Tag: Crypto lending

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Crypto Cryptocurrencies

How To Get a Crypto Loan

For some, getting a crypto loan may sound stranger than fiction. But times are changing and fiat money is no longer the king of the financial jungle. Crypto loans are slowly gaining ground. And while the majority of crypto users, let alone the general public, have yet to fully understand what this fuss is all […]

For some, getting a crypto loan may sound stranger than fiction. But times are changing and fiat money is no longer the king of the financial jungle. Crypto loans are slowly gaining ground. And while the majority of crypto users, let alone the general public, have yet to fully understand what this fuss is all […]

For some, getting a crypto loan may sound stranger than fiction. But times are changing and fiat money is no longer the king of the financial jungle. Crypto loans are slowly gaining ground. And while the majority of crypto users, let alone the general public, have yet to fully understand what this fuss is all about, there is a small class of users who are already turning around their financial outlook for the better, all thanks to crypto loans. 

Understandably, when it comes to crypto loans, many questions need to be answered – what is a crypto loan? Why would one need it? How does it work? And for the mischievous, can you default and get away with it? These are some of the questions we address in this article. The idea is to get you comfortable with the concept of crypto loans and how you can easily get one. 

What is a Crypto Loan?

Crypto loans are a relatively new concept in finance. As such, the understanding on what exactly constitutes a crypto loan may vary depending on the provider. For the sake of this article, let us use the following definitions:

  1. A loan backed by crypto assets – This is perhaps the most common form of crypto loans. In this form, you borrow money and deposit digital assets as collateral. Crypto loans cannot be easily recovered by repossessing physical assets as is the case with traditional finance. Therefore, the idea of holding your digital assets as collateral comes in handy.
  2. A loan issued in crypto – In this scenario, you apply for and receive cryptocurrency as credit. Of course, you must provide collateral, which is usually in the form of other digital tokens.

Why Take Crypto Loan Anyway?

There are different circumstances under which you may find a crypto loan useful. For instance:

  • You have large Bitcoin deposits and you want to buy a house that is in high demand – it won’t be in the market for long. You also don’t want to lose your crypto, especially after seeing how BTC is booming. Taking a loan with your BTC deposits as collateral will smoothly get you out of this dilemma.
  • You have crypto lying idle in your wallet but no fiat money and you want to go for a vacation. You’re sure to have trouble paying for expenses with your crypto. Instead of exchanging crypto to fiat for this purpose (maybe because the rates are not favorable), you may choose to borrow fiat to cover your expenses.
  • You have a high-cost debt that is threatening to ruin your finances. It could be a huge credit card loan that is accruing interest at a high compounded rate. In such a case, you can take a crypto loan at a lower interest and clear off your credit card loan (which is more expensive). This is called debt refinancing.
  • You have digital assets (say, Dao) which you cannot use for a certain purpose. You may collateralize these assets, and take a loan issued in a suitable format to address your needs at that moment. 

These are just some of the creative ways you can use crypto loans. Expectedly, many more applications will emerge as events in the crypto space continue to evolve. For now, let us look at some of the best platforms where you can get a crypto loan (not arranged in any order).

Best Platforms for Crypto Loans

#1 Nexo

Nexo is perhaps best known for issuing interest for staking crypto assets. The less advertised side of the institution is the crypto credit lines it advances to its customers. Getting a crypto loan on Nexo requires you to set up an account and supply some know-your-customer (KYC) information. This is done only during the first registration. 

Once your account is ready, you can get an instant crypto loan with interests from 5.9% annual percentage rate (APR). When applying for a loan, Nexo’s live calculator shows you how much collateral you will need for that amount of loan. 

One of the features that make Nexo a world leader in crypto loans is the fact that you can stake any of the 18 currently supported digital assets. The idea that loans are disbursed instantly is also quite refreshing. 

#2 BlockFi

BlockFi issues loans in USD in exchange for BTC, ETC, or LTC as collateral. Getting a crypto loan with BlockFi means entrusting them with either of the above digital assets while you spend their dollars. The platform is among the easiest to use. Getting a loan on BlockFi is as easy as signing up for an account, specifying the amount USD you need, and which crypto you will be staking for the loan. 

