In the last few years, many investors have joined the cryptocurrency, whose number is increasing every day, mainly because the cryptocurrency has gained immense popularity. There are many virtual currencies that are volatile over a short period of time. If we talk about the last year, the first half of bitcoin saw its value doubling and its value decreased significantly in the same few months. Many investors invested in it due to the rapid volatility in the last year, some of whom might have earned their money and some lost their money. Whereas many investors have only one intention is to get short term profit as they have a firm belief in its future. Some investors want to maintain investment in holding cryptocurrencies while spending all these physical currencies like USD, INR, EUR, CAD etc. If you are interested in bitcoin trading check a good cryptocurrency mining pool .
It has become entirely possible for them to avail the facility of crypto lending. Investors can hold crypto-assets in a secure way for which they need a wallet. Let us take you through this article to learn more about crypto-based financing.
What is cryptocurrency lending or lending?
All investors involved with crypto-financing are granted permission to offer cash as crypto collateral or to borrow loans. Helps the lender to own the crypto asset with crypto lending. There are few plans for crypto investors with HODL and no plans to sell crypto assets quickly. If you want, you can lend your crypto assets and earn money with interest in that period. The interest earned by crypto is also called ‘crypto dividend’. This is one of the easiest ways to earn money, you can lend your assets to crypto investors to generate passive income. A crypto loan is a collateralized loan that you obtain through a crypto-lending platform or crypto exchange. The crypto loan performs its function similar to a car loan and a mortgage, where you can use your car or house property as collateral. You can use your cryptocurrency to keep your loan funds safe if you wish.
How does crypto lending work?
With cryptocurrency financing borrowers and lenders are associated with a third party, including online crypto lending platforms. Three parties are involved with crypto loans: the Borrower, Lenders, and Lending platform:
Borrower
Investors and borrowers have many objectives for which you will need money. You can use crypto assets as collateral to receive funds.
Lenders
Lenders are those who want to lend crypto, cash or stablecoins, through which you can get passive income by investing in crypto.
Lending platform
Crypto Lending is a third-party platform with which lenders and borrowers are linked. With this, the transactions you do are also taken care of and can be decentralized, centralized platform and autonomous.
Crypto-lending platforms types
Manual platforms
Investors involved with the manual platform are required to manually deposit a certain amount of crypto assets to reap higher returns.
Automated platforms
When you deposit your assets in your crypto wallet, the platform starts paying dividends on it.
The Bottom Line
If you have now decided to get started with crypto loans after this article, then you should check out the many platforms like BlockFi, Youhodler and Celsius. With these platforms, you will be able to determine which would be the right choice for you. By choosing a platform it will make your things even easier and it will push the yield of the investment you make to a higher level. So, you need to be very careful whenever you choose a lending platform.
