Module 5.0.0. Why a Crypto Loan
Don’t forget cryptocurrencies are money. Being money, crypto loans are obtained for various reasons such as:
(1). To Raise Capital for Projects
Examples are building a house, buying a car, pay hospital bills, etc.
(2). To Raise Fund to Invest More in the Crypto Market.
This is one of the common reasons people take up crypto loans. For instance, if you plan to hodl your Bitcoin as a long-term asset, you wouldn’t want to sell it to raise money to buy other emerging crypto assets, especially knowing that the value of Bitcoin keeps going up.
In such situations, you may use your Bitcoin as collateral to raise capital to invest in the emerging crypto assets. Once you have paid back your loan and the interest, your Bitcoin is returned to you.
(3). Tax Incentives
In most jurisdictions, taxes are not charged on borrowed money. In fact, some tax operations give incentives to borrowers. Hence, some traders delay tax by using their cryptos as collateral to raise funds.