Using Crypto as Collateral a Realistic Need

Previously, lending was only possible through our traditional banking system and other financial institutions. Nevertheless, the trend as changed as blockchain technology and cryptocurrency is becoming more popular to people.

This new trend is on a constant rise as today you can hold cryptocurrency assets while using them as collateral to get a flat loan. If you have understood the amount benefited by banks and financial institutions in providing loans, you will appreciate the importance of this new service.

Today, getting a crypto backed loan by using Ethereum (ETH) and Bitcoin (BTC) as a collateral is now a common practice in the crypto community. Right from history, various forms of financial market tools were used as collateral in obtaining credit facilities. Among those tools is the use of stocks. Interestingly, stocks have been mostly used as a means of collateral in taking a loan because it represents a good exchange value, does not depreciate quickly and liquid in nature. Because of this, the stock is widely used as the best collateral option among others.

Is Crypto-Assets Great collateral option for acquiring loans?

If you have gone through the loan process of a bank, you would attest you wouldn’t want to undergo such process again. The most problematic situations faced by loan seekers is coming up with acceptable collateral for the issuance of your loan. Besides this, another issue is that of timing because some loan seekers may want an immediate loan but because of the bureaucratic process of acquiring a loan, it may take longer than expected.

However, recently, the use of cryptocurrency has replaced our traditional means of acquiring a loan. Cryptocurrencies such as Altcoins, Bitcoin etc., have become the new block used as collateral in obtaining loans. Crypto assets are created to be liquid, seamless, and universally accepted.

The acceptance of using digital asset-backed loans has eradicated the issue of monetizing ones’ collateral. Furthermore, crypto backed loans are perfected without any delay — they are swift when compared to other means of acquiring loans like our traditional lending institutions.

Is Bitcoin the Perfect Collateral option for Loans?

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