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Loans backed up with Bitcoin are increasingly popular. This has to do with representing a truly interesting alternative to traditional loans.
There are many reasons why the loans with Bitcoin guarantees are gaining ground to other financing options. Perhaps, one of the main reasons is the blocking technology that is used to support the loans. This causes transparency and confidence to increase exponentially.
What loans with Bitcoin guarantees are?
These are loans that are backed with Bitcoin. To obtain these loans it is necessary to offer Bitcoin as a guarantee. The operation is carried out in a simple manner, without exhaustive documentation or large credit checks.
Loans are granted to borrowers through decentralized Blockchain platforms. In these platforms intelligent contracts are created with which all parties reach a mutual agreement. It is a simple and transparent process in which there are no hidden charges. When the borrower returns his loan, he immediately recovers his Bitcoin.
Since all hundred currencies fluctuate, lenders are protected with guarantee. This can mean that the borrower may have to increase the guarantees and the value decreases considerably.
Bitcoin backed loans grow but do not explode yet
It is true that the loans supported in this way are growing significantly. However, they have not yet completed the exploitation on the same level as the other cryptocurrency options.
This has a lot to do with the fact that many people have not yet discovered the enormous potential of this type of loan and, of course, not even the advantages over traditional loans.
On the other hand, it is true that there are still legal restrictions and pitfalls regarding these types of loans in certain legal sectors.
And, being a relatively unknown environment, bad practices also revolve around the first steps of its implementation. Looking at one of the TechNode reports, we found that about a third of P2P loans operating in China, just three years ago, included some kind of plan that ended with police investigations and users unable to withdraw their funds.
Obviously, in these three years there has been considerable progress. However, when it comes to requesting loans of any kind, the reliability of companies is a fundamental element.
Benefits of these loans
These are fast loans, which can be obtained almost instantly. They do not include credit checks or other types of checks and are safe.
The amount of bitcoin that supports these loans is kept in cold wallets until the borrower returns the financed amount.
On the other hand, interest rates are low and holders do not need to sell assets. This way, they are not taxed, but you can even get benefits if the value of the assets increases.
In essence, these are interesting, very profitable alternatives to traditional loans. In fact it guarantees great benefits both for the borrower and for the person to be financed. It is true that it has not yet become a wide current, as happens with other Bitcoin-related options. But, of course, it has great potential in the medium and long term.
If you are thinking of buying Bitcoins, this is, without a doubt, another option that you should keep in mind.