“Never sell your bitcoin.” Donald Trump’s words from the 2024 Bitcoin Conference in Nashville resonate deeply in the crypto community. This principle has given rise to Bitcoin-backed lending services, allowing holders to obtain liquidity without parting with their BTC. Ledn, founded in 2018, is a major player in this space, having funded over $10 billion in bitcoin-backed loans across more than 100 countries.
Why borrow instead of sell?
Bitcoin’s compound annual return between 2015 and 2024 was roughly 80% (from $430 to $87,300), an unmatched track record. Selling to meet short-term cash needs means forfeiting future upside and potentially triggering a taxable event. Bitcoin loans offer a solution: use BTC as collateral, access cash (e.g., USDC or fiat), and keep the coin for long-term appreciation.
The four steps of a Ledn loan
Step 1: Understand terms and submit application
Ledn currently offers a fixed APR of 12.40% on Bitcoin loans, with a standard loan-to-value (LTV) ratio of 50%. This means you can borrow up to half the dollar value of your BTC collateral. Over-collateralization protects Ledn from price drops, enabling a no-credit-check process. Before applying, you must complete KYC (identity verification) and choose a payout method (crypto wallet or bank account). Approval typically takes minutes to 1–2 business days.
Step 2: Deposit collateral
Once approved, you have 10 days to send your BTC to Ledn’s designated address. Using a wallet like Bitcoin.com makes this straightforward. The collateral remains under your control, but Ledn holds it until the loan is repaid.
Step 3: Receive loan funds
After the deposit is confirmed, the loan becomes “active” on the dashboard. Funds are sent to your chosen account (bank or wallet). Some borrowers opt to deposit additional collateral to lower their LTV ratio, which can reduce interest costs.
Step 4: Repayment and renewal
You can repay the loan at any time using BTC, USDC, or fiat. There are no prepayment penalties. The standard term is 12 months. If the full amount isn’t repaid by the due date, you may renew as long as the loan still meets minimum criteria (e.g., LTV within limits).
Risks and considerations
While Bitcoin loans provide liquidity without selling, they come with risks. If BTC price falls significantly, Ledn may issue a margin call requiring additional collateral or partial repayment. Failure to meet this could lead to liquidation of the collateral. Borrowers should monitor market conditions and maintain a comfortable LTV cushion. Nevertheless, for those who believe in Bitcoin’s long-term value, borrowing at a 12.4% APR against an asset that historically returns ~80% annually can be a compelling strategy.
Conclusion
Ledn’s streamlined process—a simple four-step flow with quick approval, no credit check, and no penalty for early repayment—makes it an attractive option for HODLers who need cash flow. The key is to borrow conservatively: a 50% LTV or lower leaves room for market volatility. Overall, Bitcoin-backed loans allow you to “have your bitcoin and spend it too,” as long as you understand the underlying mechanics and risks.