Why do Loans exist?
This is a question that doesn’t get asked often enough. Virtually, everyone in the world has given a loan to someone – be it a friend, co-worker or even a family member. But why do we give or take loans? Sure, there is an entire industry that makes billions of dollars in profits by giving out loans but that is just a consequence of loaning, not the main purpose.
Loans primarily exist to help people. It can be anything from a person lending his cousin $10 to buy a hat or a bank lending an organization millions of dollars to open a new office, a loan is something which helps people out when they need it.
This goes for all loans, whether it’s a bank loan, a personal loan between mutual parties or even a crypto-backed loan.
But these loans aren’t perfect. A bank loan usually requires tons of paperwork and takes quite a while to be issued, on the other hand, a personal loan based on mutual agreement requires you to ask for it from your friends or family – and not everyone might be comfortable with doing that.
The features associated with crypto-backed loans, however, are quite unique. They are only available for those holding cryptocurrencies, i.e. hodlers in need of fiat money. Unlike banks loans, crypto-backed loans are instantaneous and require absolutely zero paperwork. There is not even a credit check! You simply need to transfer your crypto assets to the lender’s wallet and you’re basically done!
If you want more detailed information about crypto-backed loans then click here, this article, however, is about a time when crypto-backed proved themselves worth the hype behind them.
A Real Crypto-backed Loan success story
In the post-modern world of the 21st century, people usually don’t keep large sums of money with them and instead choose to invest their money in a plethora of things like shares, real-estate or even, more recently – cryptocurrency.
This can prove to be a problem when they find themselves in a situation where they need a substantial amount of liquid money. In a situation like this, taking money out of these investments either takes a lot of time or causes the person to stop an investment which could have benefitted them greatly, in a later period in their life.
Taking a loan is a great option in such a situation but as mentioned previously, bank loans take a lot of paperwork and time to process while mutually agreed loans have other inherent problems.
Twitter user, “KinGeeK – The Alchemist” found himself in such a situation when he needed money rather urgently but did not want to sell his crypto assets. Crypto-backed loans proved to the perfect solution to his problem as he found a crypto-backed lending service and, almost instantly, got a loan of fifty-five thousand dollars. He did not have to go through any credit checks that would have delayed the process nor did he have to fill out any time-consuming process of filling out paperwork. He simply used his crypto assets as collateral and got the loan he needed. He described the experience of getting a crypto-backed loan as “just what he needed”.
This is just a single instance of the numerous crypto-backed loan success stories out there and this just goes to prove that crypto-backed loans are doing exactly what they are intended for, i.e. fulfilling the basic purpose of the very existence of loans – helping people exactly when they are in need of it.
So what is the unique problem associated with crypto-backed loans, mentioned above? The lack of public awareness about them as a majority of loan borrowers do not even know that crypto-backed loans exist.
This, however, is a problem that might soon disappear as these crypto-backed loans continue to rise in popularity where in the future, they may become a very common alternative to conventional loans.
About Bank Of Hodlers
Bank of Hodlers is building a customer-centric bank on the blockchain, by providing financial services like cryptocurrency-backed loans and cryptocurrency-backed cards.
We have recently launched our asset-backed lending product where you can earn interest on your BTC, ETH, TUSD and DAI. You also have the option to borrow DAI against Ethereum. You can sign up to the platform by clicking here: app.bankofhodlers.com/register.