Categories: BitcoinEducation

What is a Bitcoin Loan?

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A Bitcoin loan is a type of cryptocurrency loan issued upon depositing Bitcoin as the loan collateral. When considering the latest trends in the crypto world, there is a need to provide crypto loan services to crypto users. In the conventional banking system, people can take out loans using their assets, and since Bitcoin is viewed as a digital asset, it is plausible to offer bitcoin loans through appropriate bitcoin lending platforms.

Bitcoin loans are the most popular loans issued by CoinRabbit. A Bitcoin loan is, essentially, a loan issued out to crypto users upon depositing Bitcoin as their collateral.

However, recently CoinRabbit also started lending out bitcoin whenever users choose to deposit USDT and USDC as collateral. 

The introduction of Bitcoin loans for both the bear and bull markets ensures that CoinRabbit provides top-notch financial assistance to its clients, regardless of the trends in the global crypto market.

So, in this article, we will use the term Bitcoin loan to refer to loans involving Bitcoin, either as the collateral or as the Loan amount. 

How do Bitcoin loans work?

Bitcoin loans are the most popular loans, probably because Bitcoin is the most dominant cryptocurrency by market cap. At CoinRabbit, BTC loans are loans that are issued whenever Bitcoin is used as the collateral. Today, CoinRabbit offers Loan Amounts in the form of USDT, USDC, and USDT TERC 20 stablecoins. 

Various Bitcoin lending platforms approach the BTC lending and borrowing process differently, with some platforms requiring long registration processes and personal information.

However, for CoinRabbit, the process is relatively straightforward. This ensures that crypto owners remain anonymous, as intended in the crypto world. 

CoinRabbit offers bitcoin loans with arguably the lowest bitcoin lending rates compared to other bitcoin lending sites. However, why is it essential for crypto enthusiasts to consider taking up bitcoin loans?

Why take a Bitcoin loan?

There are several reasons why people opt for bitcoins loans during the bear and bull markets. Below are some reasons for taking a Bitcoin loan. 

  • Bitcoin is a relatively speculative asset that is highly volatile in price. There are several instances where you may need to take a bitcoin loan, for example;
  • Use your Bitcoins to get readily spendable stablecoins for quick usage, while retaining your Bitcoin is secure cold wallets by CoinRabbit
  • Bitcoin loans protect you from the volatile crypto markets. When using Bitcoin as collateral, you are protected from market volatility, and upon repayments, you receive the same amount of Bitcoin, regardless of its current market value.
  • Bitcoin loan amounts can be used to reinvest and make long term profits, make urgent purchases without selling your Bitcoin at bad market prices, and make profits using the existing loan arbitrage at CoinRabbit.

What is a Bitcoin loan collateral?

A Bitcoin loan collateral is an asset used to secure the loan whenever you apply for a Bitcoin loan. For the instance, at CoinRabbit, when you apply for a Bitcoin loan, it means that you intend to offer some Bitcoins to CoinRabbit as collateral in exchange for USDC or USDT stablecoins.

You can then use these loans for your daily usage. 

For the instance, for you to receive loan amounts of 15,000 USDT, you are required to use 1 BTC as your loan security, assuming 1 BTC is valued at 30,000 USDT. The 1 BTC used as security is also referred to as the Bitcoin loan collateral. 

At CoinRabbit, there are no repayment deadlines, meaning you can get instant Bitcoin loans as long as you have the collateral amount ready. 

Is Bitcoin loan safe?

This is a sensitive question, leading to the famous phrase in the crypto world that goes “not your keys, not your crypto”. It is, however, prudent to talk about the Bitcoin loans offered by CoinRabbit. CoinRabbit secures your crypto funds in special wallets with the private keys are securely stored, and can only be accessed by several IP addresses through a VPN. These private keys are renewed monthly with a risk control system that assesses the wallets balances every second.  

CoinRabbit uses top industry security features to ensure that your crypto is secured. CoinRabbit has partnered with ChangeNOW and Guarda Wallet to ensure maximum security of your collateral. Also, these partners have been around for a year, providing the credibility of CoinRabbit. 

What to do with Bitcoin loans?

Bitcoin loans from CoinRabbit have several use cases. For the instance, you can use your fast bitcoin loans from CoinRabbit to take advantage of the existing arbitrage opportunity caused by significantly low-interest rates offered by the platform. CoinRabbit loans are provided at 10% APY, while several other crypto loans are provided at 12% or more. 

This way, ordinary crypto users, financial managers and investors can take advantage of the arbitrage opportunity to make more profits. Currently, CoinRabbit does not have any limits on the number of loans you can take out. Therefore, depending on your immediate needs, you can easily plan and use your Bitcoins for:

  1. Reinvesting in the same coin
  2. Diversification of the risks in portfolio rebalancing
  3. Daily expenditures
  4. All the financial needs

How to get a Bitcoin loan?

It is easy to get a Bitcoin loan at CoinRabbit, following these simple steps. Navigate to CoinRabbit’s homepage, and select BTC as your preferred collateral. Select the amount of BTC you’d like to use as collateral, and the loan calculator on the homepage will automatically give you the total loan amount you are eligible for. 

What else can I use as collateral?

There are several crypto loan collateral options available on CoinRabbit. Bitcoin loans allow you to use Bitcoin as collateral. You can also get NANO, ETH, DOGE, DGB, XMR, FIRO, XRP, BCH, UNI, LINK, MKR, CHZ, SNX, COMP, ENJ, BAT, SUSHI, YFI, ZRX, BNT and FTM as possible collaterals. It is important to note that CoinRabbit is actively working on increasing the pool of collaterals to ensure maximum flexibility. 

Not financial advice. Do your own research and take everything moderate.

Crypto backed loans have their own risks that should be taken respectively.

Author

  • Hey there! I'm Dan. After years working in traditional finance, including at Goldman Sachs and earning my degree in Finance from Carnegie Mellon University, I made the leap into cryptocurrency. Now, I apply my investment experience to the world of digital assets. With a straightforward, results-focused approach, I aim to provide clear insights and practical strategies to help you navigate the fast-changing crypto space. For me, crypto is more than just a trend – it’s the future of finance.

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Dan Marsh

Hey! I'm Dan, CoinRabbit's blog manager. In addition, I am a crypto enthusiast and supporter of new technologies that should replace the old and decrepit system. I hope you will be satisfied with my articles. Have a good day, let's meet on the vastness of this wonderful blog.

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