The world of blockchain already surpassed and little-by-little, replaced the conventional system of financing. This starts from the payment transactions up to the system of investment method.
Moreover, the industry of cryptocurrency loan and lending process spikes at its highest through De-Fi or decentralized finance. This platform provides an interest rate as much as 10x higher compared to the conventional way of banking system.
Crypto loan and lending gained more attention and interest over the last years joining the popularity of Bitcoin.
Nowadays, crypto lending penetrates the foundation of banking professional conversations and investors over the institutions. Let’s dig deeper in order to understand what crypto loan and lending is all about.
The Birth of Cryptocurrency
Cryptocurrency is also known as crypto assets which became popular during 2008. This came into life when Satoshi Nakamoto invented the Bitcoin that attracts technologists to explore the idea in a broader way.
And because of innovations, there are new currencies that were created and also became popular and recognized the same way. These newer currencies include Namecoin and Litecoin.
With its growth, the value of Bitcoin suddenly increased during 2017 having an end annual value of US$20,000. Subsequently, in early 2018, there was a small decline and abrupt changes in Bitcoin’s prices which led to its worth of $10,326.73.
Looking back on crypto loan and lending
Along with the increase in cryptocurrency, new financial services penetrated this kind of industry. From payment systems, currency exchange, financing, up to crypto-based loans and lending, these new services are starting to generate cryptocurrencies. Below are the various services utilizing crypto.
This is a different type of financial service that permits lenders to give funds using various currencies to the borrower. The lender may have the potential to earn passive income through cryptocurrency lending based on the trade price on a specific time provided.
- Companies offering this type of financial service: Bitfinex and Nuo
This simply works by lending the Bitcoin, Altcoins or Ether and approving the contract provided. Engaging in this will simply let you earn an interest rate for a specified period.
- Companies offering this type of financial service: Coincheck, Nuo, and Lending Block
Crypto to Fiat Lending
Another new financial service that works using the cryptocurrency is the crypto to fiat lending. This operates with cryptocurrency holders that usually have businesses and need cash.
With this, the cryptocurrencies including Altcoin, Bitcoin or Ether serve as collateral thus allowing the user to have cash in hand. However, in this type of financial service, there are some conditions that apply. One example of this is the decrease of collateral price which may come for around 25 to 30%.
- Companies offering this kind of financial service: SALT Lending and Unchained Capital