You can borrow against Bitcoin without selling it, but there’s a catch

Bitcoin holders who need cash do not necessarily have to sell their BTC. They can borrow against it instead, keeping exposure to Bitcoin while using its value as collateral for a loan.The complication is that the loan they want may exist on another network. Many blockchain lending applications run on Ethereum, which keeps its own record of who owns what. A Bitcoin owner's BTC is recorded on Bitcoin's network, and an Ethereum application cannot simply reach over and take it as collateral.One solution is to entrust the Bitcoin to a custodian, a business that holds it for safekeeping, and receive a digital token the lending application can accept. The original BTC stays in custody while the new token represents it on another network.That arrangement can unlock a loan without selling the Bitcoin, but it changes what the holder depends on. The borrower now relies on the custodian holding the BTC, the rules for getting it back, the token maintaining its value, and the lending application managing the loan.Coinbase, Circle and WBTC offer competing versions of that arrangement. Circle's Sept. 4 explanation of its cirBTC product sets out its approach to a market already served by Coinbase's...