Opening a bitcoin-backed loan is like unlocking the liquidity in your BTC - without selling it. But to do it right, you need to understand the steps, the risks, and the tools involved. Here's how it works, step by step:

Choose a Trusted Lender

Start by picking a reputable platform or service that offers bitcoin-backed loans. This could be:

• A centralized lender (like GetBitcoinLoans)

• A decentralized protocol (like Sovryn or Aave with BTC wrappers)

• A private lending agreement (peer-to-peer or over-the-counter)

Look for transparency, strong custody practices (ideally multisig or third-party), fair interest rates, and clear terms of service.

Decide How Much to Borrow

Loan amounts are based on your collateral and the Loan-to-Value ratio (LTV). For example:

If BTC is R1,000,000 and you deposit 1 BTC,

At 50% LTV, you can borrow up to R500,000.

Lower LTV = less risk of liquidation.

Deposit Your Bitcoin

Once approved, you’ll send your BTC to a secure address provided by the lender. Ideally, this should be a non-custodial or multisig setup - so you still have partial control or visibility over your funds.

This BTC acts as collateral and gets locked until you repay the loan.

Receive Funds

You’ll receive the loan in fiat (like ZAR) or stablecoins (like USDC or USDT), depending on the platform. You can spend or invest the funds freely, but your BTC stays locked until you:

• Repay the loan, or

• Get liquidated (if BTC price drops too low).

Monitor the Health of Your Loan

Bitcoin’s volatility means your LTV can change fast. If it rises too much, you may get a margin call - asking you to:

• Repay part of the loan,

• Add more BTC,

• Or face forced liquidation of your collateral.

Use price alerts or auto-top-up features if available.

Repay and Reclaim Your BTC

Once the principal + interest is repaid, your BTC is returned to you. No taxes, no sale, just full-circle HODLing.

TL;DR: To open a bitcoin-backed loan, pick a trusted lender, post your BTC as collateral, receive cash or stablecoins, manage the LTV, and repay to get your bitcoin back. It’s debt without selling - liquidity without regret.