Like most other reputable digital financial organizations, a few KYC checks will be performed. It takes one business day for your loan application to be processed and receive a loan offer, which will indicate how much of your selected digital asset you will need to send as collateral for the amount of loan you specify. Also in the offer, there will be other information regarding your loan parameters such as interest, APR, and other financials that will help you evaluate the offer. On BlockFi, you can get a loan for as low as 4.5% APR. Overall, the loan experience on BlockFi is pleasant except for a long time it takes for the deal to reach closure. 

#3 CoinLoan

Like Nexo, CoinLoan offers both crypto lending and interest-earning from deposits. The platform promises no paperwork and no credit history check to delay your loan processing. As such, CoinLoan loans are approved as soon as you submit collateral. However, when registering on the platform, KYC is mandatory – these are just the rules of the financial market.

The platform accepts collateral in crypto, stablecoins, or fiat. Interest rates start at 4.5% APR, which are some of the lowest in this market. CoinLoan will allow you to deposit any one of the 17 currently supported cryptocurrencies.

#4 Salt

Salt is one of the friendliest crypto lending platforms. Without moving from the home page, you can instantly see how much collateral you need for your loan, monthly installments, APR, and all. Salt loans are also highly customizable in terms of payback period, loan-to-value ratio, and whether you hold any Salt coins or not. Sadly, you can’t borrow less than $5,000, just in case you wanted to try it out. Interest rates on the platform start at 5.95% and increase depending on your loan parameters.

Final Thoughts

Getting a crypto loan is one of the best ways of using your crypto assets to ease personal financial pressures. These loans allow you to get fiat currency without letting go of your crypto gems. Then, when you are much more financially stable, you can pay back your loan and have your digital assets back. You can also use crypto loans to access services where crypto is not accepted or refinance another loan. Some of the leading crypto lending platforms include Nexo, BlockFi, CoinLoan, and Salt. As to whether you can get a loan and default, the answer is yes, but you will have to forfeit your collateral!

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Cryptocurrencies

Nexo Crypto Review: Nexo Tokens, Nexo Lending Platform & How It Works

The advent of blockchain and cryptocurrencies brought with it a ton of possibilities for the global finance industry. Gone are the days when banks and other financial institutions dominated the finance lending space. Thanks to blockchain, decentralized finance (DeFi) is now possible, and virtually anyone from all around the world can take part in the global financial system – and all they need is an internet connection. 

The advent of blockchain and cryptocurrencies brought with it a ton of possibilities for the global finance industry. Gone are the days when banks and other financial institutions dominated the finance lending space. Thanks to blockchain, decentralized finance (DeFi) is now possible, and virtually anyone from all around the world can take part in the global financial system – and all they need is an internet connection. 

The advent of blockchain and cryptocurrencies brought with it a ton of possibilities for the global finance industry. Gone are the days when banks and other financial institutions dominated the finance lending space. Thanks to blockchain, decentralized finance (DeFi) is now possible, and virtually anyone from all around the world can take part in the global financial system – and all they need is an internet connection. 

Nexo is a blockchain-based project that is fulfilling this promise by making it possible for individuals to access such financial services as loans while using their crypto assets as collateral. Individuals from over 200 countries can use their cryptocurrency to receive loans in 45 Fiat currencies – and all this in a transparent, automated, and tax-free process. 

But what is Nexo, and how does this lending platform work? We review this blockchain project to answer these questions and tell you everything else you need to know about the Nexo crypto-lending platform.

What is Nexo? 

Nexo is a blockchain-based lending platform that advances loans and financial assistance to different crypto holders. For the longest time, the crypto market was underexploited, and the only viable method of gaining from one’s crypto assets was by speculating their prices on the market. Nexo, however, seeks to change this by providing crypto investors with a platform where they can issue and borrow crypto loan services while using different crypto assets as collateral. 

Nexo is a product of Credissimo, a Europe-based fintech company launched in 2007. The company is one of the most well established and trusted brands in the online lending space. On their website, they claim to have 73% customer return rate, disbursed over 102, 800 loans in 2019, and maintains a portfolio of 370, 000 unique customers. 

How Does Nexo Work? 

Nexo leverages the blockchain network by providing users with instant lending solutions. With Nexo, crypto holders can get Fiat loans and set up their crypto assets as collateral. It makes it possible to monetize your crypto assets and remain liquid without losing ownership of the investment. The loans are forwarded to the borrower’s bank or debit card.

Nexo How it works - Forex Academy

Nexo is a wholly automated and highly versatile platform with a straightforward lending system.

