Can I Use Bitcoin As Collateral For A Loan?

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Many people are wondering if they can use Bitcoin as collateral for a loan. This cryptocurrency has definitely gained a lot of popularity in recent years. What may have once been only a fascination with the cryptocurrency fad has truly become a viable economic instrument that is taken seriously the world over. As the most valuable and certainly the most popular cryptocurrency in existence, Bitcoin doesn’t appear to be going anywhere any time soon.

But the bigger question of what Bitcoin can actually be used for is still at the forefront of many minds. Many people with Bitcoin are burning a virtual hole in their virtual pockets that have expressed interest in using Bitcoin as collateral for a loan. With the expansion of Bitcoin, new opportunities have definitely surfaced, recognizing its innate value as an asset.

Lenders That Accept Bitcoin as Collateral for a Loan

Many banking institutions are still unwilling to accept Bitcoin as collateral for a loan. Either they consider it to be far too risky, they don’t understand it or a combination of both. But some companies have begun to fill the void and test these waters, seeing a real demand in the marketplace. These are a few of the companies that will accept Bitcoin as collateral for a loan.

1. YouHodler

According to Connor Benkinsop in Cointelegraph YouHodler specializes in lending amounts from $100 to $30,000. Not only can you use Bitcoin as collateral for a loan, but you can use six different cryptocurrencies as well with more on the way. This opens up an interesting concept that hasn’t been previously considered. Using the power of your Bitcoin without liquidating it is a very viable business model that YouHodler is fully embracing. YouHodler isn’t in the extended loan business though. Their loan terms don’t typically go beyond 120 days. So if you’re looking for a 30 year fixed interest mortgage, it isn’t going to happen here.

2. Salt Lending

Another startup that sees the profit potential in allowing Bitcoin liquidity without actually liquidating is Salt Lending. Will Yakowicz writes for Inc. that Salt Lending is one of a handful of companies that are willing to take on the risk of Bitcoin-backed loans. They do acknowledge that to account for the ups and downs of Bitcoin, it is necessary to put up more of the cryptocurrency to get less cash and you’ll find that interest rates will also be higher than traditional lending institutions.

3. EthLend

Following a peer-to-peer approach to lending, EthLend acts more like a marketplace than a banking institution. The same concept applies as with other companies offering liquidity without selling assets. EthLend boasts that they are one of the first decentralized applications on blockchain, according to Stani Kulechov in Medium. Peer-to-peer is a whole other type of lending platform, but EthLend is happy to offer its services as a marketplace for borrowers and lenders.


With more of these startup lending companies hanging out their shingle each year, it appears that there is a demand in the market. With that said, this may not be the loan for absolutely everyone. Loans are short and interest is high when using Bitcoin as collateral for a loan. Those that are using the loan strategically are finding it very useful. Some Bitcoin miners are using loans to upgrade their equipment so they can mine even more Bitcoin.

Those that are all-in with the cryptocurrency revolution believe that this is the future and could not ever envision selling their Bitcoin. These people will always see the value in borrowing against their Bitcoin rather than just selling it off. Far too many of the earliest investors in Bitcoin remember cashing out their wallets when they made a little bit of money, but losing out in the long game. Crypto investors have learned from this mistake and aren’t so quick to sell anymore, but they definitely want to be able to use the power of the asset.

The Future of Bitcoin Lending

Yakowicz in Inc. mentions that some smaller Swiss banks have begun offering some traditional loans using Bitcoin as collateral, but it is largely taboo. Even amongst the lenders that are in this space, more competition is making it a more viable lending option. Some of the newer startups are offering lower interest rates and more loan options that are more like traditional institutions. This does seem to be a new frontier in consumer and business lending that is gaining momentum.

It is certain though that the world is no longer seeing the selling of Bitcoin and other cryptocurrencies as “virtual” currency. The idea that “it’s all fake anyway” is a myth that is long gone. Cryptocurrency investors are savvy and understand that the Bitcoin in their wallets is a true asset that deserves consideration like real estate or other securities. The addition of an industry dedicated to lending different currencies using Bitcoin as a security is only the next logical step toward cryptocurrency legitimacy.

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All data provided by the Home Mortgage Disclosure Act, at updated Dec, 19
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