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How to borrow crypto? Step-by-step guide

Adriaan Brits

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crypto

If you’re looking for a way to borrow crypto, you’ve come to the right place. So let’s get started! In this step-by-step guide, we will show you how to borrow crypto. We’ll cover the basics of borrowing against your crypto assets, what you need to get started and what to watch out for. A growing number of platforms allow you to borrow money or other cryptocurrencies against your holdings. One such platform is Celsius which allows members to borrow fiat or other cryptos against their BNB, BTC, ETH, and XRP holdings. But we will discuss this later in this brief step-by-step guide, so stay with us! 

What is a crypto loan?

what is crypto

Crypto loans are a type of loan that allows you to borrow money against your cryptocurrency. This means that you can use your crypto as collateral to borrow cash. Crypto loans are becoming increasingly popular as they offer a way to get money without selling your crypto. 

Borrowing money against your bitcoin is getting increasingly common. This is possible on a variety of loan platforms, including Celsius. To borrow bitcoin, you must first deposit a particular quantity of cryptocurrency on the platform. The loan amount will be determined by the value of your cryptocurrency as well as the lending platform you choose.

Land cryptocurrency prices might differ from platform to platform, therefore it is critical to browse around before picking which one to utilize. Borrowing cryptocurrency is simple if you’ve discovered a loan platform that you like. So let’s begin with a step-by-step explanation of how to borrow cryptocurrency.

cryptocurrency

Step 1 – Decide on which platform you are going to borrow crypto. 

The first and crucial step of borrowing crypto is deciding which platform you will use for that process. There are many different options available, each with its own set of pros and cons. Do some research and decide which one is right for you. Some factors you may want to consider include fees, interest rates, loan terms, and the types of collateral accepted. If you are unsure how to decide, you can check out Celsius network reviews. This can be very helpful, so don’t hesitate and don’t waste your time. 

Step 2 – Decide how much you can borrow.

Step two in this process is to calculate how much crypto you can even borrow. Particular factors have an influence on this, and here is a list of some of them:

  • How many crypto assets do you have at this moment
  • How much do you want to pledge as collateral
  • The highest loan-to-value ratio (LTV) required by the lender

Step 3 – Create an account and verify your email address.

Now things are getting easier. The third thing you need to do is to create an account on your chosen platform for landing crypto. You need to get through the Know Your Customer — KYC process. This means that loaners want to identify you and accounts that are open for borrowing crypto. Here is the list of steps you need to do to verify your account in most cases:

  • First, upload your ID or driver’s license as well as your passport 
  • Then you need to take a selfie with your chosen document
  • Pending for the KYC procedure to complete, which is usually instant or same-day

This step is mandatory for every platform just to verify the account holder’s identity. 

Step 4 – Loan application 

After creating and verifying the holder’s account, you can now send your application for the crypto loan. Here you will find important information on how you can apply for a loan, but remember that this depends on the loaners and platforms you are using. Also, if you want to get to know the crypto world better, we suggest you visit tradecrypto.com for more exciting articles and reviews. So, let’s start. 

  1. Go to the chosen platform.
  2. Create an account 
  3. Wait for account approval from loaners. 
  4. Complete the mandatory loan application 

Mandatory loan applications almost always include the following things. 

  • You need to enter the amount you want to borrow
  • Choose the sort of collateral you want to pledge.
  • Choose your LTV, and the site will determine how much collateral you must commit.
  • Choose the currency in which you want to receive your payments.

Funding can happen in minutes or, more commonly, within 24 or 48 hours after pledging your collateral, depending on the lender.

Step 5 – Make a deposit 

You will now need to provide collateral as a deposit once your loan has been approved. This will depend on where your crypto is stored. 

If your crypto is stored in your crypto wallet, this means that The borrower will take possession of your cryptocurrency immediately from your wallet.

If your crypto is not stored in your wallet and elsewhere in the hardware wallet, the borrower gives you a public address where you need to send your assets. This is often the public address of the custodian who will hold your cryptocurrency during the loan period. 

Step 6 – Now, you can receive your funds. 

The method through which you get your cash is determined by your selected currency. In the case of USD, monies are typically transferred to your bank by wire transfer, which might take a day or two. Funds are sent to your crypto wallet for stablecoin payments in USDC and other currencies.

borrowing crypto

Once you have your funds in your bank account, you can exchange them for cash. If you have always wanted to know who benefits from the inflation, you can check out the link. So, there you have it! A step-by-step guide on how to borrow cryptocurrency or money against crypto on lending platforms. Now that you know all about crypto loans, what are you waiting for? Start borrowing today and put your crypto to work!

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