All you need to do is deposit your crypto assets, access your Fiat loan, and repay it at your convenience. You can repay this loan with fiat, crypto, or a combination of both currencies. There are no minimum repayments with fiat. However, if you are paying back in crypto, the minimum repayment deposits are 0.0025 for Bitcoin, 0.025 for Ether, 32.00 for Ripple, 5.00 for TrueUSD, and 5.00 for USDC. See here the full list for minimum crypto repayments. 

In addition to loans, Nexo also offers its clients with a savings account with an ROI of 8% for stablecoins and fiat currencies. The platform has partnered with BitGo, a digital asset trust to secure all crypto funds. Currently, Nexo supports Bitcoin, Ethereum, Pax Gold, Ripple, Litecoin, Binance, Stellar, NEXO, Bitcoin Cash, EOS, and various stablecoins. 

The Nexo product is available globally – except for a few countries like Bulgaria, Cote d’Ivoire, Myanmar, Iran, Iraq, North Korea, Libya, Syria, and Zimbabwe.

More importantly, Nexo enables you to avoid capital gains taxes even if you live in countries with crypto tax legislation. On their website, Nexo argues that “when you take a crypto loan and spend that loan, you avoid paying any capital gains taxes, which otherwise in many countries you have to pay when you sell your crypto.”

Who Can Use Nexo? 

The NEXO platform is a pretty open platform. Any of the following individuals/entities can utilize NEXO services. 

  • Investors who desire to make profits off their crypto assets, while still maintaining ownership of those assets
  • Businesses of all sizes
  • Crypto miners
  • Hedge funds
  • Pension funds

The Nexo Oracle 

The Nexo Oracle is the technology that drives almost all of Nexo’s functionalities. Some of its core strengths include:

I) Developing loan contracts

The Oracle picks up and automates all the processes after a credit line application is initiated. This includes disbursement of funds, asset monitoring, notifications, and the overall administrative procedures of the loan. 

II)  Developing and maintaining real-time data

The Oracle aggregates data from at least six independent exchanges to perform accurate, real-time data aggregation to minimize the risk for both the platform and users. It also detects market moves and readjusts loan limits accordingly. If an asset increases in price, the Oracle automatically increases the loan limit. 

III) Maintaining an analytics module

The Oracle automatically records and manages all interactions with clients – including loans, repayments, outstanding balances, and accounts. 

IV) Conducting auto-notifications

All of Nexo’s processes are automatically executed, and this includes sending notifications to clients. 

V) Developing prediction modeling and algorithms

Nexo utilizes big-data analysis, automated algorithms, and predictive modeling techniques to realize the smooth running of the system. This helps ensure that information aggregated from outside sources is used appropriately and promptly. 

The Nexo Team

Nexo involves a core team of 14, who hold influential positions in Credissimo. Chief managing partner Kosta Kantchev is the co-founder of both Nexo and Credissimo. 

Antoni Trenchev is the managing partner and also co-founder of Nexo. Trenchev is a former member of the National Assembly of Bulgaria and has a background in e-commerce development, strategy, and processes.

Georgi Shulev is also a managing partner and co-founder of Nexo. Shulev has long-running experience in investment banking and is the co-founder of Consestimate – a financial estimate platform where investors share ideas and forecasts with peers and identify the “fundamental value of public companies.”

The NEXO Token 

Nexo token - Forex Academy

The NEXO token is the native token of the Nexo platform. And the Nexo project creators define the token as a security instrument that’s compliant with the United States Securities and Exchange Commission (SEC) regulations. The Nexo platform incentivizes users to hold the NEXO token by paying out dividends derived from loan returns. Here, 30% of loan returns are channeled to a dividend pool and distributed to the coin holders. 

At the time of writing, the coin is trading at $0.122583, ranking at #81 in the market. It has a market cap of $68,646,212, and a 24-hour volume of $4,089,490. The coin has a circulating supply of 560,000,011, with a total supply of 1,000,000,000 Nexo Tokens. The coin’s all-time high was $0.539466 (May 07, 2018), with an all-time low of 0.043333 (Sep 12, 2018). 

Where to Buy and Store NEXO

You can purchase NEXO from several reputable exchanges, including IDEX, Huobi, Coinswitch, YoBit.Net, Huobi, Binance, HotBit, and Changelly. The majority of these will require you to trade other cryptocurrencies, such as Ethereum and Bitcoin, to get  NEXO. 

