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Author: Admin | 2025-04-28
It ever becomes apparent you’re not going to pay off the loan, the $5,000 worth of jewelry will be sold to pay for the loan. That might be confusing, but keep in mind it’s just an example, let’s get more into the details.While collateralized loans are apparent in legacy finance, they are much more efficient and quick when used in cryptocurrency.A loan-to-value (LTV) ratio is important to understand in this case: LTV ratio is an indicator of the value of certain collateral compared to the loan that has been given. This is very common in real estate and has been transferred more apparently for Bitcoin and crypto loans. LTV ratios are demonstrative of how close or far your loan is from liquidation, or selling your underlying collateral in order to pay back the loan. Confusing? Probably – so let’s use the image and scenario to assist:Bitcoin LTV loans are revolutionary: A user will log on to a Bitcoin LTV platform and request a certain amount of United States fiat currency, let’s say $100,000, which is usually placed on a 50% LTV ratio standard. As a result, in order to be loaned $100,000, you need to first to deposit $200,000 in cryptocurrency, most namely Bitcoin. The price of Bitcoin is at the time of borrowing, $100,000. Let’s say months go by and you’re still making payments for the $100,000 loan. Let’s say the value of Bitcoin falls to $5,000. Since your LTV ratio is 50%, the Bitcoin that you’ve stored with the lending platform will, as a result, be sold, meaning liquidated to ensure that the loan payment is made.Below, you can see how LTV’s are used in real-estate focused loans for at which point the loan will default. The same concept applies to crypto and Bitcoin loans, however, just replacing real-estate with Bitcoin or different crypto.Advantages of a Bitcoin Loan over a Traditional LoanBitcoin/Cryptocurrency loans have a few major benefactors that some consider places them as better options above all other loans or types of lending. Let’s have an overview of the main advantages of getting a bitcoin loan: Speed: The lending bitcoin process can be issued and start its lifecycle within minutes on certain platforms, making it a faster loan alternative above legacy systems. No Credit Checks: Since most Bitcoin lending platforms provide BTC loans on a digital collateralized-basis, no credit checks are required meaning users with bad to no credit will not run into major problems as they will in the case of traditional lending. No Minimum Payments: The majority of Bitcoin loan platforms do not have minimum payments that are traditionally required or similar. Digitized: Bitcoin loans are digitized, which means they can be transparent and applicable to certain environments that they otherwise would never be enabled in.Best Bitcoin Lending Platforms 2025So now that you understand what a bitcoin loan is, how to get a bitcoin loan, the advantages of lending bitcoin over traditional loans and how they work, let’s review the top cryptocurrency lending platforms to
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