There are as many opinions in crypto as many people involved.
Some say cryptocurrencies like Bitcoin and others are only suitable as a store of value while some see them only as a medium of exchange.
But nothing becomes a store of value just like that !!
It takes time, and it takes a long time.
But in today’s hyperconnected world you can comfortably assume that 10 years more should be enough for cryptocurrencies like Bitcoin to be considered as a store of value.
10 years is still long for some of us, but the good thing is that some usecases like the medium of exchange, lending, borrowing, refinancing, cash-backs, insurance can be done right now !!
This arm of decentralized cryptocurrencies is called decentralized finance (DeFi)
And amongst this, crypto lending, i.e., crypto loans, is the most exciting. So skip to this section if you want to know what they are and how do they work?? Otherwise, just explore this list of popular crypto loan programs:
Top Crypto Lending (Loan) Platforms of 2019
|Best Crypto Lenders|
|YouHodler [Recommended]||Get Loan Now|
|BlockFi [For US Customers]||Get Loan Now|
|Celsius||Get Loan Now|
|CoinLoan||Get Loan Now|
|Salt Lending||Get Loan Now|
Member of the Crypto Valley Switzerland, YouHodler is revolutionalizing cryptocurrency-backed loans forever.
It has recently started getting a lot of traction from countries around the world and since then have processed more than $10 million in loans.
It gets better when you get to know that YouHodler now supports popular 12 cryptocurrencies including BTC, BCH, ETH, LTC, XLM, XRP, DASH, etc which can be kept as collateral to get cash loans and crypto loans in EUR, USD, USDT or in BTC
And the product is truly for the people who are unbanked and goes on to provide loans as low as $100 for a period of maximum 120 days which is a lot in certain countries.
Also, their Loan-To-Value (LTV) is the highest in industry and using YouHodler you can get loans of up to 90% LTV.
#2. Celsius Network
Getting crypto loans is becoming the new normal and leading in it are companies like Celsius Network. It is a crypto lending company that has already made crypto loans worth $100 million.
The goal is, of course, to give banking and finance facilities through crypto/blockchain which are otherwise denied such services by traditional means.
You get cash loans for collateralizing your cryptocurrencies and those with extra cash/cryptos get high-interest rates upto 10% for depositing the same with Celsius.
It is a win-win both for borrowers and lenders as borrowers get the money they want without partying away from their crypto and lenders earn interest on their coins.
At Celsius, you can expect annual rates from 5% to 10% depending upon your collateral and can get loans up to tenure of 1 year at an LTV of up to 50%.
BlockFi is another US-based pioneer company that is giving crypto collateralized loans to its users around the US. The operations are majorly centered in the USA and the company has been getting good traction since 2018.
Users can borrow loans as low as $5000 with an LTV of up to 50%.
BlockFi recently ended its origination and withdrawal fees making it worthwhile for many crypto users who have smallholdings. They also provide a BlockFi savings account and you can expect an interest rate of up to 8.6% through it.
To be able to use BlockFi you need to have atleast $5000 or more in crypto, and currently, BlockFi is available throughout the US except (NV, SD, VT or HI).
Looking for some more options in the crypto lending place?
Here you go, look at CoinLoan. It is an Estonia based company that has started getting traction in 2019.
It is purely a P2P lending platform where borrowers can borrow without selling out their crypto holdings and lenders can earn extra through interest rates for lending their holdings.
Another good thing is that you can get loans as low as $100 through CoinLoan and get LTV up to 70% depending upon the type of crypto you collateralize.
Furthermore, there are no fees for the origination of the loan but there are small withdrawal fees. Also, CoinLoan is the only crypto lender that can lend you for the long term such as up to 3 years.
#5. Salt Lending
Salt Lending is another pioneering company in the area of crypto lending and believes in urging its users to HODL crypto and instead take loans against it.
The company is operating since 2016 but it was only in the bear market of 2018 it really started getting a lot of traction. As of now, through the Salt Crypto Lending platform, you can get loans of 30-70% LTV up to a period of 12 months.
But the minimum loan amount is $5000 with no origination or prepayment fees and when you lend you can expect interest rates return to be up to 5.95%.
What Are Crypto-Backed Loans & How Crypto Loans Work?
Crypto loans, as its name signifies are the loans that one can take-up against the cryptocurrencies that one holds. In this type of loan, the crypto you own acts like collateral, and you can then borrow money in USD, EUR or a stablecoin in some ration of the value of your collateral.
The best thing about crypto loans is that you don’t need a credit history, or a bank account or a FICO score to get your loans. A lot of paperwork and operational work is also discounted in crypto loans. That’s why crypto loans are very easy and almost instantaneous to get.
So basically here how they work:
The cryptocurrencies (like BTC, ETH or XRP) that you own needs to be collateralized with as much as personal information that you can provide to a crypto loan platform. Once you do that all these platforms have different LTV ratios set to provide you a loan. So for example, if the LTV is 50 % and you have collateralized 20,000 USD worth of crypto, then you are entitled to borrow up to USD 10,000.
Plus for the borrowed $10,000 you need to pay the interest rate that you have agreed with the platform or the lender. For example, if you have agreed for a 5% annual interest rate, you will be required to pay $500 annually for borrowing $10,000 against your original collateral of $20,000.
Now, let say after six months of your borrowing, the total worth of your cryptocurrencies has increased to $40,000 and this now makes you eligible for more $10,000. This happens because the total value of your line of credit has increased due increase the value of your collateral. But be aware that the vice-versa is also true !!
This is also called, the instant crypto line of credit.
Why Would One Want A Crypto Loan When They Have Cryptocurrencies?
This was the first question that arose in my mind when I listened about the concept of crypto loans for the first time. Of course, this should be your question too, because it is obvious that people holding crypto can simply sell their crypto to get the money they want instead of taking a loan on it.
Upon further digging, I could find out that these people who need loans despite HODLing crypto are those people who need liquidity without selling their cryptocurrencies.
They want the extra money to pay for their bills or for another investment without giving up their advantage of holding cryptocurrencies.
And the concept of crypto loans (or bitcoin loans) makes that possible, and that’s why you will find cryptocurrency lending platforms that I have listed above doing well in the bear market also.
So that’s all from me in this introductory guide on crypto loans and crypto lending platforms.
Hope to hear from you soon, once you have tried these platforms. Personally, I am trying Nexo and another India based lending platform. I will soon share my experience with you !!
Hey there! I am Sudhir Khatwani, an IT bank professional turned into a cryptocurrency and blockchain proponent from Pune, India. Cryptocurrencies and blockchain will change human life in inconceivable ways and I am here to empower people to understand this new ecosystem so that they can use it for their benefit. You will find me reading about cryptonomics and eating if I am not doing anything else.