NEXO is an Ethereum-based token, meaning it can be stored in any Ethereum-compatible wallet such as MyEtherWallet, MetaMask, Ledger, Trezor, or Atomic Wallet.

Final Thoughts

Nexo brings real value and utility to crypto users and the crypto space. Users can leverage their crypto holdings to gain access to Fiat loans without the plethora of the terms and conditions of traditional finance. Nexo users can also earn passively by keeping their money on Nexo and letting it work for them. It will be interesting to see how Nexo advances as a platform and how its offerings will continue to evolve. 

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Crypto Daily Topic

The Best 6 Crypto-Lending Platforms And Their Pros And Cons

Most crypto holders believe trading is the only way to make money from their crypto holdings. On the contrary, cryptocurrency today offers many possibilities for individuals to boost their crypto savings and grow their investments. One of these is via crypto lending, whereby you loan out part of your crypto assets and earn interest.

Most crypto holders believe trading is the only way to make money from their crypto holdings. On the contrary, cryptocurrency today offers many possibilities for individuals to boost their crypto savings and grow their investments. One of these is via crypto lending, whereby you loan out part of your crypto assets and earn interest.

Most crypto holders believe trading is the only way to make money from their crypto holdings. On the contrary, cryptocurrency today offers many possibilities for individuals to boost their crypto savings and grow their investments. One of these is via crypto lending, whereby you loan out part of your crypto assets and earn interest.

Another is to deposit your credit funds and let them grow passively.

Via crypto lending platforms, individuals can also get fast access to loans. Unlike traditional lending platforms that require a good credit score, conduct KYC checks, and are at the whims of state regulation, crypto lending platforms allow users to access credit as painlessly as possible.

Thanks to the unregulated nature of cryptocurrency, however, virtually anyone can get access to a loan as long as they have internet connectivity. (This, at least, is the standard, but some crypto lending platforms will restrict use in certain jurisdictions depending on their regulatory requirements. As such, before considering any lending platform, always check whether your country is supported).

How Does Crypto Lending Work?

Crypto lending is a fairly straightforward process. The lender deposits crypto funds on a lending platform. The lending platform then makes the funds available to borrowers at a rate set by the lender.

To take a loan, borrowers create an account and take out a loan for a specified period. When that specified period expires, the borrower returns the funds, along with the pre-set interest rate.

To eliminate risks such as borrowers being unable to pay back the loan, crypto lending platforms usually institute guarantees or require borrowers to set up collateral or some other type of loan-backing system.

Most borrowers take out Crypto loans for two purposes: personal expenses or for margin trading. The personal expense borrowing is similar to the loan services in traditional finance.

Borrowers who take out the loan for margin trading do so because they don’t have enough capital for placing a trade. If they make a favorable trading decision, then they make a profit and pay back the loan easily. If the trade goes awry, they have no choice but to meet the loss and pay back the loan out of their pocket.

The Advantages of Crypto Lending

  • Very favorable transaction fees, especially when compared to the traditional lending system
  • Borrowers do not need to have a bank account (for the 1.7 billion unbanked people, crypto lending is likely their only option)
  • Quick confirmation time
  • No byzantine procedures so prevalent in the traditional lending system
  • Diversified loan options
  • No discrimination based on nationality

The risks with crypto lending

  • A higher default rate when compared to traditional loans
  • The lending platforms are prone to online attacks
  • The volatility of cryptocurrencies that can cause lenders to lose profits or force borrowers to pay more than they borrowed

With that, let’s look at some of the best crypto lending platforms in the industry.

1. CoinLoan

Coinloan is an Estonia-based peer-to-peer lending platform where borrowers can take out crypto-collateralized loans. Clients can also earn interest simply by “parking money” on CoinLoan and letting it work for them.

CoinLoan imposes no credit history checks or KYC procedures. The loan repayment period goes from 7 days up to 3 years, and the platform doesn’t impose any extra fees or penalties. Everyone’s funds are put under the maximum security possible – with cold storage wallets and distributed key storage being the standard.

Coinloan’s lending process is as follows: Borrowers deposit part of their cryptocurrency portfolio as collateral. Borrowers are furnished with the exact figures for the loan contract beforehand. They’re also granted flexible lending conditions, are not submitted to any credit checks, and are offered convenient withdrawal procedures.

Lenders are offered with these guarantees: First, the platform is licensed in the EU and is subjected to various checks and compliance. As such, lenders on the platform are guaranteed repayment of their loan, and their transactions are fully protected with SSL-encryption.

