In one of our latest podcast episodes, we had the pleasure of hosting Finn from Firefish to discuss an exciting topic: Bitcoin loans. Together, we dove into the loan process on the Firefish platform and explored why bitcoin is an excellent collateral. Here are the key takeaways:
Why use Bitcoin as Collateral?
Bitcoin offers several key advantages over traditional forms of collateral like real estate. Unlike physical assets such as property, bitcoin is:
- Digital and liquid: Bitcoin can be traded 24/7, and liquidation can occur in seconds.
- Divisible: In case of liquidation, only the required portion of the collateral is sold, leaving the rest untouched.
- Indestructible: Unlike physical collateral, bitcoin cannot be damaged or destroyed.
These qualities make bitcoin an ideal choice for securing loans, especially in a globalized, digital economy.
How does Firefish work?
Firefish enables peer-to-peer bitcoin loans, where users can pledge their bitcoin as collateral. The process is fully transparent and uses a multisig system, ensuring that the pledged bitcoin remains secure and cannot be re-lent.
In the event of a loan default, the lender is protected by a pre-defined liquidation process. The platform even offers the ability to recover bitcoin using a backup script in the event that Firefish itself becomes unavailable.
A Market with Potential
Bitcoin loans are particularly attractive to bitcoin holders who prefer not to sell their assets - whether to buy a car, make a major investment or simply to bridge liquidity gaps. Interest rates at Firefish average around 10%.
The platform has ambitious plans to expand its offering, including global services and the ability to receive loans in stablecoins to bypass bank transfers.
Conclusion
Bitcoin loans have the potential to revolutionise the way we think about and use credit. The combination of efficiency, security and flexibility makes bitcoin one of the most promising forms of collateral for the future. If this topic interests you, check out the full podcast episode and discover the potential of bitcoin as loan collateral!
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