Topic: Borrow fiat with your Bitcoin and never sell - page 3. (Read 1173 times)

From all I understand in your post, your talking about crypto loan. Selling my Bitcoin again...? No, I would not do that. Crypto loan is a great idea, I have not fully educate my self about this crypto loan but I know binance CEX has the feature where you can take a crypto/fiat loan and deposit another Coin, it could be BTC (your asset) as Collateral (https://www.binance.com/en/loan).
Instead of selling my Bitcoin for a cheap price, I'd rather go for the crypto loan.

Precisely for me it's not a good idea to take out a loan with a decent profit while we don't think about how big the risk will be later this also needs to be thought about and what if it happens, so I avoid it.

For me, a loan is not a good thing, especially for crypto investments which are full of high risk when volatility is difficult to predict, this kind of thing is not included in the management I planned, I certainly have to have my own allocation where when I want to have BTC it must be there when the price drops This will not be charged because it has been allocated differently from the loan where we have to return it at the specified time.

Good idea but isn't a wise move. It will never be advisable to invest in Bitcoin using borrowed funds. We all know how risky crypto investment is and it could only cause you trouble in case you fail in your investment. Borrowing just to have investment capital won't work in the long run. You better save and allocate funds for investment. Bitcoin investment is not as easy as you think because its volatility is unpredictable.

I'm not, and it was not my plan. I keep Bitcoin and also fiat money and that is because Bitcoin is not fully accepted in all areas, not even in my country. Yes, I could say it was not banned in my country but the problem is it was not also accepted as currency. And I was urged to sell them and converted them to fiat money for there is something I could use to buy stuff and other necessities.

I see your idea was good but not really how it works this time, not now - might be possible and it works in the future.

I think you need to have a more thoughtful plan than this 'borrow fiat, never sell bitcoin' plan. You know, fiat has the interest rate, and if Bitcoin was under a bear market with price drop every day, you put yourself at risk. Saw how many crypto financials like 3AC, Voyager, Celsius are now under bankruptcy because of hedge funds, lending,... They've expanded a lot when it was a bull market and overestimated themself and can not cover under the bear market.

Not a wise thing to do as you do not know what will happen to bitcoins in the future.

My goal is to never sell the Bitcoin, and to leave it to my children after I die. I will teach them about the first principles of money, and why Bitcoin is the greatest, hardest money ever created, so that they never sell it. Their cash can be stolen through inflation, their gold can be stolen by anyone, and their land can be stolen by eminent domain or asset forfeiture. Their Bitcoin can never be stolen, so long as they know how to hodl it.

When we  do tend to take up some loan then we arent that dumb on not to know on whats the interest.Therefore, if you do see that it is really just high then there's nothing you can do about it
So its a take it or leave it kind of situation of yours to take. There's nothing wrong to take up some loan as long you are responsible  and able to repay those amounts in due time then i dont see
anything wrong with it as long it would be applied to investment but of course dont expect something from it because there's no assurance or sureness that you could make profits on time.

^ I think you did not understand as OP said, the BTC here is just collateral, whatever happens to the price still the BTC is the collateral.
Probably the point is, while BTC is at a low price or you know that your BTC will grow more in the future, instead of selling it directly to exchange, just use it as your collateral and borrow fiat which is fiat amount will remain the same as what you borrowed.
However, the problem here is where you will find a service that allows BTC as collateral and make sure it should be trusted.

So let me get this right:

You want to

1. Borrow fiat for half of your Bitcoin as collateral.
2. Pay off the loan by, what, selling Bitcoin profits for x amount of fiat or in the form of x amount of Bitcoin?

So either you are paying tax once you sell for fiat to pay your debt OR you pay in an agreed amount of Bitcoins. And seeing as Bitcoin is going up very nicely, you could actually lose out more on profits than you would have paid on taxes. Unless of course Bitcoin falls. But thats not a bet I would want to take. Because the chances that Bitcoin is going to go past 33% in price is more likely than the opposite. And at that point you lost more than if you paid 33% in taxes.

Don't the rich make money by borrowing fiat to buy property which will then generate turnover (revenue)? That generated turnover is taxed and part of the profit is used to pay back the loan? Once its paid back they can do the same method over again but this time borrow more by using the bought property as additional collateral?

Any turnover is still taxxed. If your property does not generate any profit and you have no fiat to pay them back then they can take your property and your Bitcoin as collateral. Am I missing something?

The same method for borrowing money to buy Bitcoin would generate huge profits.
But first you have to find someone to loan you fiat to buy Bitcoin.

