Borrowing or lending out your bitcoin

Lending out

By lending out your bitcoin, you can earn extra income while keeping full exposure to the bitcoin price. Next to BlockFi there is a very interesting alternative platform, that probably fits better with the security demands of bitcoiners and is endorsed by Adam Back. The non-custodial p2p platform goes by the name of HodlHodl and allows you to lend out your bitcoin while keeping the keys to your coins and also does not require KYC. HodlHodl creates unique multisig escrow to hold the bitcoins. They used a similar setup for p2p trading. HodlHodl is partnered with Liquid and Blockstream.

Borrowing

Obviously the aforementioned platforms also allow you to borrow bitcoin, as this is the other side of the lending contract. Now, why would you want to borrow bitcoin? One reason could be to sell it short, but since we are all believers in bitcoin that is not your motivation is it? No, we can also borrow bitcoin to profit from arbitrage opportunities in the option or future markets. When the premium in the futures market for example exceeds the cost of borrowing, one could capture an almost risk-free amount by borrowing coins and selling futures against them.