2. YouHodler

This is a crypto-lender based out of Cyprus and Switzerland and lends both crypto and fiat loans backed by crypto.

Its Turbocharge service allows borrowers to take out additional crypto and use it as collateral for other loans. Its MuliHODL feature allows users to boost their holdings by “playing with their crypto and finding the right balance,” which means making small and careful trades with calculated risk. YouHodler also has a wallet available for iOS and Android.

Another thing YouHODLER has going for it is their service which allows borrowers to access instant cash from the platform’s fiat-base funds. This eliminates the need for borrowers to search for a compatible lender, saving time and allowing them to access cash quickly.

3. SALT Lending

Launched in 2016, US-based SALT Lending was one of the first crypto lending platforms in the space. The platform is one of the trusted around and for a good reason. Borrowers can take out crypto-backed loans on a peer-to-peer platform, while also using crypto as collateral.

SALT’s lending procedure is straightforward. Users don’t need to undergo any background verification, and can usually receive the loan the same day. Loan terms are also tailored according to the borrower’s needs, from loan-to-value ratio to loan length.

When it comes to security, SALT Lending goes the whole nine yards. From backing all crypto assets with insurance, to keeping crypto funds in cold wallets. Currently, SALT services loans are available in a select 35 US states, plus Bermuda, Brazil, New Zealand, Puerto Rico, Vietnam, the UK, UAE, Switzerland, and Hong Kong.

4. BlockFi

Launched in 2017, US-based BlockFi offers two products; an interest account and crypto-backed loans. The BlockFi Interest Account lets your crypto work for you by putting it up for monthly interest. Users can earn compound interest on their crypto, boosting their savings in these cryptocurrencies; Bitcoin, Ether, and Gemini Dollar (GUSD).

For crypto-backed loans, BlockFi clients can use their crypto holding as collateral and unlock up to 50% the value of their assets in US dollars. Moreover, borrowers get the funds on the same day through bank wire or stable coin.

Individuals can use the BlockFi loans for pretty much any use, from paying off credit card debt to paying school fees or a home. Small businesses can take out loans to expand their business or to help them pay employees. Currently, BlockFi supports 46 states and all other countries except those with US sanctions.

5. Com

Launched in 2016, Hong Kong-based Crypto.com is a crypto lending platform that also offers exchange-based crypto trading, investment options, and crypto payment gateway services for merchants.

Crypto.com clients can get instant loans without going through convoluted background checks. There also are no fixed repayment schedules or deadlines or late payment penalties. You can repay at your own pace at any time, and any amount, in the 12 months upon the start of the credit period.

Crypto.com also allows users to earn interest on their deposits. Currently, investors can earn interest on the following cryptocurrencies: Bitcoin, Ethereum, Ripple, Binance, Chainlink, Maker, Pax Gold, TrueUSD, Paxos Standard, USD Coin, and Tether.

6. Celsius.Network

Celsius.Network was founded in 2017 with the aim of leveraging blockchain technology to empower individuals with “unprecedented economic opportunities, financial freedom, and income equality.”

Customers can receive loan facilities on collateral-based credit lines on loan terms of 6 months, 1 year, 2 years, or 3 years. The platform imposes no penalties for defaulted loans – failure to pay back the loan within the specified loan term will also lead to the liquidation of your collateral.

Like many other crypto loan platforms, Celsius.Network does not conduct credit checks, and loans are approved within minutes. The platform lets borrowers deposit their collateral in either Bitcoin, Bitcoin Cash, Litecoin, Ethereum, Ripple, and DASH. Loans are given in Tether, Fiat, some stablecoins, and Celsius’s own native token – the CEL token.

Users can also deposit CEL, Bitcoin, Ethereum, Litecoin, Ethereum, OMG, Bitcoin Cash, EOS, and other crypto-assets and earn interest.

Bottom Line

As you can see, there are options aplenty for crypto-based lending services. With these platforms, anyone from anywhere can access a loan regardless of their location, credit history, nationality, and whether they’re banked or not.

While all platforms offer the same kind of service, there are the subtleties with each service that differentiates it from the others. These differences lie in loan repayment schedules, supported currencies, loan terms, loan-to-value ratios, and so on. As such, you need to read the fine print and discover which platform works for you.

Finally, ensure to read and understand any terms and conditions for any platform, and check the legality and tax requirements for crypto-based loans in your jurisdiction.