The loan application conversation would go like this:

You : Hi, I want to borrow fiat to buy BTC.
Bank: No. If we were smart enough to understand the potential of Bitcoin, we would have bought it ourselves.

owh I see your point. so you prefer to borrow money than sell your Bitcoin if there is something urgent to get money?
well, this is your own plan and I cannot blame you. everybody has individual thinking.
but for me, I will try my best to stay away from loans. I prefer to sell my asset if something happen with me and need much money than borrowing money for loans moreover in bank. because I need to pay for the debts and interest. additionally, I maybe feel worried if having loans, I cannot life calmly. that is why I prefer not to have loans. better to sell my assets and then I can collect money again to add my investment.

This is what big companies are doing and why they recently got in trouble when the price crashed.
They took loans with their bitcoin as collateral, but when the price halved the lenders demanded more collateral, which the companies couldn't provide because their investors and sales dwindled.

As for you, the average user, taking a loan with bitcoin collateral is not a bad idea, as long as you don't use all of it. Say, I'd take one now for the equivalent of 2 BTC, while holding 10 BTC. The price could go lower, but even if it went below 10k USD, which will I'm willing to bet will not happen, I'd still be completely safe.

I had to read it many times to understand what is the point of you making a loan when you already have money that you invested in bitcoin and you can use it? I have a question:

The day you took your money and decided to buy bitcoin, what was your deal with it? your goal was to buy bitcoin and make hodl and never spend that bitcoin and you die without spending the bitcoin? was that your goal? or was your goal to buy bitcoin and hodl until it increased a lot and then you spent it in the real world?

when we make an investment the objective is to make a profit and then we use that profit, and we continue to invest and then we use the profit, always keeping the principal to generate more profit. it makes no sense to make a loan when you could sell a part of your bitcoins and leave another part until you had a big increase to make more profit

If you ask me OP I think you didn’t think this through. Let’s say I follow your instructions and decide to borrow Fiat using Bitcoin and at the point of be running the process bitcoin is 20k dollars and that’s I get 20k dollars Fiat. Let’s say at the time of repayment bitcoin goes up to to 30k how would the transaction be, and if who I borrowed the money from is knowledgeable about crypto-currency then it would be a major problem.

It's simply better to avoid needing to borrow money because I don't want to have to sell my bitcoins, but I also don't want to have to pay interest to the bank over loans and unfortunatelly we can't predict how much percentage profit bitcoin is going to generate us in a year time period. Fluctuations can be positive, negative or nothing at all, therefore you are forced to prepare a 'Plan B' to repay your loan anyway.

Op, are you living in the USA? 'Cause I think the scheme of borrowing instead of selling is very specific to the US where loans are extremely common, and where there's such a thing as a sell tax which one avoids by never selling the asset. If you're comfortable with this system and you live in the US, it might be alright. I personally would never do that because I come from a culture where loans are very rare and risky, and people just buy what they can afford and don't borrow unless there's absolutely no other way.

If you live in a country where bitcoin is openly used to buy everyday stuff then good for you, but then buying stuff will gradually end up attracting taxes too. Now you cant live without paying for your food and water, so whats the point you are trying to make? Good and services tax exist in countries.

Surely you will gain, but that is a gain on paper, not in reality unless you sell. If your objective is to evade taxation by using bitcoin then you are in the wrong place.

Bitcoin has its pros and cons just like fiat, in the ideal scenario they are supposed to work complementing each other.

I am sure others have had "pipe-dreams" like yours before this and failed after realizing their mistake.

We have exactly that in crypto as well. You pay let's say 120 dollars worth of ethereum, to get 100 dollars worth of bitcoin, and that 120 dollars worth of ETH is collateral. Meaning if the price drops and you lose some, then they have the right to liquidate you and you will have to live with the loss. The higher collateral you are willing to spend, the more money you will be making, and that is how people are approaching this at the time.

Crypto collateral loans are not good, they are not giving you the fair rates plus they are not actually loans because if you have enough collateral, that ain't really a loan. Loan is what you get when you have no other money.

Ok, now tell me one thing....

What happens if the Bitcoin price dumps and it goes into a "recovery" phase for 3 to 4 years ....as it did before? Then you have to pay interest on the borrowed FIAT for 3 to 4 years. 

Not just that.... the interest that you paid on the borrowed capital ....also lose accumulated interest that you could have received, if it was in a Bank. There is also no guarantee that the price will recover to a new all-time-high. 

Well, there's a likely that if he's in dire situation he'll sell what he got from holding and that's what he's going to use for paying his debts.

This option is for someone who can really confidently pay his debts with other sources that he's got. But if this is the only wealth that he's got, the bitcoins that he's holding.

It's hard to imagine that he'll be forced to sell his bitcoins just to pay those debts someday.