People invest in Bitcoins and other cryptocurrencies as speculative instruments. This means that holders of these coins will not find any reason to liquidate their digital assets or exchange them for merchandise or services as long as their prices are on an upward trend. However, since some investors may find themselves with a need for cash at any given point in time, what option do they have? Fortunately, Bitcoin loans allow these investors to put their coins to work without being compelled to exit the investment position by selling their BTC. They obtain loans using their Bitcoin as collateral and hence, do not have to give up speculating.
How does a Bitcoin loan work?
Bitcoin loans allow borrowers to borrow BTC instantly on various crypto lending platforms, using their Bitcoin as collateral and repay the loans later with interest. These loans work in a similar way to conventional loans, but due to the difficulty of individuals connecting with each other to lend and borrow, some platforms have been set up to facilitate these transactions, one such example is YouHodler. Many online Bitcoin lending exchanges have sprung up to act as intermediaries between lenders and borrowers. This eases the stress of lending and borrowing Bitcoin.
How Can You Get Bitcoin Loan on YouHodler?
As earlier stated, if you want to borrow BTC, you usually use a crypto lending platform which is the broker between the lenders and the borrowers. One of the best platforms for BTC loans is YouHodler. The platform acts as a pawnshop, and you are the BTC seller and YouHodler the buyer. You transfer your Bitcoins to the platform, and they loan Bitcoin instantly. Borrowers may also get the loan in fiats like USD, EUR, or even in stablecoins like USDT. After the predefined period, you repay your loan with credit cards, stable coins, or a bank account, and you get your BTC back. This platform saves borrowers the hassle of looking for a lender, as with P2P platforms. YouHodler also has one of the highest loan-to-value ratios compared to other platforms.
What are the advantages of bitcoin loans?
The Bitcoin loans have the following advantages over conventional secured loans:
· The amount of loan is based on asset value: Typically, you can only access loans equal to 50% of your portfolio value. However, some exchanges like YouHodler will lend as much as 90% of the digital asset value.
· No credit check on the borrower: The Bitcoin lending platforms do not conduct credit checks when borrowers apply for a Bitcoin loan. As such, these loans are ideal for those with a poor credit score or no credit history.
· Quick Funding: After your loan is approved, you get your funds in a few hours, or even instantly. What’s more, you can find a lender with a BTC loan app; hence you conveniently access your funds on your mobile devices.
· Choice of loan currency and mode of payment: Bitcoin loans offer the borrowers the chance to choose the currency in which to receive the funds, e.g., USD, EUR, GBP, etc., and even cryptos and stablecoins. You can also send the money to your bank card or bank account.
Conclusion
Bitcoin loans are a great way to get liquid cash without selling your BTC and losing the speculative opportunity. However, you need to understand that you cannot access your assets as long as you have an outstanding balance. Also, you could lose your investment if the lending platform collapses because these loans are uninsured. Additionally, you have to carefully choose the platforms, monitor prices, and repay the loan to avoid losing your assets.