Features of cryptocurrency loan
Cryptocurrencies in recent years have come into serious use – only the most lazy people have not heard about them.
Financial organizations are also forced to adapt to the trends of the modern world, in connection with which, in recent years, the phenomenon of cryptocurrency credit has appeared.
In this article, we would like to talk about the features of such lending, where to get it and how to arrange such a deal.
Note that due to the high volatility, such loans are risky enough for both a financial institution and a borrower, and one should not forget about the high level of fraud in this area.
In particular, if you wish, you can pass verification on documents that do not correspond to reality. Nevertheless, modern services are engaged in forming customer ratings.
By the way, judicial practice shows that this phenomenon is still new, but in the USA there was already a precedent when a fraudster was ordered to return a cryptocurrency loan.
The advantages of the service of such a loan should include
- Provision of loans at relatively low interest rates;
- Operational clearance;
- The ability to conduct transfers in an international format;
- Good profit with the growth of the cryptocurrency rate.
Where to get a loan in cryptocurrency? So, many earn on cryptocurrency through margin trading, then the exchange itself provides a loan.
Of course, margin trading is always a risk, but the profit is potentially good. At the moment, such loans can be taken on the Polonex, Binance, Bitmex exchanges.
How does cryptocurrency credit work
Cryptocurrency loans are not traditional services; this is a new phenomenon called P2P lending.
In other words, these are loans between users through the use of Internet sites. They are the guarantor of the security of the transaction, while the service is entitled to a commission.
If we consider the transaction from a legal point of view, then this is not a full-fledged loan, rather, we are talking about a loan.
Typically, these services work in the following vein.
- Mandatory verification. It is necessary not only to register, but to provide passport and other documentary data about yourself.
- Mandatory loan agreement. After you complete the registration, you will be able to fill out an application and familiarize yourself with the terms of the contract.
- Risk sharing or hedging. In order to minimize risks, often the issuance of loans falls on the shoulders of several lenders working in the group.
- Credit ratings. Such systems make ratings based on the solvency and credit discipline of the debtor. Accordingly, the higher the rating, the greater the chances of obtaining a higher loan amount. There is also risk insurance against loan defaults.
Where to get or provide a loan in cryptocurrency
Below are the platforms where you can take or arrange loans.
This platform is a product of the Binance exchange; it allows users to borrow funds in tokens to each other
In fact, one party receives a% for providing funds as a deposit, the other pays interest on the use of credit currencies.
This is a service that allows some users to provide loans in bitcoins, and others – to use the funds provided.
The platform has been operating since 2013, since 2016 it is a licensee of BaFin in Germany. On average, loans are no more than $ 50,000.
This organization has been lending in bitcoins for several years, it also finances business ideas.
An exchanger is also presented on the basis of the service, which allows you to exchange currency for various assets, except for fiat.
The most difficult product is the PoS option, which allows you to send altcoins to the pool to increase the amount of reward.
He claims to be the first-ever provider of loans secured by cryptocurrency assets.
Loans are available without hidden fees, with flexible repayment schedules. Compliance with AML, KYC standards is observed.
How to get a cryptocurrency loan. Step-by-step instruction
The system is very simple and involves
- Registration on the basis of the site: email, phone number and confirmation.
- Verification, that is, sending documents to the administration in order to verify identity.
- Entrance to the site and selection of the necessary contract from offers for loan products. You can also create an application yourself, but this is a paid service.
- Familiarization with the loan conditions and agreement, transfer of funds to the right account. Terms and conditions of return are specified in the contract.
How to provide a loan in cryptocurrency
You just need to enter the platform, and declare your desire to provide a deposit. Further, the system will offer the conditions and%, which you will receive guaranteed upon expiration of the declared period.
All commissions and other conditions are negotiated with the administration, support works around the clock.
Is it possible to take a loan from individuals
In fact, the P2P system is private lending. True, in this case, a guarantor is needed, which this or that service acts as.
If you want to get a loan just from an individual, then you have to look for a lender for a long time, as this is a very risky enterprise.
Cryptocurrency Credit Risks
- Weak warranties. In any case, lenders risk their own funds, you can’t rely too much on credit ratings, because fraudsters can pay for their eyes on 2-3 loans in a timely manner.
- High risks. Loans in the same bitcoins can be very profitable, or they can even drive a lender or borrower into debt. This risk should be laid initially.
Advantages and disadvantages of a cryptocurrency loan
The positive aspects include
- Quick access to the desired amount of currency.
- Relatively low interest.
- Often – favorable credit conditions.
- An opportunity to stipulate terms and requirements with the creditor.
- The possibility of insurance.
The disadvantages include
- High credit risks. If Bitcoin goes up, then a loan in cryptocurrency will become a very disadvantageous enterprise.
- Lack of insurance at reasonable prices due to high volatility.
In general, the field of lending in cryptocurrencies is still only developing, but there are already prerequisites to believe that in the near future it will be one of the main types of business for such services.
We do not recommend taking such loans if you cannot accurately calculate your risks, and if you take it, then only for clear purposes.