In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans and what are the different types of crypto loans. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would be targeting the benefits of crypto-backed loans or crypto lending.
Involving blockchain technology into lending could make the product offerings cheaper, faster and much more transparent to borrowers and lenders. Transactions powered by Blockchain are instantaneous and indisputable, that also comes along with – no transaction fees clause. Fundamentally, leveraging blockchain technology with peer-to-peer lending offers following benefits –
Negligible Transaction Fees
Under the P2P lending process, when a borrower initiates the loan request, it goes to a bank/financial institution’s that charge you fees for processing, documentation, or early payment charges, that was mostly applicable to the borrower. If we refer to Processing charges by Banks in India, it could go up to 20000 INR, on the other hand, crypto-backed loans do not have any processing or transaction charges. Only if you are using the platform [like Nexo, Nuo Bank, Ethlend, etc.], they might be charging you with a small amount. So crypto-backed loans come with a value of money when compared to P2P loans
No Paper Work or Need of Bank Accounts
While opting for Crypto-to-Cash loan you may need a bank account, but otherwise, there is no need of any paperwork or bank account while picking a crypto-backed loan. It also helps in targeting the individuals at the lower level of the pyramid, which is unbanked and cannot provide the required KYC documents.
No Boundaries, Loans Diversified
P2P lending mostly works in restricted geographies’, however, crypto lending could open gateways to cross-border lending, offering diversification to both lenders and borrowers. Crypto-backed loans offer an opportunity to the lending community to diversify their portfolio across different continents and countries. While lenders can take advantage of cross-country diversification, borrowers get a global pool of lenders. A win-win for both.