Cryptocurrency is one of the most mainstream forms of investment today, thanks to its high-risk, high-reward automation. Some of its most famous coins are Bitcoin, Ethereum, and Tether, but other options yield great results.
However, cryptocurrencies are beginning to branch out from just an investment platform. Nowadays, besides acting as a means to heighten your savings and boost your investments, it also offers a way to borrow money in crypto loans. And despite being a new offer, it has multiple benefits that continue attracting attention from individuals and businesses alike.
If you’re still confused about its perks, here are the top advantages that cryptocurrency lending comes with.
Top Advantages of Crypto Loans
Significantly Lower Interest Rate
More often than not, traditional loans come with extensive interest rates that put the borrowers in sticky situations because these fees make it more difficult for them to pay off their loans. To solve this issue, cryptocurrency lending offers significantly lower interest rates, making it easier to pay for.
The lower rate is primarily because crypto doesn’t need as much staff and maintenance. Another factor contributing to this is the lack of intermediaries fees due to its decentralized nature. As a result, most of the interest charged on crypto loans only goes towards the lenders’ profit and overall maintenance of the blockchain.
Transparent And Reliable
Over the years, cryptocurrency has slowly built a reputation as one of the world’s most transparent investment platforms. As a result, you can count on its new branch, cryptocurrency lending, to be as transparent. Because although all personal details are concealed on blockchains, users have the ability to see all transaction details. So if you’re interested in knowing which transactions pushed through and which ones didn’t, you can simply look.
Moreover, borrowers would feel at ease because all the lending terms are clearly stated in the contract. Information such as the total loaned amount, interest rate, monthly rate, and final due date is laid out.
More Accessible Than Traditional Lending Methods
For traditional lending methods, you need to have a bank account, source of income, character references, and more. But despite going through the time-consuming assessment phase, there’s a big chance for your application to get rejected, especially if your credit score doesn’t meet the bank’s criteria. Plus, other factors, such as your annual income and credit history, can determine your approval.
But what if you don’t have the necessary documents to apply for a traditional loan? Don’t worry; you are not alone. There are currently 1.7 billion adults without bank accounts, which makes them unqualified for bank loans. But there’s one thing they might qualify for – crypto lending.
You don’t need a bank account or an exceptional credit score with cryptocurrency lending. All you need is some crypto assets to use as collateral, and you’ll get the funds you need. It’s a more accessible lending method, mainly because the only document you’ll need to show is your ID for verification purposes.
Although your money is somewhat safe in a traditional bank, it’s worth remembering that some major money laundering scandals involve banks. With this in mind, there’s enough reason for some individuals to feel wary about associating their assets with banking institutions. And because these establishments are fueled by manpower, it’s no surprise that human error also plays a pivotal role in faulty security measures.
On the other hand, cryptocurrency often appears risky to most individuals because it’s only a digital currency – there’s no physical form of crypto. But did you know that crypto lending platforms are more secure than banks? In fact, the entire crypto industry continues to thrive in becoming a reputable platform in terms of safety.
So if you’re looking for a reputable crypto lending platform, one of the first things to look out for is a detailed outline of their security measures. Some of the key topics to look for are:
How the platform will keep your crypto assets (collateral) secure
If they will store your assets in a cold wallet (because using a hot wallet is less safe versus storing your crypto assets in a cold wallet)
How much the interest rate is
Faster Than A Traditional Lending Process
Applying for a loan at a traditional bank is a lengthy process that requires a plethora of documents and extensive patience. The bank may need several days or weeks to finalize whether your application is approved or not and another week or two to release your funds. So for borrowers who need funds as soon as possible, this lengthy process will feel like torture.
But your loan will be approved within 24 hours when it comes to crypto lending because the only document they’ll need to verify is your ID. So it’s a speedy transaction that won’t require stacks of documents, as long as you have adequate crypto assets to show as collateral.
And although crypto lending platforms that use peer-to-peer (P2P) networks take longer, they are still significantly faster than lending from a bank.
Cryptocurrency lending, when done responsibly, provides the utmost value to both borrowers and lenders. Moreover, it offers significant perks that make traditional lending seem unreasonable and directly tied to blockchain technology for maximum safety and protection against cybercriminals. Indeed, it’s a powerful tool that’s highly accessible and light on the pocket compared to traditional bank lending.