Today there are not that many situations in which people actually need to take out an actual Bitcoin loan. As in you borrow Bitcoin, pay interest in Bitcoin, and repay Bitcoin. There are many cases in which Bitcoin used as a payment method makes sense for loans with its ability to be sent around the world and across borders quickly. But, there are not that many cases when you want your loan denominated in a volatile asset like Bitcoin. However, as cryptocurrency adoption continues and as it's used more as an actual currency more and more reasons to take out a bitcoin loan will come up. Some examples today are:
Bitcoin Business Loans
While there are thousands of fiat businesses that accept Bitcoin, there are still very few businesses that 100% based in Bitcoin. Meaning their revenue, expenses, and profit are all Bitcoin. But they do exist in growing number every day, such as Bitcoin equipment suppliers, consultants, and exchanges to name a few.
Trading with leverage is a great way to get rich or go broke, with the later happening more than the former. Trading cryptocurrency with leverage is an even better way to go broke. Cryptocurrency is a very young, relatively small, and extremely volatile asset class. And with that extreme volatility comes margin calls on leveraged loans when you borrow from an exchange. For a long term trader, this adds the risk of their long term position being sold at a top or bottom opposite their trade. A Bitcoin loan can avoid this risk of liquidation. A Bitcoin loan turned into fiat is an effective way to short the currency long term.
Over the Counter Bitcoin Trader loans
OTC (Over the Counter) trading in cryptocurrency is a booming business. For those new, over the counter trading means trades outside of exchanges directly between 2 parties. The trades are usually different from regular trades in that they are either very large or done in cash. Very large trades benefit from OTC in avoiding exchange fees or price movement from their large trade. Cash trades benefit from relative anonymity of doing the exchange outside of a platform. There are multiple scenarios in which a Bitcoin loan makes sense for this type trading such as the inability for a trader to get a fiat loan for this type trade.
So if you find yourself in need of a true Bitcoin loan here are some situations you might be in and how to get a Bitcoin loan for that situation.
You have other cryptocurrencies you can use as collateral.
This is by far and away the best way to get a Bitcoin loan. If you cryptocurrency collateral there are many places and options for getting a Bitcoin loan. Margin Loan: This is the most popular way to get a bitcoin loan. Multiple cryptocurrency exchanges offer margin lending. The types of cryptocurrency that would be acceptable as collateral margin lending on most exchanges would be large cap currencies such as: BTC, BCH, ETH, EOS, XRP, LTC, ZRX, XMR, ZEC
Our top places for margin lending are
➜ ➜ Learn more about where and how to get a margin loan here:Collateralized P2P Loans: If you don’t have high cap cryptocurrencies to use as collateral or just don’t want to pay the margin lending rate which can be quite high for some exchanges or periods of high market volatility, you can still get a collateralized cryptocurrency loan. Btcpop.co is a P2P cryptocurrency lending platform which allows users the ability to use 100+ altcoins as collateral for Bitcoin loans. Unlike margin lending where amount you can borrow is a formula, at Btcpop you simply make a loan offering setting your own interest rate, repayment schedule, and collateral then peers from around the world decide if they want to invest or not and fund your loan. Btcpop offer some Instant Collateral Loans at preset terms as well.
Our top place for Collateralized P2P loans:
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You do not have cryptocurrency for collateral
Regular non-collateralized borrowing in the bitcoin space is significantly more difficult than getting a loan from a bank for example. Online identification or credit scoring is not standardized and the pure ownership of cryptocurrency incites a lot of thieves and scammers as collecting cryptocurrency is impossible, and collecting through the legal system is not well established yet. However that is not to say it cannot be done, just that it is harder. The 2 historic places where you could do this are P2P lending services Btcpop.co and Bitbond.com. Both services have evolved over the years to accommodate the extreme volatility of Bitcoin price. If the price skyrockets or crashes, repayments on Bitcoin loans tend to do the same. Bitbond.com has focused more on fiat denominated loans. They offer a professional lending service which still has P2P capability but a majority of all loans are done via a system and auto funding instead of actual P2P loan listings. Their primary business is with small business fiat loans with Bitcoins as a form of payment. To get a loan at Bitbond it would be recommended you have a small business or venture, verifiable financials, and a good purpose for your loan. Once you sign-up and verify at Bitbond an agent will walk you through the process and help you get your loan funded. As not many Bitcoin denominated loans get funded on Bitbond, the amount of BTC you are able to borrow will have to grow slowly over time. Btcpop.co still offers a truly P2P Bitcoin loan service. In order to combat defaults Btcpop puts a heavy emphasis on collateral loans, but users are still able to build creditworthiness without collateral. Borrowers are able to prove their creditworthiness verifying in additional ways as well and even locking loans in the platform while they build a repayment history. In order to get a Btcpop uncollateralized loan you will need to verify and get a letter in the mail. Once this has been done, the best way to build trust is by taking out and repaying small loans, communicating your business, and participating in the community. Once other users begin to trust you, they will borrow out increasingly larger amounts of BTC. Some long term users are able to borrow 10’s of thousands of dollars worth of Bitcoin only on reputation.
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