Bitcoin Forum

Bitcoin was born following the great recession of 2007.

The nationwide banking emergency, known as the subprime mortgage crisis can be blamed on everyone from financial institutions, to credit agencies, to consumers. What essentially happened is millions of people were buying houses that they couldn't afford on credit. Home prices began to fall dramatically from the 2006 highs, and mortgage backed securities lost most of their value.

This brings me to the topic of this thread: Credit Crisis & Bitcoin.

I am very concerned that bitcoin can be bought using credit cards. Much like what happened during the subprime mortgage crisis, millions of people who can't afford to invest are buying bitcoin. If crypto were to drop in value like housing prices did, we could have another giant credit crisis as people are left with depreciating digital currency and increasing debt.

Should exchanges accept purchases made by credit cards? Will this credit crisis be the worst one of all time?

The idea may be correct, but I think we have to compare the scales of both problems as well. Buying a house is relevant and pretty much a necessity for almost all families around the world. And it's not a huge risk as well, because you are practically taking out a loan to buy yourself a house.

Now compare that to the number of people who have heard of bitcoin; of those people, who want to invest in bitcoin; and of those people, who have to take out loans to buy bitcoins. It's a fraction of people who would want to buy houses, so I think bitcoin is not going to cause a credit crisis because people are borrowing money to buy it.

https://99bitcoins.com/how-to-buy-bitcoin-with-a-credit-card/

If credit card purchases of bitcoin rise there could be a lot of issues. Credit purchases already have to pay more fees, ontop of the very large fees that currently exist. And if people take out mortgages etc to buy crypto thinking the price will rise forever they might be in for a rude awakening. They will rack up so much debt from fees, interest and late payments. I fear what is going to happen if Bitcoin's price were to crash for some reason or lose 75% of its value.