Zillenials creates a new way to borrow and lend money using Bitcoin and other cryptocurrencies
Bitcoin lending is a new trend of the 2020 year plagued by COVID-19 pandemic. This year comes to the end and while the future is still unclear the world undergoes a big digital transformation.
Zillenials and DeFi
Each young social cohort step by step becomes the leading power of the economy and now we witness an advent into these roles of Zillenials also known as Z generation. They can’t imagine their life without digitalization and they shun classical financial institutions such as banks. As the Bank of America’s recent report states https://www.bloomberg.com/news/articles/2020-11-19/-zillennials-are-going-to-change-investing-forever-bofa-says, Zillenials are changing the financial landscape forever. Indeed they start preferring Bitcoin loans over legacy credit cards and this trend gets a disruptive technological power.
The influential Messari analytical house points https://messari.io/pdf/crypto-theses-for-2020.pdf in its “Crypto Theses for 2020” that “DeFi lending got a ton of hype in 2019 (more on that later), but it was the loan growth at centralized lenders that really went gangbusters. There was about $650 million in loans originated in all of DeFi. Meanwhile Celsius lent out over $2 billion over the course of 90 days. Even upstart lending businesses like Blockchain.com, that began operations in late 2019 have been lending over $100 million per month.” DeFi makes a difference while invigorating the cryptocurrencies’ use as a tool for lending and borrowing. Messari makes a bold projection while saying, “We expect loan growth to continue its torrid trajectory higher, and predict we’ll see some spectacular lending desk blow-ups in the new year, as loan pricing gets more competitive and risk profiles rise.”
Just compare
Cryptoloan is going to provide a service to make easy comparison for essential terms (interest per week, monthly repayments, total interest, APY) offered by various loan providers. There are five main providers, Nexo, BlockFi, Celsius Network, Crypto.com, Nebeus and Nexo. It seems very exciting to borrow for example not only in Bitcoin but for example in CEL, native tokens of Celsius Network if one takes into consideration YTD up 5,000% this year! Anyway Bitcoin looks like a very lucrative deal for hodlers, investors preferring to invest in the long run.
And in the short run Bitcoin looks like the best asset. Just look at figures, YTD: Bitcoin 158%, FAANG 78%, China technological companies 47%, BioTech 43%, Silver 19%, 30-year U.S. Treasuries 19.1%; REITs -9%, UK stocks -14%, banks -21%, energy stocks -35%.
How Bitcoin loans work?
Bitcoin loans perform by taking your Bitcoin or other cryptocurrency and holding it as collateral. When you repay your loan and pay back an interest, you get your BTC back. The loan provided usually performed in USD based stablecoins such as Tether (USDT) that is a king in its class and whose capitalization skyrocketed above $18 billion. If one deals with the native DeFi projects then the relevant stablecoins of these burgeoning crypto segments come to light. Sometimes the loan can be provided in fiat money, for example in USD.
The Bitcoin loan hubs secure a borrower’s loan by keeping their cryptocurrency asset as collateral. If the borrower fails to reimburse their loan, their Bitcoin is realized to compensate for it.
The Bitcoin loan providers chunk a profit while most of them charge a fee of around 2% on your loan amount. If you borrow $100, you pay $2 to the loan provider. This payment adds to the interest rate you must repay.
Step by step
The quick universal guide on how to get a Bitcoin loan.
- Select the loan provider/
- Opt in the site, go through KYC and get verified/
- Deposit the collateral.
- Choose terms (interest rate, time to repay, etc).
- Take out your loan.
Reimbursement is equally as plain
- Put in the amount of cash or crypto to repay your loan and incurred fees.
- Pull out your collateral or start a new loan.
It’s very easy since most Bitcoin loan providers do not require credit checks nor need you to fill out long forms, wait days for feedback. KYC is essential but actually one may say that if you have Bitcoins at your disposition then 99,9% chance that you’ll be eligible to get a Bitcoin loan in a fast and clear manner. For to get your Bitcoins you’ll have to repay the taken loan and incurred fees. It’s important to track that your loan is still over water during the loan term.
For example, if you want to borrow $100 and are ought to deposit a 50% of this sum (Loan-to-Value fixed term), then you need to deposit Bitcoin worth $200. If the Bitcoin plummets by 50% or more, the loan provider will activate its right to sell your collateralized BTC to protect itself from seeing your loan under water.
