How to Get a Bitcoin (BTC) Loan

By Samuel Becker · September 02, 2022 · 7 minute read

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How to Get a Bitcoin (BTC) Loan

With a Bitcoin loan, a borrower typically offers up their Bitcoin holdings as collateral, and the lender gives them cash, and charges interest. If you’re curious, getting a crypto-backed loan is possible, and we’ll run through everything you need to know.

What Is a Bitcoin Loan?

Bitcoin loans allow borrowers to use their crypto as collateral to get their hands on fiat currency.

There are many online platforms that allow a borrower to take out loans against the Bitcoins they own. Some of these loan platforms work by connecting Bitcoin-investing borrowers with cash lenders, while others offer the loans directly to Bitcoin investors.

That means an individual can either be a cryptocurrency borrower or lender. It’s possible for investors to use lending platforms to lend money to Bitcoin investors, hold that Bitcoin as collateral, and then create an income stream from the interest payments of the borrowers.

Ways to Take Out a Bitcoin Loan

Bitcoin loans offer both speed and flexibility, in addition to cash liquidity — all of which may be attractive to some Bitcoin investors.

Over the years, Bitcoin and many other cryptocurrencies have delivered positive returns for individuals investing in cryptocurrency, despite the ongoing volatility and risks of this sector. (That said, past performance is no guarantee of future results.)

Long-term investors may be reluctant to liquidate their cryptocurrency digital assets, while at the same time, needing money for short-term needs, like a medical emergency. That’s where a Bitcoin loan can make sense for some people.

For borrowers, Bitcoin loans have a few advantages over traditional loans:

Fast Loan

One advantage of Bitcoin loans is that they may have faster turnaround times. That is, you can sign up on a platform, get verified, and get money in your hands in relatively little time. Conversely, with a conventional loan, there is usually some due diligence and a waiting period involved.

No-Strings Loans

Another advantage is that Bitcoin loans may serve as no-strings-attached types of lending. As opposed to the business, auto, or home-loan approval process, a Bitcoin lender may not have any interest at all in what you plan to use the money for.

No Credit Score Requirement

Some Bitcoin lenders may not care about your credit score. But there is something else that matters: A “trust score.” A trust score, as the name implies, is simply a way to verify your identity so that the lender feels a degree of trust, and is then more likely to lend to you.

Borrowers may be asked to present documentation that will increase that score, including but not limited to: government-issued identification; address verification, such as a gas or electric bill; email verification; verification of online financial accounts, such as PayPal; credit card verification.

Some borrowers can also improve their trust score with their social media presence. The more of a social media profile an individual has, the more it proves they are a real person, who can pay back the loan.

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4 Steps to Getting a Bitcoin Loan

If you’ve weighed the pros and cons, and think that taking on a Bitcoin loan is something you’d like to do, the process of getting one is pretty straightforward.

1. Select a Lending Platform

This will likely require some legwork, but you should look at the available lending platforms on the market, and decide which one you want to go with. There is no right or wrong answer here, but depending on factors like your risk tolerance, some might be more attractive than others.

While a borrower’s first impulse may be to borrow against their Bitcoins at the lowest available interest rate, there are other factors to keep in mind. For example, it is important to check if a given platform is reliable and secure.

2. Create an Account

Next, create an account on the platform of your choice. Borrowers will likely need to verify both the cryptocurrency collateral they’re offering, as well as their identity (“trust score”).

3. Select a Bitcoin Loan Type

The third step is to choose the type of Bitcoin loan you want to take out. Platforms may have options — for instance, on some platforms if a borrower agrees to a higher interest rate, they won’t have to put up as much bitcoin as collateral. In some situations, a lender can choose how much they want to lend, and set the interest rate themselves.

4. Receive and Accept Bitcoin Loan Offers

Finally: Wait for the BTC loan to come through! This can take just a few hours after submitting an application. Once a borrower accepts the terms of the loan, they should receive the money.

Reasons Not to Take Out a Bitcoin Loan

Just as there may be advantages to taking out a BTC loan or crypto-backed loan, there are also reasons not to. Here are a few things to take into consideration before signing up for a Bitcoin loan.

Bitcoin’s Volatility

Cryptocurrencies are volatile, there’s no getting around it. And Bitcoin volatility could mean that the amount of the digital currency that you have to put up as collateral may be many times the amount of actual cash you receive in the loan. That, in effect, multiplies the amount you could lose if you default.

To get a sense of how volatile Bitcoin’s value is, take a look at Bitcoin’s price history.

If the value of your collateral falls, some lenders can make a margin call, in which they ask for more collateral to return it to the original ratio of the loan, or ask that you repay the loan altogether (similar to a traditional margin call). While a borrower will get that Bitcoin back upon repaying the loan, that situation can come with financial penalties if they don’t have the Bitcoin to meet it.

Frequent Defaults

Additionally, there’s some evidence that Bitcoin loans tend to default frequently, which makes them both more expensive for borrowers, and riskier for lenders. Since Bitcoin lending isn’t regulated in the same way as ordinary loans, there is little recourse if an overseas borrower defaults.

The interest rates that crypto lending platforms charge to borrow against Bitcoin can be much higher than the average mortgage, and in some cases quite close to double-digit interest rates charged by credit cards.

More Fees

Finally, you need to take fees into account. Typically, borrowers also have to pay the lending platform a commission, along with other fees. It can be helpful to look closely at the interest rates and the fees, and think carefully about one’s own expectations for Bitcoin over the term of the loan before taking one out.

Bitcoin Loans: Pros and Cons



Loans can come through quickly Higher volatility vs. a fiat-based loan
Loans are often no-strings attached Increased chance of potential default
No credit score requirement High fees

The Takeaway

As new as Bitcoin and other cryptocurrencies are, Bitcoin lending is even newer. And while Bitcoin loans create a new set of possibilities for quick liquidity (e.g. you don’t have to worry about your credit score or other time-consuming underwriting procedures), they also come with their own set of possible pitfalls. Bitcoin loans often come at higher interest rates and typically require some collateral.

A lot should go into deciding whether a crypto-backed loan is right for you, including carefully researching possible lending platforms, and reading the fine print of a loan offer before accepting one. Also, you may want to look at borrowing against other crypto (Bitcoin vs. Ethereum, for instance) before making a decision.


Can you get Bitcoin loans?

Yes, it’s possible to get Bitcoin loans through various platforms. Prospective borrowers usually need to have crypto reserves to offer up as collateral in order to take out the loan.

Where can you take out loans against your Bitcoin?

There are a number of online and digital platforms that allow prospective borrowers to borrow money against their Bitcoin holdings. An online search will yield many, but it’s up to you to do your due diligence to choose the one that works for you.

Is it possible to get Bitcoin loans without collateral?

It may be possible, but getting a loan without collateral is just a collateral-free loan. It’s not necessarily a “Bitcoin loan,” since there’s no Bitcoin being offered up as collateral.

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