Topic: Lending Against Your Bitcoin (Read 236 times)

There are a few advantages and of course some serious disadvantages with these.

You're looking to start a business, you're bullish on BTC, you think the value of your collateral will get up, and only from those gains you will pay both the interest rate and make a profit while having money to invest now!. All is good! But!

Your funds are locked in, you must pay your debt before getting access to them if you go over your loaned amount you have locked bitcoins twice the value that you can't touch, monthly payments back, and no real way to get out of it other than taking another loan...so if you need extra money for something you're in trouble, which brings up to the main danger. What if bitcoin experiences a dump, like the one we had a few months ago:

You take a loan of 30k  you guarantee it with a BTC worth 60k, then the dump comes, you must increase your collateral otherwise your BTC will be liquidated at 30k, and if you can't, that's it. And the price recovers in a week back to 40k and you realize that no matter how you spin it you have lost between $10-30k which you can't get ever back because your bitcoin is gone and so are future possible gains!

I wouldn't advise anyone on taking a loan at 1:2 without keeping a serious reserve to cover this and at the same time just like the others I would be against taking a loan on a large sum, you're risking your collateral in a non-FDIC insured platform, so if something happens, it is gone forever!

Hey m8, appreciate your message. That process is currently underway and I should have my first machine deployed by the end of July! I'm actually utilizing my client's revenue share program and I opted for a 0 APR card to finance the machine. Based on my conversations from many operators most of them have said that these ATMs are paying for themselves in 6-9 months, so basically my plan here is to utilize the debt from the banks to have this bitcoin ATM pay for itself! Then i'll have my own little money printer and I'll reinvest either into more machines or more BTC.  I have cash flow to move if I need to, originally I was considering using some BTC to pay for this and my op would have accepted but I didn't find that a good way to do it simply because BTC is king, and I don't want to put up any of my coin because i'm holding long term. This post was really just to learn more about how folks are doing this, I've just seen a lot of commentary on the subject for people who would prefer to lend against their BTC over selling it to get fiat when needed, and that made me curious. Something like this would be more attractive at ATHs maybe in 2025 and beyond.

It’s nothing new. This is something that a lot of people have been doing for years now and I am aware of it but I have not had interest in it. I just feel it’s best to Hodl my coins till when they increase. Sites like BlockFi, Crypto.com, Luno, and so many of them does this. And depending on the platform and token you’re actually using for the lending , you can get from 6% to 18% or maybe a bit above that.

But imagine you just hold the coins in your wallet after you might have bought them at a lower rate and then hold for years, the price can go up and you will get 1000%. So this is another reason why some people are not interested in that, they just prefer to HODL it themselves.

I really don’t like the thought of any service where you have you hand over ownership of your precious bitcoin.
What good is a $10,000 loan against bitcoin if the company gets hacked & you lose your bitcoin. In the mean time bitcoin price doubles & you don’t get your bitcoin back & you’re left with a $10,000 debt. No thanks!

Keep it simple. When you send bitcoin to someone your bitcoins are basically going out of your wallet.
It doesn't matter if you keep them on an exchange or lend someone. You don't have any control on those coins.
If that platform loses your coins you lose your coins. So lending bitcoins just to earn a little percent on it is a bad idea.
It's different with proof of stake where you can still control your coins indirectly but with lending it's a high risk low return strategy which we should avoid.

Borrowing in the form of bitcoin assets will be profitable if Bitcoin is still at the lowest price. But due to very fast fluctuations it will be more risky.
But a loan in the form of Bitcoin depends on the agreement or agreement at what rate to borrow, so it will be matched with the initial lending rate.
But borrowing like this will actually burden the borrower when he can't return what he borrowed, because there will be a certain percentage of interest to be paid.
In this forum, many provide loans in the form of Bitcoin or FIAT with a predetermined interest rate.

As far as I know, the current lending platform is limited to centralized ones such as Blockfi (mentioned above) where you need to trust a centralized party, and P2P just like on the lending board. With P2P you can select the lenders easily, and you can ask for collateral if needed, but you should expect some users not to be comfy with it. Personally, I'd do P2P instead of trusting a centralized third party.

If you want to be more extreme, you can easily liquidate some of your Bitcoin into ETH and use a P2P-based smart contract platform such as yield.credit. This way you don't need to worry about collateral, but you still need to 'trust' the smart contract.

OP, are you trying to get a loan in order to finance your future ATM business by any chance?  I thought I'd post here instead of responding to your PM, and I hope I'm not revealing a secret of yours by doing so--though the note you sent me didn't sound like it was confidential.

If that's the case, I wish you luck--and I'd recommend you enter the bitcoin ATM game sooner rather than later, at least if you're in the US.  I've been watching my state on Coinatmradar, and there have been a lot of ATMs popping up all over the place, with three in my own city, where there had been just one about a year ago.  They're all owned by different companies, too, with different fee structures, though the only one I really trust/like so far is CoinFlip.

