We look back a couple of years and realize how the cryptocurrency market has advanced; it increasingly occupies more financial land. It is not something that we did not expect; only that it has happened so fast that, in many cases, it is incredible.
One of the most revolutionary proposals in the digital currency market is investments in real estate through crypto mortgages, where anyone who has the capital can use this innovative tool and trade at bitcoin buyer.
The fashionable term is crypto lending.
The simplest definition for this term is the act of lending bitcoin or cryptocurrencies where the currency of exchange is digital currency rather than fiat currencies.
This type of financing strategy arises from the need for users of the blockchain platform to make long-term investments where their capital is insufficient. They see the need to request these loans in cryptocurrencies.
The way of carrying out this type of operation is similar to the loan operations carried out by traditional banking entities.
It is only necessary that a user needs money and has Bitcoins available, which remain as collateral for the loan transaction; this guarantee is released once the loan and interest are paid.
If the borrowed amount is not paid, the platform will deduct the amount inherent to the loan and the accrued interest from the guarantee.
In this type of transaction, there are no third parties or guarantors; it is only supported by an intelligent contract between the parties involved, which is less cumbersome and complex.
Why do users request loans in Bitcoin?
There are a variety of reasons why users often use the cryptocurrency loan tool, but here are some of the most common:
- When the user needs to have fiduciary currencies but does not want to risk his cryptocurrencies, he prefers to resort to loans where he is granted dollars, euros, or the currency of his preference without exchanging his digital currency currencies.
- As a form of investment forecast, where fiat currencies are available, there is speculation with the balance in cryptocurrencies where the downward trend is pointed out.
- To reinvest and acquire more cryptocurrencies, which in many cases is a risk, but there is also doubt if profits skyrocket.
- The need for a digital loan is resorted to since banks make it practically impossible.
Is it safe to invest in crypto lending
It is important to note that any financial market has its risks, but the cryptocurrency market is even more volatile, which is why we must evaluate the options before making any loan and its possible consequences.
The positive thing about Crypto loans is that they are backed by a guarantee that the user has, that is, their digital assets and also an intelligent contract that gives support and security to the operation.
In many cases, it is considered that this type of loan is much more beneficial than a fixed term in traditional banking.
On the other hand, we find certain aspects that can be considered disadvantages of this new way of handling digital currency loans.
Not having regulation of any entity or legal support gives a particular vacuum to the operation, generating doubt if we will be scammed or real investment.
The volatility of the digital ecosystem is not very optimistic that can be said because it can generate a lack of control in terms of the calculation of interest and even the final capital to be paid.
Acquisition of real estate with cryptocurrencies
Many people are currently involved in the crypto market; many have exciting capital, while others are just beginning to increase their initial investments.
Something that makes them every day is the desire to acquire real estate from a loan, but not a traditional loan, but one that is debited monthly in cryptocurrencies.
This type of personal financing has revolutionized the digital market as a result of which it offers its potential clients a grant of 100% of the value of the asset to be acquired, as well as the elimination of the initial payment in fiduciary currencies.
On the other hand, the user’s patrimony is not affected since they must not sell them to acquire these loans.
Many opportunities arise from this innovative financing tool; it only remains for the applications and users to establish the guidelines to follow so that Crypto loans are increasingly available to everyone.
Traditional banking entities are increasingly being questioned now with the emergence of this type of financing that allows real estate acquisition; it challenges the parameters established in many entities regarding granting loans.
Everything is a matter of improving the conditions for the parties, and precisely it is what is intended through mortgage loans with cryptocurrencies.