conventional banks and other financial institutions where you can apply even for a small amount, crypto-based loans require you to have a need for a big amount of money.
Nexo: Leading name in Crypto-loans
One of the prominent names in the crypto-based loan agencies space is the Nexo. The company has carved out a place for itself thanks to its reliable and secure service, instant loan processing capabilities, no hidden charges, and excellent customer support services. Nexo loan offers the facility of instant bitcoin loan approval once you deposit the cryptocurrency assets to your account with the company. The company will not ask for any credit checks.
Another convenience offered by Nexo is the facility of no minimum repayments. This essentially means the company will debit the interest-based upon your account, which provides you the freedom to make repayments according to your own convenience.
In order to avail of the loan from NEXO, you need to open an account with them. Then transfer the crypto assets and on the completion of the process, you will find the credit line open in your account. You can use these credit lines to get the requisite amount of money and use them for your desired purpose.
The convenience of cryptocurrency-based loans is proving to be the next big thing in crypto space. It provides the opportunity to crypto holders to apply for the loan while still retaining the ownership of the crypto assets. Yes, it comes with its own set of disadvantages like limited reach and regulatory issues but overall, it is the right step in the right direction.