• Picking your Broker
  • Questions to ask your Broker
BitCoin Brokers List
  • Home
  • Bitcoin Brokers
  • Bitcoin Info
    • Bitcoin General Information
    • Bitcoin Economics
    • Bitcoin Legal Information
    • Bitcoin Mining Information
    • Bitcoin transactions Information
    • Bitcoin Security Information
  • Do’s & Don’ts
    • Picking your Broker
    • The Best Times to Trade
    • Questions to ask your Broker
    • The Worst Times to Trade
    • Trading Mistakes to Avoid
    • Demo Trading Versus Live Trading
  • Education
    • Charts
    • Technical Analysis explained
    • Fundamental Analysis explained
    • References and Further Reading
  • Bitcoin Wallets
    • what are Bitcoin Wallets ?
    • Bitcoin Wallets Overview
  • Mining
  • News
No Result
View All Result
  • Home
  • Bitcoin Brokers
  • Bitcoin Info
    • Bitcoin General Information
    • Bitcoin Economics
    • Bitcoin Legal Information
    • Bitcoin Mining Information
    • Bitcoin transactions Information
    • Bitcoin Security Information
  • Do’s & Don’ts
    • Picking your Broker
    • The Best Times to Trade
    • Questions to ask your Broker
    • The Worst Times to Trade
    • Trading Mistakes to Avoid
    • Demo Trading Versus Live Trading
  • Education
    • Charts
    • Technical Analysis explained
    • Fundamental Analysis explained
    • References and Further Reading
  • Bitcoin Wallets
    • what are Bitcoin Wallets ?
    • Bitcoin Wallets Overview
  • Mining
  • News
No Result
View All Result
BitCoin Brokers List
No Result
View All Result
Home currencies

Bitcoin Lending Explained

BbrAdmin by BbrAdmin
October 29, 2021
in currencies, development, Top Talk
60 2
0
Bitcoin lending platform

Bitcoin lending platform

202
SHARES
1.6k
VIEWS
Share on FacebookShare on Twitter

Table of Contents

  • Bitcoin Lending Explained
  • More About Bitcoin Lending
  • The Two Types of Bitcoin Lending Platforms
    • Centralised Finance Crypto Lending (CeFi)
    • Decentralised Finance Crypto Lending (DeFi)
  • Advantages and Disadvantages of Bitcoin Lending
  • Borrowing and Lending Bitcoin With Caution

Bitcoin Lending Explained

Many crypto enthusiasts store their assets safely until the price is right to move them. This is what’s called “HODL”, and it’s a valuable strategy given the volatility of the majority of cryptocurrencies.

However, you can use the funds collecting dust in your Bitcoin wallet by engaging in Bitcoin lending. Essentially, you can receive interest on your Bitcoin stash. Furthermore, you give other people a chance to utilise their digital assets by using them as collateral for a loan.

In the past couple of years, Bitcoin lending has been on a steady rise, and we want to tell you everything you need to know about it.

More About Bitcoin Lending

Many Bitcoin investors struggle with maintaining a steady cash flow. It often leads to raiding the capital they have tied up in assets for short-term costs. To get a better sense of how Bitcoin lending works, let’s use an example.

Imagine that you have three Bitcoin in your online Bitcoin wallet, and you don’t want to sell because you are reasonably confident that the price will soon go up. Also, if you offload your Bitcoin now, there’s a chance you won’t be able to buy as much as you want at a later date.

The solution is to use a Bitcoin lending platform. You can use your Bitcoins as collateral and receive a loan. Typically, that process involves “over collateralizing,” meaning that you’ll have to lock up more coins than the overall value of the loan you’re receiving.

When you pay back the loan plus the interest, you’ll get your collateralized coins back. Plus, if the price of Bitcoin went up, you’ll get extra profit. Naturally, this system works better for the lender than the borrower.

Bitcoin lending offers insurance to the lender should the price of Bitcoin suddenly plummet. But it’s a much riskier endeavour for the borrower, as most lending platforms require them to maintain the loan-to-value ratio.

Bitcoin LendingThe Two Types of Bitcoin Lending Platforms

The purpose of any crypto lending platform is to be a safe place where lenders and borrowers can collaborate efficiently.

The presence of the intermediary ensures that there are no irregularities in the process. There are two major types of crypto lending platforms, centralised and decentralised. Let us take a closer look at both.

Centralised Finance Crypto Lending (CeFi)

These are crypto lending platforms with a central authority that controls all systems and operations. A company or a group runs it, and it’s in charge of all management. This type of platform requires users to comply with KYC (Know Your Customer) procedure.

It’s a way to prevent money laundering activities and other types of financial crimes. These platforms use blockchain technology for all transactions and typically have 24/7 customer support.

Decentralised Finance Crypto Lending (DeFi)

Many Bitcoin investors are not onboard with CeFi and choose to sign up for a decentralised platform. It doesn’t have a central authority and is fully secured and monitored.

Codes handle everything. DeFi platforms rely on smart contracts to automate transactions and pay-outs.

Because transactions run on blockchain technology, they can be viewed by anyone in the network. This system provides more transparency.

Getting a loan is relatively simple. All you have to do is apply for the loan and send the coins, which will serve as the collateral. You don’t have to leave any personal information.

