For centuries, bank lending has prevailed and it is still going strong to this day. It’s the most popular lending method in existence currently. Advantages and disadvantages aside, no one can deny that bank lending has supported the growth of many industries worldwide. With that said, crypto lending is the new kid in the field of lending and is effectively making a name for itself.


Looking at bank lending and crypto lending on a superficial level, one will easily find numerous similarities between them. Nevertheless, there are still several structural differences that make them different from each other.


Exhibit A: Bank lending


With bank loans, your credit score is vital and will be what determines the amount of money you can borrow. Having a low credit score means that you could potentially be unable to acquire the funds that you need and/or be left with a high interest rate. 


Several factors are taken into consideration, like your current income and credit history. Upon finding a bank that will offer you a loan, you must provide a plethora of personal information. These include your social security number, government-issued ID, bank statements, proof of employment, and more. 


Moreover, borrowers have little control over the final loan terms. In actuality, the bank dictates your loan amount and interest rate by drawing from the provided information. If the loan terms are satisfactory, you will need to settle the loan documents and wait for your money. This waiting period can last anywhere between a day to a week. On a monthly basis, you need to make the minimum repayments as the loan terms dictate.


Exhibit B: Crypto lending


While cryptocurrency lending platforms are unique, they can be divided into two distinct categories: centralized and decentralized.


Centralized platforms share some similarities with traditional bank lending. With these platforms, it will usually take responsibility for various tasks. These include onboarding users, KYC checks, managing payments, and providing custody solutions.


Decentralized platforms, on the other hand, are unique in comparison to centralized platforms and bank lending. For the most part, smart contracts help automate loan distribution and repayments taking place between platform users. KYC information and additional data are not typically collected. 


Crypto lending has considerably more advantages than traditional bank lending does. A notable benefit is that acquiring a crypto loan is more accessible than getting a bank loan. There is no need to have a bank account and a credit score is not required. In some cases, you don’t even need to confirm your identity. 


Another advantage is that there are crypto lending platforms that you can borrow and lend on. With them, anyone owning specific cryptocurrencies can earn interest on their crypto, essentially permitting your crypto to work for you. Furthermore, the loan terms are more flexible and the fees are straightforward, as well as lower than those you would find in conventional banking.




Despite bank lending being around far longer, when it comes to loans, cryptocurrency lending has the upper hand. The advantages outweigh the disadvantages, and the disadvantages themselves are not that big of a deal. Even though crypto lending is still in its infancy, it is making waves in the industry.