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Breaking News: Bitcoin, XRP, Ethereum Dip Post Fed's Rate Cut: What’s Next For Crypto?
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Breaking News: Bitcoin, XRP, Ethereum Dip Post Fed's Rate Cut: What’s Next For Crypto?

Goldman Sachs Is Bringing bitcoin-Backed Loans To Traditional Finance

Best Owie
Best Owie
Last Updated: June 11, 2024 11:31 am
2 mins read
Bitcoin

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Lending and borrowing have become words that are associated with Bitcoin. This is the same with traditional finance where lending and borrowing remain a big part of the ecosystem. However, there has not been an intersection of these three. This has mostly stemmed from the distrust of traditional finance toward bitcoin. The digital asset which remains largely unregulated did not provide the kind of backing tradfi wanted. That is until now.

Bitcoin-Backed Loans In Tradfi

Investment bank Goldman Sachs has announced the introduction of Bitcoin-backed loans. In what is a first for a major U.S. bank, Goldman Sachs has expanded its crypto offerings to include these bitcoin-backed loans. It is the first secured lending facility of its kind which will lend out cash that is collateralized by BTC. 

Related Reading | Number Of Bitcoin Millionaires On The Rise As Accumulation Continues

Mostly, banks have shied away from the cryptocurrency due to its highly volatile and unregulated nature. Nevertheless, various institutions have taken to providing services that revolve around cryptos such as asset and wealth management, trading, and investment. All of which remains a far cry from cash loans that use bitcoin as collateral.

A move like this will see not only Wall Street embrace the cryptocurrency faster but other factions of the traditional finance will begin to move in this direction. 

Bitcoin price chart from TradingView.com

BTC succumbs to bears | Source: BTCUSD on TradingView.com

Goldman Sachs has no doubt evolved in its view of bitcoin over time. Less than two years ago, the bank did not believe that the cryptocurrency was an asset class. Since then, it has not only recognized it as an asset class but has been offering its clients a way to trade the cryptocurrency. It also boasts a crypto research team that publishes reports on the crypto market. Over the months, these reports have been mostly bullish toward digital assets such as Bitcoin and Ethereum.

Crypto Collaterals

Although this is the first for a major bank to accept bitcoin as collateral for a loan, it is in no way a novel concept. The rise of the decentralized finance (DeFi) space has seen users being able to borrow against their crypto holdings for a long time. There are DeFi protocols dedicated to this in the space.

Related Reading | Bitcoin Briefly Tops $40,000 As More Countries Adopt Crypto

In this regard, traditional finance is playing catch-up to DeFi which requires no paperwork for individuals to secure a loan. With a deal like the one Goldman Sachs is offering, it can help to bridge the gap between traditional and decentralized finance.

Bitcoin is trading at $38,927 at the time of this writing, down 2.64% in the last 24 hours.

Featured image from Bitcoin Lending, chart from TradingView.com
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Best Owie
Best Owie

Best Owie

Best Owie is a seasoned managing editor with a wealth of experience currently serving as the Managing Editor at NewsBTC. Best is a highly skilled professional with a track record of producing engaging and informative content. With a keen eye for detail and a passion for accuracy, Best is committed to ensuring that each article published meets the highest standards of quality.

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Best has over six years of experience in the crypto industry and has overseen the creation and publishing of thousands of articles over the years. Best is always abreast of everything that is going on in the crypto industry in order to create and curate the most relevant content for readers. This shines through in Best’s publications, which are always clear and concise, enabling easy reading and understanding for all.

Best is also an avid learner and advocate for new technology. This has seen Best dive into topics in areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), Layer 2 blockchains, etc. In addition to this, Best is a vocal member of the crypto community across various social media platforms such as X and Reddit. Best’s work garners tens of thousands of readers monthly, who rely on the information in these publications to keep up-to-date with everything happening in the crypto community.

Best’s articles explore breaking news, intricate systems such as yield farming, liquidity pools, and other decentralized finance (DeFi) systems. This is because Best understands the importance of information to gaining financial freedom and believes that everyone should have access to this information.

Best also believes in leveraging the blockchain for philanthropy to create the most positive social impact. This involves work with charitable organizations focused on financial literacy and education. With each article, Best lends a voice to important issues such as a more financially inclusive future, transparent systems for growth and development, and technology that is not self-serving but one that serves all of humanity.

When not curating engaging content, Best can be found reading a book with a cup of hot chocolate, enjoying a Netflix series, or exploring the outdoors with Green - the world’s most quiet and well-behaved Husky. Best’s interests also span other industries such as art, finance, and security, attending seminars and conferences in not just the crypto industry but other industries as well.

As an animal lover, Best is also involved with charities for animals, local shelters, and rescues. Best is also involved in local events that promote inclusivity, such as being a prominent member of hiking clubs and a cycling club, as well as being a part of a very happy group of animal lovers.

Best is a true professional in every sense of the word, with an exceptional dedication to producing high-quality work. This shines through in Best's work on and off the clock. These include advocating for inclusive crypto education for all, the impact of financial illiteracy, and the benefits of adopting new technologies such as cryptocurrencies. Best’s prolific career in the media industry is a testament of how hard work and dedication pays.

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