Bitcoin Lending

Definition ∞ Bitcoin lending involves providing Bitcoin to borrowers in exchange for interest payments. This financial activity can occur through centralized platforms or decentralized protocols, often requiring collateral from the borrower. Lenders seek to generate passive income from their holdings, while borrowers access liquidity without selling their Bitcoin. The terms, interest rates, and collateral requirements vary widely depending on the platform or protocol utilized.
Context ∞ Bitcoin lending is a prominent aspect of the growing decentralized finance (DeFi) and centralized crypto finance sectors, frequently featured in market analysis and news about investment strategies. The practice presents opportunities for yield generation but also carries risks related to counterparty solvency and collateral volatility. Regulatory scrutiny and market stability are ongoing considerations for participants in this segment of the digital asset economy.