Wanna Put Your Bitcoin Up as Collateral? Sure, With A Bit of Education!
Have you ever wanted to put your bitcoin up as collateral? It can be a great way to access some extra funds – if the lender you’re working with actually gets it. In order to make the most of your bitcoin and use it as collateral, lenders need to understand the idiosyncrasies of digital currency.
What’s the Problem?
You can’t just walk into a bank and put your bitcoin up as collateral. Let’s face it, not everyone understands all the in’s and out’s of digital currency, so it’s a tough sell. Furthermore, standard loan agreements don’t cover some of the unique aspects of bitcoin.
What Can You Do?
Fortunately, there are cryptocurrency lenders that specialize in loans backed by bitcoin. That said, you’ll still need to prove that your bitcoin is:
- High quality (who wants an unsecured loan backed by a pile of junk!)
- Safely stored (your crypto needs to be secured away from hackers)
- Easily transferable (if the loan needs to be payed off)
This isn’t as easy as it sounds. You need to prove that your bitcoin is safe, that it’s still in your wallet, and that you can actually get it back if you run into repayment issues.
Good News: Lenders are Waking Up To Bitcoin
While many lenders still don’t understand digital currency, there’s a growing number who are now more open to bitcoin. This is thanks in large part to increased demand from lenders and borrowers alike, making the case for bitcoin backed loans more compelling.
What You Need To Do
If you want to use your bitcoin as collateral, you’ll need to explain exactly what it is and how it works. Again, this is where cryptocurrency lenders come in – they’ll understand the nuances of digital currency and be a lot more likely to approve your loan.
If you’re smart about it and understand the nuances of digital currency, you can use bitcoin as collateral for a loan. But you’ll need to make sure the lender has a good understanding of it too – because, let’s be honest, some old school finance wonks just don’t get it. Hey, better to be on the safe side, right?
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