Crypto Currency Lending
A currency of any kind holds value that can be used in different ways.
You can deposit money in your bank in a term deposit. The term deposit certificate can be used to secure a loan, being used as security. Crypto currency avails the same benefits as traditional currency in that one may get a loan using their crypto currency as security. This article will explore some of the avenues that one may go about in using crypto currency as collateral in lending.
There are different platforms that offer or facilitate lending using crypto currency. One recent startup that is promising to revolutionize crypto currency lending is the Denver based Secured Automated Lending Technology (SALT). It promises to offer the traditional lending but secured on crypto currency. It is a membership-based platform that will use bit coins and other forms of crypto currency to secure loans.
Another platform that is available for lending is the many Bit coin (BTC) lending avenues. These are peer-to-peer platforms that allow the lending or borrowing of bit coins and attract a specific interest rate. Some BTC lending accounts include Loanbase, BTCjam and Bitbond which can borrow on platforms such as Coincheck, Bitfinex, and Poloniex.
The borrower has to first open a membership account with their chosen platform. This is followed by forwarding their crypto currency collateral to the platform wallet. Once the loan that is applied for gets approval, the funds will be transferred to the borrower`s bank account. The borrower will make periodic repayments on the loan until they fully repay it. On completion of paying the loan, they will receive back their collateral.
Most lending platforms do not perform credit checks on the potential borrower. Instead, they conduct what is known as an Anti-money laundering (AML) check. In addition, a further Know Your Customer (KYC) verification may be required for the loan approval.
In order to get a better rank in trust, it is advisable for a potential borrower to be in possession of a governmentissued form of identification. An address and credit card that can also be verified is important. Having some form of visibility on social media and having an account such as PayPal is also another added advantage.
It is advisable for you as a sound investor to do your due diligence before committing your crypto currency to be used as the collateral. It, therefore, makes sense for you to do some background check on the platform that facilitates lending against crypto currency. As a general rule, do not use any platform with low ratings of trust.
Try and find out any feedback or comments about the platform on social media. Users of crypto currency will normally post their experiences of using crypto currency on social media sites. Their comments and feedback would be important for you to factor in before taking out a loan. This will ensure that you minimize the risk of losing your crypto currency.