Cryptocurrency exchange Coinbase has announced that it is now possible to borrow cash using bitcoin as collateral and a PayPal account. At the moment, this option is only available for some states in the United States, but it is expected to be expanded to the rest of the world in the coming months. The use of bitcoin as collateral gives another dimension to the cryptocurrency, since it makes it possible to bypass the bureaucracy of traditional banking. To request the loan, you do not need a review of your employment or financial situation. The only limitation is that you can only borrow up to 40% of the account value, with a maximum of $ 1,000,000.
Coinbase loans with collateral bitcoin, on PayPal
Coinbase points at its Web page that asking for these loans can be a profit from a fiscal point of view. A user who wants to sell bitcoins to meet a payment, will be very negatively affected fiscally. However, applying for this type of loan allows you to have cash directly without the need to sell bitcoins. In addition, they are loans without commission, in which there is only an applied annual interest rate of 8%. Payment must be made per month, with a minimum of $ 10 per month.
Skip the banks
For a long time it was possible to request loans in cryptocurrencies in Decentralized Finance. However, the difficulty of the process was a barrier for most users. The possibility of requesting loans in centralized cryptocurrency exchanges such as Coinbase, brings the ordinary user much closer and poses a serious threat to traditional banking. Now, while in DeFi loans everything is done completely anonymously, in Coinbase loans everything is registered.
Discovering DeFi: how to apply for a loan by skipping the banks
To get the cash in Coinbase it is necessary to link the bank account or PayPal. In such a way that the borrowed cash is immediately entered into one of those accounts through an electronic funds transfer (ACH). From Coinbase they ensure that the bitcoins used as collateral are not loaned or used for any other purpose.