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Crypto-backed loans are structured like collateralized loans, where the borrower provides the lender with collateral in order to get access to more funds. More specifically, the borrower gives the lender their cryptocurrency in order to get USD. Once the loan is paid off, the borrower gets their crypto back. This is a safe and easy way to get access to USD or stablecoins.
Blockchains are also interesting because they allow everyone, who are not mutually trusted and not even aware of others participants in the network, to unanimously agree on the single view of the ledger. This feature differentiates blockchains from other centralized and traditional systems which usually require some inherent trusts for the platform providers.
Loi: Bitcoin itself is not actually being exploited, it’s is the exchanges and end-user wallets that interact with bitcoin that are being exploited by hackers and what you read about in the news. Fundamentally, Bitcoin is decentralized and completely secure. The issue today is that most of the major exchanges for buying and selling Bitcoin exist on centralized servers, meaning all of the information for users is stored in one centralized location and prone to attack. The conundrum of this is that these exchanges would be inherently more secure if they used decentralized / blockchain technologies.
Ethereum is another use-case for a blockchain that supports the Bitcoin network, and theoretically should not really compete with Bitcoin. However, the popularity of ether has pushed it into competition with all cryptocurrencies, especially from the perspective of traders. For most of its history since the mid-2015 launch, ether has been close behind bitcoin on rankings of the top cryptocurrencies by market cap. That being said, it's important to keep in mind that the ether ecosystem is much smaller than bitcoin's: as of January 2020, ether's market cap was just under $16 billion, while bitcoin's is nearly 10 times that at more than $147 billion.