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Crypto Daily Topic

Should You Invest in Cryptocurrency Loans? 

Cryptocurrencies have generated a variety of opportunities for investors to make money. Perhaps the most common one is the commercialization of mining, which by itself is rewarding, but the overhead costs can sometimes exceed the rewards. 

Cryptocurrencies have generated a variety of opportunities for investors to make money. Perhaps the most common one is the commercialization of mining, which by itself is rewarding, but the overhead costs can sometimes exceed the rewards. 

Cryptocurrencies have generated a variety of opportunities for investors to make money. Perhaps the most common one is the commercialization of mining, which by itself is rewarding, but the overhead costs can sometimes exceed the rewards. 

Apart from mining, investors can engage in other profitable operations either linked to the dynamic crypto market, or those that are similar to the conventional economy. 

A good example is the crypto lending concept, which is similar to traditional lending, only that it has the potential to generate higher interest rates. So, how is this concept beneficial to the lender and borrower? Before we answer that, let’s understand how cryptocurrency lending works. 

The Basics of Crypto Lending 

Essentially, crypto lending is a practice of lending digital assets to borrowers who then pay back at a predetermined interest rate. It’s usually done in a peer to peer platform where the borrower must put up some collateral, either fiat currency or digital assets, in order to be approved for a loan. The borrower will then repay the lender using their own tokens or fiat currency after a specific duration of time set by the lender. 

More often than not, crypto-based lending is done for margin trading purposes. In this case, a borrower can either take a long or short position. With a long position, the borrower believes that the price of a certain crypto asset will certainly go up. As such, they’ll request to lend some of your funds through the platform to increase their capital and enjoy bigger profits. It should be noted that the interest rate and payback period is set by the lender. 

For example, say, you are a borrower with $2,000 worth of Bitcoins, which is currently priced at $20,000. This means that you have 0.1 BTC. Now, let’s say you take a long position and borrow $500 against your $2,000 holdings. You’ll now have 0.15 BTC. If the BTC price indeed increases by say 10% to $22,000, your total holdings, including the borrowed amount, will be $2,750. Once you pay back the loan, you’ll have earned more profit – about 25% – than you could have earned with your initial amount. 

Taking a short position works pretty much the same way, only that now you’ll be betting on the falling prices. As such, you borrow the coins when the price is high and sell them when the price is still high. Once the price has fallen, you buy back the coins and refund them to the lender plus the interest. The price difference is your profit, while the interest paid back is the lender’s profit. So, both parties win. 

Is Crypto-lending Safe? 

Like any other form of peer-to-peer lending, crypto-lending comes with its risks. The biggest concern arises from whether there is a guarantee of lenders getting their money back or not. 

To solve this, crypto lending platforms require all borrowers to put up collateral worth more than the amount they intend to borrow. Typically, this concept is referred to as the loan-to-value ratio, which ranges between 60 to 70%, meaning a borrower can only take an amount worth less than the set percentage limit.

Also, if the prices go contrary to what a borrower anticipated, and the loan amount is lower than the margin limit, all their holdings will be liquidated to ensure the lender receives their full lent amount. This goes a long way toward protecting the lender from market volatility. 

Other safeguarding measures put in place include lending the platform your holdings directly. This way, you’ll have peace of mind since you’re lending the exchange and not an individual. 

Advantages and Disadvantages of Cryptocurrency Loans 

In an ideal scenario, cryptocurrency loans are profitable to both the lender and the borrower, but they still come with their own pros and cons. Here’s a look at some of them;

One of the biggest advantages of crypto-lending is that it’s easy to set up an account and get started. As such, there are no skill-sets required, unlike mining or trading. 

Also, compared to mining, lending, and borrowing crypto-asset loans is a more affordable way of earning returns. Also, it doesn’t require you to check on your funds regularly since there aren’t any fast actions involved. In fact, as a lender, some platforms allow you to automate your lending account, such that you receive the paybacks without necessarily monitoring your account. 

On the downside, however, there are no unified taxation and regulatory policies governing the lending process. This makes it hard for individuals to know the tax implications of their lending activities. In the same vein, should there be any dispute, it will be solved according to the regulations of both users and the platform’s jurisdiction. 

Besides the regulation hurdle, some platforms tend to charge high commission rates out of the interest rates paid back by the borrower. What’s even worse is that the commission amounts are set daily and not over the full course of the loan. As a lender, this means that your profit amount is never guaranteed. 

