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Cryptocurrency Loans Explained


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Cryptocurrency loans work in the same way as bank loans. The bank receives money from your savings account which is then lent to the borrower. The bank will offer interest on your savings account and charge borrowers a higher rate of interest to make a profit.

Two blockchain technologies make this phenomenal interest rate safe and risk free. First, smart contracts guarantee the return of cryptocurrency without even checking the creditworthiness of the borrower. Smart contracts are blockchain code that can perform certain functions, such as: B. holding loan collateral in an escrow account. Any ideas you can add to this

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The cryptographic money loaning stages work most correspondingly to banks. Stages like BlockFi permit you to procure interest on your digital currency by putting away your assets on its foundation. BlockFi at that point loans your cash to confided in institutional and corporate purchasers. 

The loan cost you acquire is a coasting loan fee, implying that it changes with market interest. Absurd year, be that as it may, the APY for stablecoins on digital currency loaning stages has remained moderately stable around 6% to 12%. 

The cryptographic money you decided to support your record influences the loan fee you acquire. For instance, you can acquire a 6% financing cost on Bitcoin, yet in the event that you decide to support your record with USDT (a stablecoin) you can procure 9.3% yearly.

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Thanks for the share. Starting with Ethereum and dominating the network, smart contracts are the key to protecting creditors. A smart contract is a self-fulfilling contract in which the terms of the contract are pre-programmed. Technology monitors contracts and enforces them for you. If the conditions are not met, the algorithm in the contract will be notified. Allgo automatically determines the conditions of your collateral repayment and collateral receipt from borrowers. see more on https://hackernoon.com/12-best-bitcoin-lending-sites-to-earn-interest-in-2021-idl32os

The amazing thing about this technology is that, as a lender, you don't have to rely on the person or the implementation platform. This is automatic. Earlier we discussed that blockchain is an untrusted system that does not require trust in other centralized entities such as banks. Using smart contracts is also not trustworthy. They don't trust the platform to enforce your loan terms. The contract itself does it.

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