Cryptocurrency is becoming an interesting investment model. Bitcoin entered the global investment market in 2009. The primary purpose of Bitcoin was to enable easy peer transactions. Check how trustless is bitcoin if you want start bitcoin mining.
Cryptos aims to make easier transactions over the web. Digital or virtual currency allowed for digital payments. It allows users to eliminate the role of central banks or regulatory agencies.
Every cryptocurrency works on blockchain philosophy and a decentralized finance model. Blockchain is nothing but a simple ledger scheme. The transactions are broken down into individual units of blocks. Such blocks run into chains making an online ledger. Each of these chains is then hosted on the public network. The users and access privileges of all these chains are controlled.
Decentralized finance is also easy to understand. It eliminates the need for regulatory agencies in completing transactions. Users can choose to hold their funding or liquidate the same. Once a user decides to liquidate cryptos can be converted to traditional currency.
How cryptos has evolved?
Since the launch of the crypto token, there have been significant advances. Many technological advances have made this scheme a lucrative investment model. Along with cryptos, various other services gained popularity. It includes the growth of crypto exchanges, blockchain technology, etc.
Other than cryptocurrencies, there are also stable coins, NFTs, and other tokens that became popular.
Understanding crypto lending
Crypto lending is another popular service that gained attention.
In simple terms, crypto lending works in the same way as that traditional lending.
Users can lend their existing holdings in exchange for fixed interest rates. Lenders can gain their income through interest for a fixed period. Users receive their payments in form of crypto tokens. The payments may be cleared on a daily, weekly, fortnight, or monthly basis.
As we speak, there are two types of crypto lending services namely decentralized and centralized lending. In both cases, lenders earn significant income through depositing their tokens.
Crypto lending became popular in early 2020. There is a various crypto lending platform that offers this service to users. Investors can either deposit their holdings or borrow cryptos using this platform.
Two components are generally associated with crypto lending. Users can either involve in deposit earning or crypto loan services. Deposit earning is similar to the traditional banking system. Users can deposit their holdings in the crypto lending platform. Investors can earn up to 10% interest through this scheme. The platform makes use of such deposited funding. It either lends out these holdings to other borrowers. Or the platform may also decide to invest their funds for other investments.
Can an investor earn money through crypto lending?
Along with crypto investments and their regular profits, investors can also look at crypto lending. There are two parties involved in every crypto lending activity. The primary person is the lender who receives interest in exchange for loan service. The other stakeholder is the borrower who uses the available crypto tokens. The borrower pays a fixed interest in exchange for this lending.
Better interest rates on lending
The primary benefit of any lending service is its interest rate. The case is similar for cryptos as well. Investors can earn interest by lending their tokens on a crypto lending platform. As an investor, you are likely to earn more profits through this lending scheme. And you are earning this income without doing much about it. You just need to lend out your holdings and enjoy the profits being credited.
Escape from crypto volatility
Yes, every crypto token is bound by crypto volatility. In general, crypto tokens are not tied to any traditional currency. Users can liquidate their holdings in any currency. This feature has also resulted in major price fluctuations in crypto tokens. However, with crypto lending users can escape major price fluctuations. Crypto lending allows you to peg your holdings as a stablecoin. An investor can earn more through the lending process and at reduced risks.
If you are looking for crypto lending, then you can easily do so by following certain simple steps. The first step involves you creating your account with any lending platform. Choose the rate of interest at which you want to lend. Obtain bonds from borrowers that work as proof of your lending.
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