There are a ton of companies that are trying to set up bitcoin loans for the masses, but how good of a business model is this? How viable is a bitcoin loan to raise money? With all of the bitcoin and cryptocurrency hype, there are a ton of companies trying to capitalize on bitcoin loans. In this article, we will explore the good and the bad involved in taking out these bitcoin loans.

Bitcoin Loans are something that really intrigues us here at Junktion. We clearly think that bitcoin will play a much larger role in our future than it currently already is. The future of the world is leading more and more toward globalization and Bitcoin is the biggest borderless form of money or cryptocurrency.

Bitcoin loans help you raise money

At the end of the day, a Bitcoin loan is a way for your to raise money. I think before we explain why a bitcoin loan can be a good or bad thing to explain the other options you have available to raise bitcoin or some type of cash. You have to understand that debt is a bad thing. It will hinder your growth in anything you do. A way to raise money without going into debt is to sell items for bitcoin. Junktion offers free quotes on all of your items and will pay out in any coin that you please. This allows our users to simply raise the money they need all while helping the planet recycle. This always allows you to be debt free.

Bitcoin Loan interest rates and terms

Every bitcoin loan is different. There are major competitors in the space and all of them have different terms and conditions. Here is a short list of places that allow you to raise bitcoin.

Click on the company name to be taken to their website.

Logo	Company	How funds are raised	Interest/Repayment
	Junktion.io	Selling items directly for crypto	0%
	Bitbond	Peer 2 Peer	1% a month
	Blockfi	Collateral based	12% standard
	Salt	Collateral based	Variable 10-15% on amount borrowed. Repayment in salt tokens
	Btcpop	A Community can invest	Depends on your offer
	Unchained Capital	Able to borrow 50% of collateral	Similar to salt, Repayment made in USD
	Cryptopay	Collateral Based	Repayment fees

If something is missing from this list please contact us ([email protected]) and we will add it.

What Do You Need For Bitcoin Loans?

Unlike traditional bank loans, you do not need much verification to get your loan approved.

Here is the criteria which are typically taken by a lending platform:

• Government ID card
• Paypal Verification
• Income Verification
• Social Media Profiles (Facebook, Linkedin, Twitter)
• Personal Reference
• Credit Card Verification
  

The upside of a bitcoin loan

As enthusiasts, we want to hold onto our bitcoin and other cryptocurrencies but it can be hard when you need cash. This is where bitcoin loans really shine. In certain situations, they can be a win-win all around.

Bitcoin Loans during a bull market 

When the price of your collateral becomes worth more than what you borrowed against you are going to want to pay back the bitcoin loan as fast as possible in order to get those assets back. so long as the loan interest rate is less than the appreciation of the bitcoin you are essentially earning money. Allow me to explain. When you take out a loan against something that Is worth $10,000 and all of the sudden that very same thing is worth $12,000 you have gained a little bit less than $2,000 after you pay back the interest on the loan.

Get cash and keep your bitcoin

This is a no-brainer. For the people with a super high-risk tolerance, this is the perfect opportunity for you to create another position in cryptocurrency or fulfill a business transaction. The only way to come out positive in a bitcoin loan is for you to do something with the money that in theory should provide some type of return on investment.

Affordable interest 

One of the best parts of these bitcoin loans is the low-interest rates that you pay. Look at the chart above. Some of these people are getting well below what a traditional bank would give you. The good thing about these bitcoin loans is that a lot of them are peer-based. So, a person can come to you and offer you X interest rate. They maybe can even help you with your business venture, because your success is their success. Other companies do not care how risky you wish to be. So long as the bitcoin loan is collateral based companies like Blockfi do not care what you do with the money because if you do not pay them back they will keep your bitcoin.

Like everything, There is a good and a bad side.

The downside of bitcoin loans

Bitcoin loans can be super tricky to navigate around and right off the bat that is a bad thing. A Lot of these BTC loaning platforms are new and that means they have a few flaws.

Bitcoin loans during a bear market 

This is bad news for everyone but the lender. These lenders can make money on bitcoin without ever worrying about the actual price. Lets say you take out a loan and Bitcoin is worth $10,000. The next month rolls by and the price of bitcoin is now at $8,000. You are now on the hook for a loan on something that is worth less than what you thought.

You can lose money 

Look at the above example. Bitcoin is a volatile asset and when the price goes down you lose money. Clearly, but what if during these crashes you are in the middle of repaying your loan, You can not sell your bitcoin. If you had the ability to sell your BTC during a crash would you?

Invoices 

I have read horror stories on how lending because of an invoice or some type of business order. It is risky to borrow against invoices. If you need a bitcoin loan the first thing I can assume is that you do not have the amount of money needed to fund the order. Although there are companies that can fix that there is no way of telling if the person who originally wants to buy still does once the items are made. This leaves you on the hook paying back money that you spent.

Credit scores 

In the rare case that a bitcoin loan provider does some sort of background check, ask for your social security number there is a good chance that if you default on the loan it will affect your credit score.

Conclusion

The process of unraveling traditional lending will be long and gruesome. Bitcoin has set out to decentralize our world through any means. People want this to happen, its just a matter of consumer awareness and time.