Loans mean that you can borrow cryptocurrency at interest by providing collateral in another cryptocurrency.
When can this be useful? It's convenient when you have an asset you don't want to exchange for another, but you need access to a different asset for a certain period of time.
Example 1: You have Bitcoin, but you urgently need USDT stablecoin because you don't have any cash dollars (your salary hasn't arrived) to buy a laptop, and you don't want to sell your BTC. In this case, you can provide BTC as collateral, receive USDT in return, buy the laptop, and when your salary arrives, you repay the USDT with interest and get your BTC back.
Example 2: You have BNB, but you want to speculate on the spot market using BTC without actually buying it. You deposit BNB as collateral, receive BTC, and now you can trade BTC on the spot market or use it for other personal purposes. To get your BNB back, you need to return the borrowed BTC with interest.
Benefits of Crypto Loans
-
No need for selling: Borrowers can borrow money without selling their cryptocurrency.
-
Flexibility: Crypto loans can be done in multiple currencies and assets, providing borrowers with choice.
-
Accessibility: The loans are available worldwide and can be easier to obtain than traditional loans because they don’t require a credit check.
Risks of Crypto Loans
-
Market fluctuation: Decreases in market value might cause a substantial decline in collateral values, resulting in liquidation.
-
Overcollateralization: Borrowers must lock up significant amounts of assets to obtain small loans.
Crypto Exchanges Supporting Loans
- Binance (Binance was founded in 2017 by Changpeng Zhao (known as CZ) and has since become the most popular and technologically advanced cryptocurrency exchange in the world.).
- Bybit (Bybit is known among the crypto community as an exchange that often holds promotions and gives out rewards.).
- OKX (OKX is user-focused first and foremost. They relied on maximum convenience and speed of the exchange, and OKX does this very well. In addition, OKX has its own and very convenient decentralized wallet to store tokens securely.).
- Kucoin (Popular exchange, operating since 2017. In our opinion, Kucoin is the crypto exchange with the most user-friendly user interface we have ever seen.).
- WhiteBIT (WhiteBIT, launched in 2018, has quickly emerged as one of Europe's prominent cryptocurrency exchanges.).
- Gate.io (Gate.io, established in 2013, is one of the most comprehensive cryptocurrency exchanges in the market today.).
- HTX (Huobi) (HTX is a trusted crypto exchange that has been operating since 2013 and has over 47 million users worldwide.).
- BingX (Founded in 2018, BingX has emerged as a popular cryptocurrency exchange, particularly known for its copy trading features and versatile trading options.).
- CoinEx (The CoinEx cryptocurrency exchange was founded in Hong Kong in 2017. Today, it serves over 10 million users worldwide, which speaks to its reliability and popularity.).
- Bitfinex (Founded in 2012, Bitfinex is one of the oldest cryptocurrency exchanges, offering a wide array of advanced trading features.).
- XT.com (XT.com was founded in 2018 and operates worldwide, but is especially popular in Asia. XT is not just a cryptocurrency exchange where you can trade cryptocurrencies, but an entire ecosystem for trading, earning, and borrowing cryptocurrency.).
