Crypto Lending – the superior way of HODLing cryptocurrency (part 1/5)
Bitcoin (and cryptocurrency in general) loans are quickly becoming a hot topic. Crypto lending sites and crypto-backed loans are becoming a new way for the investors, hedge funds, miners, and even the unbanked to utilize and leverage their finances as well as to support their business ideas. The HODLers with their crypto bags can also earn interest on their holdings and gain more financial freedom through earning passive income.
The concept is actually quite simple:
For borrowers: If you need a loan to support your business idea or some other endeavor, you will have to put up a small amount of crypto as collateral. After that, you can get a fiat or a stablecoin to use. You will have to pay back the loan according to the agreement.
For lenders: If you want to lend cryptocurrency, you will put up a certain amount of crypto and earn a predetermined amount of interest from it.
From what we have established, we can see that lending crypto is a great way of utilizing funds when you want to hold rather than trade or sell. However, lending cryptocurrencies doesn’t come without risks. If a bank fails, a chunk of their customer’s funds is insured by the government. If it happens that they go down, their customers are at least partially safe. However, what happens with crypto lending platforms and their insurance? You need to consider things such as safety and insurance policy alongside the things you would usually look for in a lending platform (more talk on that later on in the series).
Crypto lending – introduction
Certain studies have shown that when you have passive income, your stress and anxiety levels are greatly reduced. You also spend more time with friends and family, and you are freer to pursue hobbies and interests.
This 5 part series will cover:
What is Bitcoin lending, and why you should take advantage of the best Bitcoin lending sites to earn passive income
What to look for in a lending platform (We will be covering Nexo, BlockFi and Celsius Network)
What NOT to look for in a lending platform (We will be covering XCOINS and SALT)
Security and insurance policy and the importance of these factors.
Check out part 2 of the Crypto Lending series, where we will talk about Nexo and BlockFI, their advantages and disadvantages, and why they are good lending platforms in general.