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Why Bitcoin-backed loans will become more popular



Bitcoin has grown to become an asset with a market cap of over $500 billion. Today, it is not just used as a currency and means of transferring value, Bitcoin now represents collateral assets that are compared with gold, real estate, and other traditional assets.

Mauricio Di Bartolomeo, Co-Founder & CSO at Ledn Inc. said at the Bitcoin 2023 event, Miami, that he sees a market situation where “borrowing against your Bitcoin will be more accessible, cheaper, faster, and better than borrowing against Real Estate in the US.” 

He added that apart from being faster, and cost-effective, “it’s a globally accessible asset [which] will be the first time people all over the world can access dollar liquidity at the same rates.” Everyone that accesses it is treated equally “Whether you’re in Colombia, Canada, or the US you pay the same rate.”

Higher demand for Bitcoin loans, higher demand for transparency

Jason New, Managing Partner and Co-Founder at NovaWulf Digital, in support of Mauricio, hinted that he sees a trend where more people would want to “long Bitcoin and short Fiat”. Therefore this would be one factor that will drive the development of Bitcoin-backed loans.

However, he pointed out that for entrepreneurs who’ll be building such platforms, there’s a need for transparency and being in tune with reality in terms of growth projections. They need to “recognize the limits with which” one can scale a business and also be aware that VC valuations might not be as high in such a business, he added.

Lending will be part of the crypto regulation

Looking at the entire crypto industry and regulations, Alex Thorn, Head of Firmwide Research at Galaxy, said that because of the effect of how lending platforms collapsed, the crypto lending market will also be a major part of the regulations that will be introduced into the industry. “Lending books don’t just miraculously blow up and lose more money than they’ve ever earned in revenue.”

He added that while he doesn’t see crypto regulation that will affect the lending market coming quickly from the US in 2023, “it’s hard to imagine lending doesn’t come out somehow in a regulatory framework.”

Jason, in agreement with Alex, hinted that the regulations coming should be led by the industry instead of the regulators. He said that this is because “if the industry leads” the way, then whatever the regulators introduce will fit better than the other way around.

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