Choosing the Right Platform

Generally, there are two types of crypto-lending platforms to choose from – centralized and decentralized. 

  • Centralized Lending Platforms

Centralized crypto lending platforms are similar to traditional fintech companies that deal with digital assets. This means that they operate under regulations set by a central intermediary who also manages the loan matching process as well as keeps the custody of all assets. 

The platform usually sets the interest rates which are favorable to both the lender and borrower. 

  • Decentralized Lending Platforms

As the name suggests, these platforms aren’t controlled by an intermediary or central authority. They don’t follow the Know Your Customer (KYC) processes, nor do they keep custody of the digital assets. 

Also, except for a few, most decentralized platforms have variable interest rates, depending on the demand and supply of the asset on the platform. So, it would be safe to assume that decentralized crypto-lending platforms can be more profitable to a lender than their counterparts. 

Key Takeaways 

If you hold a substantial amount of cryptocurrencies but don’t have immediate intention to use or sell them, investing them in a crypto-lending platform can be a sound investment. This way, you’ll earn passive income while still holding your initial crypto amount. Well, the earned interest may not be much but think of crypto loans as a diversification investment tool. More so, you can leave the interest to accumulate to significant amounts or re-invest it to earn more returns.  

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Crypto Videos

Crypto Lending The Superior Way Of HODLing Part 5 OF 5

Crypto Lending – A word to the lenders (part 5/5)

There are many great lending platforms that can offer great returns and make this way of investing far superior to just regular holding. However, the old saying still remains true: if you are not the owner of your private keys, you are not the owner of your cryptocurrencies.
This saying holds true for crypto lending platforms as well. The concept of lending cryptocurrencies is more than outstanding and will surely flourish. However, one must first worry about security rather than be hyped up about potential gains.


A platform might have the best crypto interest rates but fail in some other departments, such as the safety and security of the customers’ assets.

In January 2018, a cryptocurrency lending platform called Davor Coin made an announcement: “Lend us your funds, and you’ll have the chance to win a prize of $1,000,000.” People from all around the globe got overly excited and started lending their money to Davor Coin. Just a week later, the platform received a cease-and-desist letter from the state of Texas.
Davor Coin’s lending platform scheme worked only as long as values kept rising. However, when cryptocurrency values went down, Davor Coin crashed. The platforms such as this one that did not crash were fined by the SEC or given a cease-and-desist letter from the same SEC regulators, which meant they were under investigation for securities fraud.

Bitconnect is yet another great example of such platforms, as is Lendconnect. Both of these companies offered a RoI that was ‘too good to be true’; they indeed were too good to be true. These ‘great opportunities’ are also called Ponzi schemes.

Bitconnect offered a 1% return per day compounded. This certainly couldn’t go on forever. Lendconnect went even further and offered up to a 164% return on investment! What’s shocking is not the attempts of scams such as these, but the number of people that fell for it.

Crypto Lending – What does the future hold?


As they say, money makes the world go round. The same goes for cryptocurrencies as well. It’s evident that some cryptocurrencies are slowly but surely transitioning into crypto assets.
To learn the basics about how to earn interest in Bitcoin and other cryptocurrencies is getting simpler and easier by the day. As soon as these lending platforms find their audience as well as their place on the market, we will witness so far unseen financial tools working together to open the world of finance to everyone, including the unbanked.
Lending your cryptocurrencies is becoming safer, easier, and an overall great way to earn passive income. However, for more safety and better returns, you will have to stick to the best and safest crypto lending platforms that offer good crypto interest rates while still being insured for your safety.

Categories
Crypto Videos

Crypto Lending The Superior Way Of HODLing Part 4 OF 5

https://youtu.be/ck7A_kWDZwc

https://youtu.be/ck7A_kWDZwc

 

Crypto Lending – Stay away from these platforms (part 4/5)


Not all crypto lending platforms are created equal. While it may be nice to earn interest on your cryptocurrency holdings, it’s not that nice to lose them or get them stolen somehow. While most people invest in cryptocurrencies to earn a profit, not many pay enough attention to the security of their holdings.

This part of the Crypto Lending guide will show two lending platforms that people should consider avoiding. This, of course, does not mean they are unusable. However, these lending platforms have critical flaws that might impact your holdings in a bad way.

