To get an overview of how Bitcoin loan works, let’s get to know what Bitcoin is.
What is Bitcoin?
Bitcoins, technically speaking are a digital asset which has been assigned as a currency upon creation. It is a global cryptocurrency which carries the same value across the world. It allows peer-to-peer transactions between users without the need for a centralized authority. Bitcoins are created after a block is mined, and they are rewarded to miners as a block reward. Bitcoins can be exchanged for other alternative currencies (altcoins) and can be exchanged for goods and services if merchants are willing to accept them. To sum it up in one line, Bitcoin is a virtual currency.
So without banks as a mediator, we can transfer currency easily from one person to another through blockchain.
How to get a Bitcoin loan?
On a fundamental level, Bitcoin loan works like your standard term credit: It's the borrowed cash that you pay back in addition to interest and expenses over a fixed period of time. You can pay it back in EMI or repay it fully, depends upon your lender. You can likewise get Bitcoin as a loan.
Since Bitcoin is decentralized and works without the intervene of any government regulations, your loan would be processed from other Bitcoin holders.
The best way to get an easy Bitcoin loan is to get it through a peer-to-peer lending platform.
To get a Bitcoin loan from P2P platforms requires a process than typical banks. They don't need to check your credit score or income score. These platforms have their own rules for lending. They will give you their trust score upon the details of documents you submit. The more detailed the documents, the higher the score.
How Bitcoin P2P Loans Work?
There are 4 steps to get a loan from P2P lending plaforms:
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Get yourself registered with a lending platform.
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Get your KYC done.
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Choose the duration and loan amount as per your requirement.
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After your successful verification, you’ll be able to get your Bitcoins deposited to your wallet.
The main benefit of receiving Bitcoin as a loan is you can get it at any corner of the world that too without paying the exchange rates!
What Documents are required for Bitcoin P2P Loans?
Following documents are required by platforms to process your loan:
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A valid Government ID proof.
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Paypal account details.
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Income proof and details.
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Verification of your Social media profiles.
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Email & Credit card verification.
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A personal reference.
Best Bitcoin Lending Sites
These are the top two platforms where you can lend/borrow Bitcoins:
BitBond
Bitbond, established by the CEO Radoslav Albrecht is a plain and basic organization where you can lend or borrow Bitcoin. You can do this effortlessly and rapidly with no entanglements. The organization has been an enormous success for 4 years.
They are based in Germany and have processed over 2500 loans with users from 120 countries.
Bitbond uses Bitcoin as an innovation and installment system to make the first worldwide market for microloans. That is something that wouldn't be conceivable in the ordinary banking framework since installment exchanges would take too long and would be excessively costly.
Bitbond rates, fees and other details:
Loan terms and repayment varieties
Bitbond offers the subsequent loan terms and reimbursement types:
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6 weeks: single reimbursement
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3 months: monthly reimbursement of constant regular payment
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6 months: monthly reimbursement of constant regular payment
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12 months: monthly reimbursement of constant regular payment
Loan amounts:
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Minimum loan quantity for borrowers: BTC 0.01
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Maximum loan quantity for borrowers: depends on personal debt capability, all outstanding loans and current loan requests are taken under consideration
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Value per loan note: BTC 0.01 (this is that the quantity of 1 note)
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Minimum bid quantity for lenders: BTC 0.01
Interest rates:
Borrowers can have a maximum of one loan at a time. Interest rates vary depending on the creditworthiness of each borrower. Bitbond does not publish a range of APR rates, but interest rates can be as low as 7.7 %( as of March 2016) and as high as 25%. Bitbond charges borrowers a 1% to 3% origination fee.
Key Statistics:
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150,000+ USERS
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2,750+ FUNDED LOANS
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$11,000,000+ LOAN VOLUME
BTCPOP
BTCPOP.co is one of the world's first Bitcoin shared loaning stage.
They give a loan to entrepreneurs and new companies everywhere throughout the world. They have an immense network of financial specialists who consistently loan cash to the borrowers at low rates.
BTCPOP began working since 2014 and was established in Great Britain the founder of BTCPOP is Lee Bartholomew, but the organization was sold in June 2016 due to Management issues. The organization is presently headquartered at the Marshall Islands.
BTCPOP has an extraordinary security capacity and stores their client's Bitcoins Offline. I.e. in Cold Wallets. They have an extremely incite benefit and a credit gets endorsed in a split second. You can get from 0.01 BTC to 500 BTC at BTCPOP. They additionally offer 5% to the clients to hold BTC in their record. This eventually makes them a Bitcoin Bank which gives significant yields.
