Like everything else that surrounds bitcoin, getting a loan in bitcoin is different than financing in US dollars. Interest rates are often lower, your credit score doesn’t matter and funding comes from the operating website.
You can use a bitcoin loan to cover any expense, just like a personal loan would. But investors are often attracted to new business ventures — individuals looking to invest in another cryptocurrency but don’t have the cash or those needing funds to start a cryptocurrency mining operation.
In other words, it’s generally not for noobs.
How does bitcoin loans work?
First, here’s how bitcoin works:
To understand how bitcoin loans work, you’ll need to understand what bitcoin is and how it works. Bitcoin is a cryptocurrency that operates entirely online. It’s decentralized, so no particular organization, individual or country controls it. This allows bitcoin users to make direct transactions among one another without a third party — like a bank — getting involved.
Transactions are recorded and published on a electronic ledger called a blockchain, which anyone can access. The blockchain relies on several anonymous computers — called miners — to verify the legitimacy of transactions before they join the blockchain to prevent fraud.
And rather than the blockchain existing on one server, leaving it vulnerable to hackers, it’s distributed to all bitcoin users.
How borrowing money in bitcoin works
On a basic level, bitcoin loans work like your standard term loan: It’s borrowed money that you pay back plus interest and fees over a predetermined period of time. You can pay it back in fixed installments or all at once, depending on your lender or your preferences. You can also get bitcoin lines of credit and short-term bitcoin loans.
That’s where most of the similarities end. Because bitcoin isn’t affiliated with any central government or banking institution, your typical bitcoin loan will be from the operating platform. You’ll also need to factor any commission on the current exchange rate into your fees.
The easiest way to get a bitcoin loan is through LENTBITCOIN.COM platform, usually for a fee.
To borrow through a bitcoin loan platform, you first need to set up an account and wait for verification.
Documents accepted to verify your identity
Government-issued ID: A scan of your passport is preferred, because many of these sites are international.
Verification of your address: Utility bills in your name are ideal.
Email verification: Typically the platform sends a link or a code to your email address.
Some lenders also ask you to put up collateral to secure your loan, typically bitcoin or another type of cryptocurrency or something valuable that can easily be resold online. Others allow you to gain trust by being an active member of the community or having other members of the community vouch for you. Setting up a profile picture and investing in bitcoin loans can also increase your rating.
Once your account is verified, you typically need to select your loan Package and submit your application form. You can receive loan offers in as little as a few hours and get your funds instantly once you are acceptted
Bitcoin loan requirements
Getting a bitcoin loan might be less involved than going to a bank. But you still face basic eligibility requirements.
To join a bitcoin loan platform, you generally must:
Have some bitcoin in your wallet (which maybe used as collateral)Live in a country where bitcoin is regulated, such as the United States.Hold a steady job.Have a high trust score.
Where can I get a bitcoin loan?
The most common place to get a bitcoin loan is through an online service that lends bitcoin to borrowers is https://www.lentbitcoin.com below is a link to signup on a trusted Bitcoin loan website.