Replies (28)
Right. Iβve realized this too. Trade p2p and use RoboSats
Agreed. This is why Iβve move away from nostr:npub1ex7mdykw786qxvmtuls208uyxmn0hse95rfwsarvfde5yg6wy7jq6qvyt9 they are playing fiat games
If werenβt for giving up custody, borrowing against BTC in cases where you *could* pay in full makes clear financial sense.
1. If your ability to service the debt were to falter, youβd just pay off the loan.
2. If the interest on the loan is less than the rate of monetization of BTC, youβre going to come out ahead. (That is, youβll have more Bitcoin remaining.)
It is the giving up of custody that makes it a non-starter for me.
What if there's a business interest? Worst case you get liquidated and you don't have to pay back the loan. Just the same as if you sold.
I understand what you mean, I don't think it's wise to use future roi to cope on overconsumption.
While I'd probably never engage in this behavior, I support is wholeheartedly.
Getting a Fiat loan with BTC collateral means that Fiat inflation (money supply) has increased. This promotes BTC's price, which pays off the loan. The more people do this, the more Fiat is degraded and BTC is pumped...
I.e. this is exactly the speculative attack scenario:
https://nakamotoinstitute.org/mempool/speculative-attack/Liquidation might be a taxable event, depending on tax laws where you live.
First there is no borrowing involved, as one is giving away something of a higher value, second of you do that you are paying interest on your own stash, third you are often paying higher interest than just getting a bank credit. Yes don't do that it is stupid and people are being played.
Never thought of this. Perfect explanation of this mechanism, thanks!
Dept is not good, always spend money from the past, not from the future.
FUCK FIAT GAMES & FUCK KYC
borrow sats, only for the value of bitcoin to rise overnight, causing the debt to grow exponentially? no thanks
While I agree in principle about not participating in fiat games I have realized two things about this that changed my mind.
1. If my loan is fully backed I'm never in debt. I can be liquidated, which is the worst case scenario, but I keep the capital from the loan and don't owe anything if that happens.
2. By doing this it accelerates the end of fiat.
Not being played if they go in being fully aware. For reasons, I couldn't qualify for a bank credit so borrowing against my bitcoin helped me.
I borrowed against some of my stack for a venture at 50k. Had I sold instead of borrowing cash against my 2.5x over collateralized multi sig fiat loan I would have way less bitcoin right now.
I was able to do something productive, write off interest payments on my taxes, and keep my stack in tact. Win.
"It is the giving up of custody that makes it a non-starter for me." This is the main problem.
For sure.
It wasnβt clear to me if nostr:nprofile1qqsw9n8heusyq0el9f99tveg7r0rhcu9tznatuekxt764m78ymqu36cpz4mhxue69uhhyetvv9ujuat50phjummwv5hszymhwden5te0wahhgtn4w3ux7tn0dejj7znxpeu was taking issue with leverage, or with debit service.
I think borrowing is smart under the right circumstances:
- could pay it all back at any point
- can afford to service the debt
- the thing youβre *not* selling will appreciate faster than the debt service cost
exactly. Save in Bitcoin self-custody and use it when necessary
with ya
This is true the mental freedom trade off of having no debt
The only way to short fiat.
Borrowing against your bitcoin seems like a terrible idea. I can't think of a scenario where it actually works out. Plus what is the point of having bitcoin if you never plan to use it as currency? Those sort of people (never use your bitcoin!) would be better of just putting cash under their pillow.
People crying about it when price goes down says otherwise.
Bootstrap
that's amazing when it goes up, but i wonder how the people who took loans out at $120k will feel when $58k gang comes back?
I knew that was a risk and was prepared to add collateral if necessary. The lending service I used wouldnβt auto liquidate, they give loaneeβs the chance to add collateral if necessary.
Bitcoin tends to go up more than it goes down, historically, so the odds are like 3/4 that itβs the right call to borrow against your stack based on historic price action. Results never guaranteed though.
I mean, nobody likes being liquidated...
It is not that they do not like it, it is that they are not aware that it can happen, especially on price spikes. The fake borrowing scheme hides the fact that what you are actually doing is marging trading. When NGU you are good, when NGD you will loose more then simply selling what you had when you needed the money.
If NGD, I can repay part of the loan or add collateral. The app warns you, it doesn't just liquidate.
