How to Get a Loan in Bitcoin
There are always people who need loans and there are always others out there willing to offer loans. However, up until fairly recently, all of those loans were transacted using cash. That might leave Bitcoin lovers to wonder if there is any way to get a loan in their favorite cryptocurrency. Today, we’ll talk about your options so you can decide whether this loan is right for you.
Choices for Getting a BTC Loan
There are several options for getting a loan in Bitcoin, but the most popular is using an online service that matches borrowers up with lenders. Some of the most popular options include BlockFi, Bitbond, and BTCPOP, but there are many others. The requirements vary a lot depending on who you go with. For instance, BlockFi requires your social security number, birthday, and a certain amount of Bitcoin to take out a loan while BCTPOP only requires your name, email address, and basic identity verification.
How Borrowing Bitcoin Works
Borrowing Bitcoin is fairly similar to borrowing cash when you consider the basics. You borrow the currency over the Internet and pay back the loan as well as fees and interest over a specific period of time. Fixed installments are paid back based on the loan agreement you sign. There are also short-term Bitcoin loans and lines of credit available for those who need them.
However, some things are different with a Bitcoin loan. Bitcoin is not affiliated with a banking institution or central government, so your loan will typically be from another Bitcoin user. You’ll also be responsible for factoring in commission based on the exchange rate in your fees to be paid back.
What Makes a Bitcoin Loan Different
One of the best options for getting a loan in Bitcoin is through a peer-to-peer network and there is typically a fee. You will need to set up an account and verify your identity to get started. Most lenders of Bitcoin don’t look at your credit score and instead consider how trustworthy you are. This is based on financial history and identity. Those with a high trust score often must send in lots of documentation.
After verifying your account, you will choose the loan type you want and then fill in an application form to be submitted. In many cases, you will get loan offers in minutes or hours after this and the funds will be placed instantly in your account.
In most cases, to get a loan in Bitcoin, you will need to live in a country where the crypto is regulated, have a steady job, and have a reasonably high trust score.
The Bottom Line
Cryptocurrency loans are not as regulated as traditional loans, but they offer an alternative option for financing, especially for those who may not meet typical credit requirements. In many cases, the interest rate will be lower and funding is much quicker than expected. However, you need to be aware of how crypto works before going for this type of loan. As blockchains lengthen, the cost of these loans is likely to go up.