How Business Loans Will Introduce Crypto In The Near Future
If you are hoping to start a business, or give your current venture a boost, you’ll need a business loan to help you. These are different to short-term and payday loans UK as they are specifically tailored to suit a business’s needs, whether you need a lump sum, or an advance to free up cash flow. Have you ever thought about how these loans may evolve in the future? Read on as we take a look at how loans could introduce cryptocurrency in the years to come.
Business loans: what are they?
If you’re looking to start a business, or you’re a business owner that would like to give your company a boost, business loans are the first port of call when it comes to securing additional funds. With access to so many different types of loans that you can use for whatever you like, whether you want to grow your business, employ more staff, or buy premises to work from – extra funds from a lender can help. Because there are many options when it comes to these loans, there are also many different lenders – so you’ll have to do your research to find a loan with the most suitable repayment period, and the most affordable interest rates for you.
What is cryptocurrency?
Cryptocurrency has become more popular over the last decade but how much do you know about it? Crypto is a digital currency that is exchanged through a digital network – it is not a physical currency that you can touch, and it is not governed by a central authority like a bank or government. It works and is supported by a technology called blockchain, which keeps this currency secure and does not allow anyone to tamper with it. Blockchain means that you can’t spend your cryptocurrency twice! Just like money, crypto is referred to as coins or tokens. Some of the most well know are bitcoin, Ethereum and Litecoin – if you are thinking about trading and investing in Crypto, these would be the best place to start, as they are the most popular in an otherwise volatile market.
So what does crypto have to do with loans and lending? Well, as technology advances and more of us start to use and trade cryptocurrency, Crypto loans may well start to become an essential part of lending. Crypto loans offer a tamper-free way of securing additional funds and can emulate how most traditional loans work. Platforms that offer this form of lending will use crypto as collateral against loans.
Pros of crypto loans
If you think you would like to try a crypto loan in the future, getting to know how a specific platform works will help you to do this. Here are a few pros that you may find when diving into the world of crypto loans.
- Lower interest rates: Compared to traditional loans, crypto loans keep their interest rates under 10%, so they may seem better value than the most traditional type of loan.
- No credit checks: Unlike bank loans, you do not need to prove your credit score to benefit from a crypto loan, so you can still take advantage if you have bad credit.
- Easy to get: if you have collateral for a crypto loan, you’re good to go, no other requirements are necessary.
Cons of crypto loans
Of course, with any type of loan, you need to weigh up the good with the bad so that you can make a sensible decision, and because crypto is such a volatile market, it is even more important that you consider borrowing more carefully. Here are some of the cons to think about:
- Risk Liquidation: The volatility of the crypto market makes it difficult for lenders to make their money back, even if it is secured with collateral. Anything can change at any time with the crypto market.
- Technical issues: Because you will be using a platform to borrow your crypto loan from, it is always possible that it could become compromised if it is not sufficiently secure.This could result in you losing funds.
So, whilst it is possible that loan companies may start giving borrowers the option of using their cryptocurrency as a way of taking out a loan, or to use as collateral, in the short-term a traditional loan is more secure and less volatile than you would find with a crypto loan – but that’s not to say things won’t change in the future.