Interest rates: Interest in the Bitcoin P2P loaning condition is still high in respect to fiat advances (except if you have enough insurance). The following are some broad rules for interest rates on different first credits. *Please note as you build notoriety on the site these rates change
High Collateral First Loans: If you have guarantee at least 200% of amount acquiring
10-15% APR
Medium Collateral First Loans: If you have guarantee at or around 100% of amount obtaining
15-25% APR
Low guarantee First Loans: If you have security 25%-75%
20-45% APR
No Collateral First Loans: Depends on your creditworthiness
50%+ APR
Days to List for: This is to what extent your advance offer will remain in the financing stage before it is subsidized or dropped.
Key statastics:
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20,000+ USERS
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10,000+ FUNDED LOANS
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$1,000,000+ LOAN VOLUME
Services provided by BTCPOP:
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Credit-Based Lending
BTCpop's distributed loaning depends on credit, not FICO rating. Rapidly get credits from different individuals or profit by advancing cash you have. You set the terms. You set the sum.
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Initial Public Offering (IPO)
Reserve Your Business
Do you have an Idea or a Startup? Can’t get a loan from banks or private institutions? Give BTCPOP a chance to finance your next business. Need to begin putting resources into new companies? We generally have incredible new businesses propelling IPOs enthusiastic for your venture.
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Trading
Move Your Money into another Currency
Trade Bitcoin to Litecoin to Dogecoin and back to Bitcoin. We offer a simple to utilize administration to swap different cryptographic forms of money inside the network.
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Staking
Proof of Stake
Numerous more up to date altcoins are moving to PoS. You can put your coin in a bigger pool to catch a little bit of a substantially greater pie.
Credible friends
Once introduced, moneylenders initially associate Social networking records, or welcome friends by email, to construct a contact of trusted individuals. Utilizing a slider bar tells the application how much every one of the friends is eligible to get. The lender at that point needs to ensure the application's multisignaturebitcoin wallet has enough bitcoin to cover the loan.
Borrowers can get to any credit extensions and utilize the application as a bitcoin wallet, virtual bitcoin credit card, or with a forthcoming physical Visa card. This would work much like a Coinbase Shift or Bitpay charge card, which will work anywhere where a Visa card is acknowledged.
Borrowers are charged 25% APR interest using the average daily balance method. 60% of all interest and fees goes to the lender. Interest charges are applied to borrowers accounts monthly, and profits are received by lenders as payments are made by the borrower.
Minimum payments are due once per month. Some borrowers may not pay on time, in which case they will incur overdue fees. Monthly minimum payments are setup to pay interest for the last statement period + 1% of principle. This allows loans to last a long time, maximizing your interest on outstanding loans. Actual repayment times will vary depending on the borrower. Some borrowers may pay loans off monthly, some may carry a balance for longer.
The organization creates income by taking 40 percent of the intrigue and expenses. This leaves loan lenders with 15% APR. Utilizing cryptocurrencies, enabled the designers to incorporate various yields from the reimbursement of the transaction. The framework naturally handles the commission.
The plan of action attracted US$100k in seed financing from the value crowdfunding platform Bnktothefuture. The lending was spread out between 87 investors.
Nebeus
Nebeus is a full administration money related administrations stage empowering our clients to purchase, offer, store, loan and acquire bitcoins. Nebeus exclusive innovation stage started improvements in 2014 and they presently have groups in London's Levelel39 Canary Wharf and Barcelona's digital center. The Nebeus endeavors to convey an exceedingly advantageous, customer situated administration that empowers full advantage of the quickly creating crypto markets – all while being exceptionally secure, ease and proficient with a best-in-class backend settlement stage giving liquidity on three center trades in Hong Kong, Tokyo and London.
They vary from some other loaning stages in that they credit and get Bitcoin, however moment Bitcoin loaning is just accessible in the wake of achieving a hoisted level of approval on the site. This is controlled by a point framework that records for your credit history, confirmation.
At the point when rank builds, a borrower gets more openings. The principal credit is little and is allowed for a term of up to 30 days. A second credit can be longer and include a bigger number of Bitcoins. The same applies to a third credit. A moment credit is just accessible to those with a rank of in excess of 50 focuses.
Key stats:
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20,000+ USERS
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34 loans/day on average
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$2,000,000+ LOAN VOLUME
Conclusion:
Lending platforms are gaining momentum these days as they can process cross-border payments easily, rapidly and without any need for a traditional currency exchange. Due to increasing adoption of Bitcoins, more platforms will enter this space with even better facilities and security. One can also earn a handsome interest on his bitcoin by lending it to these platforms.