Advantages and Disadvantages of Bitcoin Lending

As with any type of lending, there are pros and cons to engaging in Bitcoin lending. One of the main selling points is that it’s accessible to everyone.

Also, your income doesn’t impact how much you can borrow. It’s a fully automated process, too, and doesn’t require much effort from either party.

There are downsides, however. Bitcoin price is volatile, which might result in you paying much more than you anticipated in the end.

Furthermore, some lending platforms will ask you to lock in your collateral for a specific amount of time which isn’t convenient for everyone.

Borrowing and Lending Bitcoin With Caution

Crypto lending is still in its early stages, but it has shown a lot of potential. Many Bitcoin users have great ideas about investment strategies but not the funds to see them through.

Borrowing coins at a relatively low rate provides a unique opportunity to see your stash grow in your Bitcoin wallet.

Those with significant assets already can seize the opportunity and make a few more by lending. It’s a win-win situation as long as the price of Bitcoin is stable.

Author Bio: Hitesh is a digital marketing strategist and entrepreneur with more than 15 years of experience in digital marketing, start-ups, branding, and customer acquisition strategies. Hitesh is the CEO and Founder of Reposition Group, which specialises in digital growth strategies for companies in the cryptocurrency market such as Bitamp.com.

 

Tags: Bitcoin LendingBitcoin Lending ExplainedBitcoin lending platform
Share81Tweet51
Previous Post

How to accept Bitcoin, for small businesses

Next Post

Cyberfunks Alliance for the Unbanked Uses Play to Promote Bitcoin Adoption

Related Posts

Bitcoin startups have captured 20% of the ~$200 Million Korea-Philippines remittance market?

by BbrAdmin
May 28, 2023
0

Is it really so hard to believe that Bitcoin startups have captured 20% of the ~$200 Million Korea-Philippines remittance market?...

is Quantum Computing the Answer to Bitcoin Mining Centralization?

by BbrAdmin
May 25, 2023
0

The quantity of energy Bitcoin mining consumes, and the related detrimental impact on the environment, is of great concern. Specifically,...

Where Do Cryptocurrencies Get Their Value?

Where Do Cryptocurrencies Get Their Value?

by BbrAdmin
May 2, 2023
0

Where Do Cryptocurrencies Get Their Value? The cryptocurrency market is experiencing another bull run, where we see various coins make...

How are different Addresses generated from the same Private key?

by BbrAdmin
April 29, 2023
0

With Bitcoin, a single private key will have associated compressed and uncompressed private/public key pairs. Uncompressed public key addresses are...

3 different opinions: Which part of the salary should you invest in cryptocurrencies?

by BbrAdmin
April 21, 2023
0

Over the past few years, cryptocurrencies have become one of the most popular ways to invest. Cryptocurrencies are available worldwide...

Load More
  • Trending
  • Comments
  • Latest

How Bitcoin Trading Work Between BTC & USD | How to Profit from Bitcoin Trading (like forex,)

November 24, 2021
stockscale review

Stockscale Review ~ Bitcoin Brokers List~ Everything about this Broker

March 14, 2023
vastwealth review

VastWealth Review ~ Bitcoin Brokers List~ Everything about this Broker

March 14, 2023
Sollari review

Sollari Review

March 14, 2023
avatrade bitcoin Broker list

Avatrade Bitcoin Brokers List Review | Everything what you should Know about this Broker

0

Markets Bitcoin Trading Review | Everything what you should Know about this Broker

0
XTB Bitcoin

XTB Bitcoin Brokers List Review | | Everything what you should Know about this Broker

0

Can the Fed, ECB, BoJ and PBoC Hold Back Another Wave?

0

Bitcoin startups have captured 20% of the ~$200 Million Korea-Philippines remittance market?

May 28, 2023

Minex Systems Offers a Solution to Eliminate Cryptocurrency High Volatility

May 26, 2023

is Quantum Computing the Answer to Bitcoin Mining Centralization?

May 25, 2023

Bitcoin IRA’s Free Bitcoin Investor Guide Clears Any Misunderstandings About Digital Currency Investments

May 22, 2023

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money Please read our legal disclaimer.

  • About Us
  • Privacy Policy
  • Legal Disclaimer
  • SiteMap
  • Terms and Conditions

© 2015 BitcoinBrokerslist by Wideey Bitcoin brokers list.

No Result
View All Result
  • Home
  • Bitcoin Brokers
  • Bitcoin Info
    • Bitcoin General Information
    • Bitcoin Economics
    • Bitcoin Legal Information
    • Bitcoin Mining Information
    • Bitcoin transactions Information
    • Bitcoin Security Information
  • Do’s & Don’ts
    • Picking your Broker
    • The Best Times to Trade
    • Questions to ask your Broker
    • The Worst Times to Trade
    • Trading Mistakes to Avoid
    • Demo Trading Versus Live Trading
  • Education
    • Charts
    • Technical Analysis explained
    • Fundamental Analysis explained
    • References and Further Reading
  • Bitcoin Wallets
    • what are Bitcoin Wallets ?
    • Bitcoin Wallets Overview
  • Mining
  • News

© 2015 BitcoinBrokerslist by Wideey Bitcoin brokers list.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In