Which one should you choose? – Blockchain news, opinion, TV and jobs

Cryptocurrency lending is on the rise. In fact, raconteurs have found that they are becoming a real alternative to borrowing money from banks. This growth is not surprising: many around the world already buy, trade and sell crypto. After all, crypto is digital but still a currency. If you are new to crypto loans and deciding between this and personal loans, keep reading to find out which one is best for you.

Crypto loans

Cryptocurrencies are assets similar to cars, houses or stocks. They can also be used as collateral for loans. A crypto loan works by using your crypto holdings as collateral to get money from the lender. One popular crypto lending platform whose loan originations reached $4 billion in 2019 is the Celsius Network. You can use your crypto loan as per your choice. This type of loan allows you to manage your crypto assets. It also allows the lender to take action, such as buying your property, if you miss payments.

There are two types of crypto loans: centralized finance (CeFi) and decentralized finance (DeFi). In SeFi, the lender controls your repayment schedule. Meanwhile, DeFi uses smart contracts to guarantee your compliance.


You must own any crypto that is accepted by your chosen lender. The most common are Bitcoin and Ethereum. You will also be asked for identification and verification of crypto assets.


Because crypto is digital, your assets are vulnerable to cybercrime and security breaches. The World Economic Forum discusses crypto regulation in different countries and therefore focuses on improving investor and consumer protection. Such rules allow transparency and authorization of transactions, including loans. However, these efforts to protect crypto consumers are still in their infancy, so it is important that you research crypto lending platforms before using their services.

Personal loans

A personal loan can be obtained through a bank, credit union or financial lender. The most common personal loan is unsecured, often used to finance large purchases such as vacations. You don’t have to put up collateral, so the lender won’t get your property if you can’t pay. Still, you may face consequences such as additional fees and even prosecution. On the other hand, secured loans require collateral like a car or house. Failure to pay will result in loss of collateral and a lower credit score, which will hurt your chances of getting future loans. Secured loans are often used for mortgages or automobile loans.


Anyone on the credit spectrum can get a personal loan. If you want higher chances of approval and a lower interest rate, Sound Dollar notes that applying for a personal loan requires a good credit profile. This includes having a credit score of 670 or higher, which shows your responsibility to pay on time. Pay bills on time more often to improve your score and avoid going over your credit limit. You will also need proof of income or employment to confirm payment.


Because you can get personal loans from financial lenders, they may not follow the same privacy rules as banks and credit unions. Therefore, your personal and financial data may be used or stolen without notice.

Which one should you choose?

Choose a crypto loan if you have a low credit score and crypto assets you want to risk. Crypto lenders are not banks, so they have lower interest rates. If you have a high credit score and can’t afford a mortgage, go for a personal loan. The only thing you are up against is time. Both loans have risks and responsibilities, so be careful about what you’re risking and always make your payments on schedule.

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