Topic: Be careful about borrowing BCs for a longer time! (Read 845 times)
That's called shorting
Definitely. Of course, if you are not using the BTC for fiat purposes, for example if you're a BTC seller on OTC and convert the fiat back into BTC fast, then borrowing BTC is a better idea than borrowing fiat.
Sure, there are some situations were it might be better, I just wanted people to think about it. It could also happen the other way round, with BitCoins dropping to zero and thus giving the one who lend the money a zero in return.
Might be some of the borrowers are even speculating on this.
Definitely. Of course, if you are not using the BTC for fiat purposes, for example if you're a BTC seller on OTC and convert the fiat back into BTC fast, then borrowing BTC is a better idea than borrowing fiat.
Borrowing Bitcoins for a long time is way more dangerous than borrowing dollars or whatever.
If the worth of Bitcoins keeps on increasing like it is and you have to buy the Bitcoins with your fiat-money(dollars, Euros etc), you have to pay that on top of the interest rate!
Let me give you an example:
You borrow 100BCs worth $5000 for 2 years with an interest rate of 30%.
Let's say you want to pay back it all at once after the two years. -> you need to pay back 130BCs.
But in 2 years BCs are worth $200, so you need to pay back 130Bcs*$200 -> $26.000 !
There are high chances that you are never able to pay the loans back!
Some people are thinking Bcs can reach $1.000 or even $10.000 in some years, if this is going to happen even paying back measily 0.1 BCs will be a problem!
If the worth of Bitcoins keeps on increasing like it is and you have to buy the Bitcoins with your fiat-money(dollars, Euros etc), you have to pay that on top of the interest rate!
Let me give you an example:
You borrow 100BCs worth $5000 for 2 years with an interest rate of 30%.
Let's say you want to pay back it all at once after the two years. -> you need to pay back 130BCs.
But in 2 years BCs are worth $200, so you need to pay back 130Bcs*$200 -> $26.000 !
There are high chances that you are never able to pay the loans back!
Some people are thinking Bcs can reach $1.000 or even $10.000 in some years, if this is going to happen even paying back measily 0.1 BCs will be a problem!
Jump to: