Individual or company, you can borrow money in digital currency or cryptos to finance your projects. The process can be done with attractive interest rates and unequivocal simplicity. Find out how to get a cryptocurrency loan.

What is a cryptocurrency loan?

Crypto lending allows individuals or investors to borrow electronic currencies from companies in exchange for paying interest. Such an approach is usually done on online platforms or via mobile apps. The companies holding these** e-currencies grant the tokens** against a certain guarantee. The collateral is often in the form of cryptos. Once this is deposited, the investor or individual gets an amount in e-currencies or Fiat currency (euros, dollars, etc.). This is a quick and easy way to get a financial loan when you have a stash of cryptos.

crypto loan

The interest rate charged on crypto loans is not high. Certainly, each borrowing platform has its own principles, nevertheless they are overall transparent and offer similar deals. Annually, the yield for cryptos such as Bitcoin or Etherum varies between 3% and 8%. That of tokens attached to Fiat currencies and which have some stability varies between 10 and 18%.

It is very important to pay back your loan according to the due dates. If you fail to do so, the lending company may sell or liquidate all or part of your collateral. Sometimes this can be done when the value of the collateral drops and the company asks borrowers to increase their collateral.

What are the advantages and disadvantages of crypto lending?

Making loans in cryptos is well beneficial, nevertheless it also comes with risks. Find out its advantages and disadvantages.

Advantages of digital currency lending

Crypto loans are accessible even to those who** cannot benefit from the traditional loan**. They are open to everyone and as long as you have collateral, you can undertake the procedure. Crypto loans also allow those who hold digital currency like bitcoin to have money for their projects without necessarily selling their tokens.

Getting a crypto loan is simple. You don’t have to have a bank account or go through endless confirmation procedures. Unlike traditional loans, where you are limited by your geographical location among other things, with the crypto loan, you receive the credits even on the other side of the world.

Crypto lending is much more flexible than traditional lending. You don’t have a specific amount to pay per term. You are free to define the amount to give. The main thing is that you finish paying the entire amount you owe, before the final date specified. Since** e-currencies are assets that fluctuate in value**, it is possible for the amount of cryptos borrowed to increase. For example, it is possible to borrow $2000 in Bitcoin, which with the fluctuation of the market becomes $2500 or even $3000.

bitcoin loan

Disadvantages of a cryptocurrency loan

Cryptos are volatile assets. Therefore, it is possible that the lending company will request that the client increase their collateral in order to maintain the loan. This is done when the value of the electronic currency pledged as collateral has dropped.

However, borrowers are very limited in the amount of the loan. This is because the consideration to be deposited in order to benefit from the crypto loan is high. It is imperative that you deposit collateral with a value higher than what you want to borrow.

Since the industry is not yet very well regulated, you can be scammed on unreliable platforms. In addition to the risk of scamming, customer accounts can be hacked by hackers or malware. You can lose all the capital you have borrowed as well as your cryptos as collateral.

On which platform can you apply for a cryptocurrency loan?

There are several serious and reliable platforms on which you can apply for a cryptocurrency loan namely for example:

  • Blockfi;
  • Nexo;
  • Celsius.

Find out the strengths of these fintechs specializing in crypto lending.

Blockfi

This is an excellent online platform on which you can make a crypto loan. It is possible to save in electric currency via this website. Also available in mobile app, Blockfi offers** stable and attractive rates** for individuals and investors. The minimum amount to borrow on Blockfi is 5000 USD and the collateralization ratio is 150%.

Nexo

This is also a serious and reliable platform that offers crypto savings and lending services.** Nexo** uses 256-bit encryption technology to protect users’ accounts. Your collateral and loans are secure. There is no limit to how much you can borrow on Nexo. You get loans that match your collateral.

Celsius

The **Celsuis platform **allows you to save and make loans in cryptos. It is also possible to buy multiple e-currencies on the website. The minimum to borrow on Celsius is 1500 USD. The interest rate is usually around 8%. You can borrow for 6 months to 3 years.

What is the procedure for making an e-currency loan?

It is very easy to make a loan in cryptos as soon as you have a guarantee. First you need to create a virtual wallet that will allow you to keep your cryptos. Next, you need to select a reliable and secure platform. Once your registration is validated, apply for a loan. You will be presented with a form to fill out. Once completed and your application accepted, the final step is to deposit your** cryptocurrency** collateral on the platform. Upon approval, the loan will be granted to you. All that’s left to do, then, is to pay back your loan according to the conditions previously established in the form.