XCOINS is a company founded in August 2018 by Sergey Nikitin. Nikitin decided to leverage PayPal and make this operation work. XCOINS lenders allow people to borrow their BTC funds; in return, they get monthly PayPal payments at various predetermined interest levels.
The main problem here is that XCOINS uses PayPal. This makes a lot of room for scams due to how PayPal operates in this domain. Someone can use XCOINS to borrow your BTC, go to PayPal and claim they never got it, and then file a payment reversal with PayPal, which will almost guarantee their funds back.
XCOINS explicitly announced that, in this case, there is no help or support whatsoever from XCOINS. Solely for this reason, XCOINS is a walking red flag when it comes to lending. On top of that, the platform is not exactly the best when it comes to good interest rates on crypto lending.

Salt lending platform made the news for being the first and only crypto lending site of that time. The company was founded in March 2016 by Shawn Owen. It quickly gained much popularity through its ICO. However, while their ICO promised many things (such as loans in many US states where there is no legal ability for SALT to provide such services), they never came through.
Ever since the public saw that many promises did not come to fruition, the project started experiencing more and more speed bumps. They have been under investigation by the US SEC for not declaring their ICO as security. This is not only a problem for the owners, as it can lead to the freezing all of their users’ assets. While they are working on this, the SEC pointed out to many red flags. On top of that, the founder and CEO Shawn Owens has stepped down from his position.
If we compound all this information, we can clearly see that SALT is currently far off from being a safe lending platform.

Check out the fifth (and last) part of our Cryptocurrency Lending series, where we will talk about various scams as well as about what cryptocurrency lending platforms could bring us in the future.

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Crypto Videos

Crypto Lending The Superior Way Of HODLing Part 2 OF 5

https://youtu.be/dCZ5PqmY9RY

https://youtu.be/dCZ5PqmY9RY

Crypto Lending – Where to lend your crypto? (part 2/5)

 

This part of the Crypto Lending guide will cover Nexo and BlockFi, two of the three platforms that we will show as good examples of how a lending platform should operate.

Nexo is a company founded in 2017 and is backed by Michael Arrington, the founder of TechCrunch. It has nearly 200,000 customers and even got covered by Forbes. The platform has back payments in 45 Fiat currencies.
Nexo Wallets are provided by BitGo. Therefore, users who borrow or lend Bitcoin or any other cryptocurrency are insured for up to $100,000,000.00. The insurance is backed by Lloyd’s bank. This amount is, however, for the total company in case it gets hacked or goes bankrupt. NEX allows its lenders to have their earnings deposited every single day, rather than having to wait for a week, month or more. They have an interest rate of 8%, with the option to withdraw anytime.

When it comes to user experience, they are top-notch. On top of that, this company constantly strives to get better and makes new beneficial partnerships quite often. When it comes to cons, there aren’t many. However, one comes to mind. Even though borrowers can withdraw in any of the supported 45+ fiat currencies, lenders are allowed to deposit only stablecoins and fiat currencies. Nexo is currently working on supporting BTC and ETH deposits, but they didn’t make any projection regarding the time of realization of this project.

BlockFi is a company founded by Zac Prince and Flori Marquez. It has raised over $20 million of capital from various firms. The company is young and growing at a fast pace. The company offers a 6.2% interest rate on BTC lending and 3.3% on ETH lending, compounded. Granted, this rate is only for deposits under 10 BTC and 100 ETH. The rates for larger amounts of crypto drop severely. When it comes to borrowers, they get a 4.5% interest rate by using the platform.

There is no minimum deposit, and all your crypto holdings are stored with Gemini. Gemini acts as a 3rd party depository trust that is a licensed custodian with insurance. It has a perfect track record when it comes to preventing hacks and fund losses.

When it comes to cons, there are a couple we can think of. The first one only applies to people that want to lend larger amounts of crypto. BlockFi offers digressive interest rates, meaning that the rates decrease to 2.2% and 0.2% for deposits larger than 10 BTC and 100 ETH. BlockFi also offers fewer choices of cryptocurrencies people can earn interest on as it supports only BTC, ETH, and GUSD. The last con would be that the platform is not FDIC insured (though Gemini – which protects BlockFi user’s assets – has a strong track record for security).

Check out part 3 of our Cryptocurrency Lending series, where we will cover Celsius Network as the third good option for crypto lending.

 

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Crypto Videos

Crypto Lending The Superior Way Of HODLing Part 1 OF 5

https://youtu.be/cJHnIJgfbIY

https://youtu.be/cJHnIJgfbIY

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.