If this is unrelated to that, I'm afraid I don't know of any place other than the Currency Exchange section to borrow against your bitcoin holdings.  But considering that most potential borrowers in that section don't offer any collateral at all, I'm pretty sure your request would be a welcome change and you'd easily get a loan with the appropriate collateral if you wanted to go that route.  Most people are looking for loans in bitcoin, but if I understood you correctly, you're looking for a fiat loan with bitcoin as collateral.  Either way, I doubt you'll have a problem.

Again, best of luck to you and your future endeavors, my man.  Glad you PM'ed me.

Edit:  I just read your PM again and I'm probably mistaken about your goal with the loan--but I wish you the best anyway, whatever your plans are.

borrow and lend Bitcoin with the share of the percentage that can be obtained. I tried to find it and it turns out that even that cannot guarantee 100% that our Bitcoins are fully returned.
for me it is quite high risk, you need to rethink it, you better keep it on the Binance exchange, because they also offer the same thing for holders.

Just like what other's said it's a risky proposition to lend your own bitcoin to others. Just like fiat it may be safe if you have the personal information of the person and he/she is with the same country as you are but when it do comes to crypto currency everyone can be a potential customer but your only problem is do you know this person in real life or do you have their personal information so that you can easily trace them back where they belong.

It would be better if you will just wait for the bull run than trust your bitcoin to someone because you thought they could pay you in the future but lots of lenders are running away already because they can't pay or they just don't want to pay and it's a hustle.

Hey I know you    It's funny that you are currently thinking about doing some lending as I have been considering doing the same thing myself recently.  As some others have stated, it is normally a bit of a risky proposition.  DeFi projects, for the VAST majority, are not sustainable projects, but you can make some good money by staking your coins ( until it goes under anyhow ).  I am actually meeting with a buddy of mine via phone conference this week to discuss doing this.  He's an expert in the area.  Will let you know what I end up doing.

Personally I think it is a risky business.I never do this with third parties,maximum I can do here in the Lending section against reputable members but I don't think I will do it.I think that keeping your coins in your wallet is the best you can do,just copy the seed or passphrase depending on your wallet and be safe.Why risk something that is secure for low amounts of up to 10% extra,I consider 10% a low number to risk my Bitcoins.

if you are still in a state of doubt and are not sure about the monthly interest on the bitcoins you lend, I think you should not do it, even though it seems like giving 5%-10%. Isn't it very dangerous to lend Bitcoins to other parties?
If I were you, having a Bitcoin amount above $1000, I would be better off keeping it in a hard wallet. although there is no percentage, but at least we know in the future prices will continue to soar. and think if you lent it and the price went down, what would you do? while the loan agreement has a predetermined time.

I stand firmly behind what is often repeated "not your keys, not your coins", so I think that crypto should not be used that way, unless there is some kind of functional insurance in case things go downhill. I'm not familiar with how all the above services work, but the only option where I somehow earn interest on BTC is on freebitco which gives a little more than 4% per year, but in a way that you get your earnings every day - and that you can at any time withdraw your funds.

If we look at things from the perspective of someone who invested in BTC 5 years ago and just hold, then it is more than clear that he made an incredible profit ($400/1BTC - $40 000 today), and if in 5 years BTC is worth only x5 of today's prices, I think that none of the above services can surpass this with the huge risk that each client takes.

Im not here to promote any service, Blockfi is the one I use currently and I'm not going to deny
there is no risk.

My strategy is that I have Bitcoin on loan to Blockfi, Its Bitcoin I bought with a FIAT loan
which is now paid for in full, I'm ok with that risk ATM.

Is there any risk free investment strategy by putting some another entity in charge of your funds ?

Obviously if that entity were to have insurance in place investors would have a degree of confidence.

Although sometimes i am tempted to lend my bitcoin but only thing which stops me from doing this is the RISK.
Currently i don't trust any platform which is 100% secure and where you can lend your bitcoin with 100% surety that you will get back your coins.

Of course, there is a risk for sure.

Think about it, you are relinquishing control of your Bitcoin for a small percentage reward
and if things go wrong no have no power to recover your property.

Personally I have mentioned before I am happy to take the risk in this current market, like
other risks which are frowned upon but which have paid off for me.

This thread along with others on the forum offer a reality check before anyone gets involved
with this strategy and helps people understand the risks

There's literally no guarantee that the money you lend will return back to you. I mean, I think chances are pretty high that it either won't at all or if it does, the yearly outcome will never exceed the Bitcoin ROI. These "daily" or "yearly" interest rates are just a bad bait many take, but it never pays that well..

If you're looking to lower your risks, either hodl or get out temporarily of this industry before you know more about it. Bitcoin equals immense risks!

Even in reputable exchanges that will give you good rates, I won't put it at risk of lending it to them. You'll never know what can happen to them while holding your bitcoin.
You're already good holding it and wait just the price increase because you can earn more than those percentages and rate that they offer for your interest.

Lending, in principle, is a rather risky business - and with such a collateral as bitcoin, I think the risks only increase. But the potential profit also grows along with the price of bitcoin. I personally would not take such a loan, not just to issue it - but this is a voluntary matter, as they say, so it's up to everyone to decide independently. I think in the future this type of lending will flourish one way or another because the cryptocurrency will not go anywhere and the service will be in demand for sure.