Crypto Loans Platforms Gain Traction
Over the past decade, cryptocurrency has grown from an obscure term that people did not understand to a part of the cultural lexicon. Of course, there are still many who are not quite sure what cryptocurrency is or how to use it, but that number is slowly dropping as the years pass. Because of the interest in cryptocurrency, a number of industries have sprung up around it. One of the industries that is relatively new is the crypto and Bitcoin loan field.
Why are People Choosing Crypto Loans?
There are many different platforms that are offering these services today. While they have different strategies and features, they all work in a similar fashion. Those who are using the platform will put their cryptocurrency into an automated smart contract. This will work as collateral for a loan. There are some benefits when it comes to using this method over traditional lending. One of the biggest benefits is that there is not a need for a credit check, so you will not need to have a good credit score.
The first platforms for cryptocurrency loans were started in 2018. It was at a time when the market was slumping for crypto. There were many people who owned digital currencies and who did not want to sell it because the prices were so low. They lend their holdings and would then make money on the interest. This was a way for them to still make money despite the downturn in cryptocurrency at the time.
In addition to not needing to have a good credit score, there are other reasons that digital currency lending has become as popular as it has. For example, the interest rates for these types of loans tend to be much lower than what is found with many traditional lending options. In addition, there is a growing number of investors and traders who are involved with cryptocurrency. Essentially, it is getting easier for people to find these loans. People like the simplified nature of these loans.
Despite the fact that these lending platforms have only been around for a couple of years, they have grown quickly. Already, the industry is estimated to be at around $4.7 billion. There are more and more of these platforms that are being created regularly, which provides even more options for those who are considering the loans.
Even though it is new and there are risks involved, the interest is there and growing. It is likely to continue growing, but there are some who believe that it is expanding too fast. They worry that it could indicate that there is a bubble and that sooner or later, it will pop.
Some of the top platforms available include SALT Lending, Nexo, and Celsius Network. When you are considering one of these lending platforms or another, it is important to understand the types of deposits that you can make, the interest rate, and where it is allowed. Some, for example, are not allowed in the United States. Those who are interested in a crypto lending solution should research the platform to make sure they are working with a quality company, just as they would with a traditional loan.