Bitcoin Loan: What is It and How to Get It?

Bitcoin Loan: What is It and How to Get It?

Ever since it launched in 2009, Bitcoin has challenged many of our assumptions about finance. Bitcoin enthusiasts often “HODL” their assets — keeping them safe in a wallet until the price rises. But a common question is this: how can you get your Bitcoin to grow without having to wait?

This is where Bitcoin loans come in. Bitcoin loans let crypto investors receive interest on their stash of Bitcoin and at the same time let borrowers access the value of their digital assets by using it as collateral for a loan. With a Bitcoin loan, a borrower typically offers up their bitcoins as collateral, and the lender holds the collateral, gives them cash, and charges interest.

What is a Bitcoin Loan?

With Bitcoin loans, Borrowers borrow funds in return for BTC as collateral security. In other words, a borrower keeps his Bitcoins as collateral to get funds from a lender. Other than the nominal amount, the lender also charges some interest on the amount.

The web is currently filled with numerous platforms that facilitate the service for both lenders and borrowers.

How Does Bitcoin Loan Work?

In principle, Bitcoin loans work just like any other loan. A lender loans their bitcoin to a borrower. The borrower then repays the loan with interest. Borrowers may state how much they are willing to pay in interest, or the interest due may be determined by the platform based on their creditworthiness. 

The Borrower’s Point of View

If a lender willing to meet your requirements is found, the loan is facilitated. To keep a decent reputation, maintain integrity, and pay the interest timely.

The Lender’s Point of View

A lender is someone who possesses funds and is willing to undertake BTC for interest. It eliminates market volatility since risk continuously follows cryptocurrencies. It’s a decent way to earn revenue without facing extreme risks.

One of the risks involved with the loan is the borrower’s unwillingness or incapability to make timely payments. It’s crucial to run a background check before lending to a borrower.

Easy Steps to Get a Bitcoin Loan in 2021?

If you like the sound of a BTC loan, but you’re not sure where to begin, you have two main options — centralized and decentralized lending platforms.

Traditional investors prefer Cefi platforms because of the regulated environment and instant live support. DeFi lending platforms, on the other hand,  are entirely decentralized and don’t have to go through KYC. 

  1. Choose a well-reputed platform.
  2. Start by verifying your details to create an account.
  3. Choose your loan type with details like period and interest rate.
  4. Find a lender and accept the offer. The process can consume a few hours after the application submission. 

Common Purposes to Get a Bitcoin Loan

A Bitcoin loan enables borrowers to unlock the value of their digital assets by using them as collateral for a loan.

Buying a House

Getting an enhanced real-estate portfolio might be the requirement behind people getting a BTC loan. Many aim to improve their proceedings and get a new home. A BTC loan gets them the needed cash without hindering their future appreciations.

Leverage BTC

Many traders use their Bitcoins to get cash and use the cash to get more BTC. The process can be risky since cryptocurrencies are highly volatile. Plus, if the BTC rate drops or they cannot keep up with the monthly payments, they are faced with a predicament.

Business Investments

Numerous entrepreneurs and SME owner’s take out a BTC loan to:

  • Expand their business.
  • Get some working capital.
  • Wrap up another high-interest rate debt.

Pay Taxes

Facing tax challenges is common for long-term investors with huge paper profits. Investors tend to sell their assets for long-term capital gains.

But it alerts the tax authorities, and here is why. Once you start earning a high income, your long-term federal gain reaches 20% + 3.8%  = 23.8%. Add the income tax in it, and you are facing a whopping 30% income cut off. Meaning, your long-term gain of 1,000,000 dollars ends up being a 700,000 dollar gain.

Bitcoin Mining

BTC mining is a prevalent practice, but it consumes heavy resources and demands expensive equipment too. To maintain the process optimally, many miners tend to get a BTC loan. Since the Bitcoin mining sector is highly competitive, measures like this become a necessity.

Top Websites to Get a Bitcoin Loan

Although the web is brimming with numerous BTC loan providers, the best-known platforms in the crowd are:

  1. Bitbond
  2. BitLendingClub
  3. BTCjam

Wrap Up

Bitcoin loans offer both speed and flexibility, in addition to cash liquidity—all of which may be attractive to some Bitcoin investors.

In recent years, Bitcoin and many other cryptocurrencies have delivered profound returns for individuals investing in cryptocurrency. Long-term investors may be reluctant to liquidate their cryptocurrency digital assets while at the same time needing money for short-term needs, like a business or medical emergency or an investment opportunity. That’s where a Bitcoin loan can make sense for some people. Apart from that, If you are a Bticoin lover and want to make investment in it to make profit from it then you must check out Immediate Edge platform. It is an automated trading robot that can help you to earn profit daily. Check out experts’ Immediate Edge Reviews to know more about this auto trading platform.

ABOUT THE AUTHOR

Sylvia Davis

Sylvia Davis is the FinanceLong columnist and news editor for the financial stories. She curates column and regularly contributes financial news updates. Before joining our team, she worked as a news writer for the foremost publications.

Leave a Reply

Your email address will not be published. Required fields are marked *

FinanceLong is one of the leading news site providing business and financial news from around the world. We ensure that our regular readers and news enthusiasts stay updated with latest breaking business and financial news. We offer 24/7 latest news from all over the world.

Connect with Us

Email: contact@financelong.com

Address: Lee Garden One, 33 Hysan Avenue, Hong Kong.