Bitcoin Forum

Hey guys. I don't want to sell my btc, but I need some money for my family vacation. I looked around several DeFi platforms where I can lock wrapped BTC and get stablecoins, also looked to companies like SALT and Unchained. I don't like 2 things: high interest rate and liquidations. Anyone took BTC backed loans? What is your experience?

First time that I've heard of such thing, I think that it's a good idea but I haven't tried it yet, probably the closest that I've ever had this is with asking for a big loan from one of my friends to pay for something personal and I made my bitcoins at that time a collateral for the loan, there was some interest though it's not as high as you might consider with your situation. Whatever you're planning to do, make sure to get the lowest rates because you don't exactly know how you'll pay for that loan. It's also understandable that they will do this kind of thing with bitcoin involved loans, there's not a lot of options so they can just charge whatever interest that they feel like is the most justified.

I love family vacays. It is always a refreshing, relaxing, and bonding time. Okay. Personally, I have no experience with BTC backed loans, but I got the time to read up on it during the bankruptcy case that came up against Celsius and heard the stories of those who borrowed against bitcoin pre-bankruptcy case. One of the things they loved about Celcuis over their competitors was they had lower interest rates compared to other platforms. One person in particular didn't like that to borrow against bitcoin, one has to lock in more bitcoins than the amount you have to borrow. But I understand, because the borrower gotta be protected against market volatility.  

BTC loans that quite weird to me,but I think I've seen that borrowing crypto on Binance is easy that you'll use your cryptocurrency as collateral to get a loan instantly without credit checks.
I don't really understand it although but getting a loan from BTC is the same as getting a loan from fait and dollars as well.It entails some differences,Just like you would do for a bank loan, you will need to make an application and provide the collateral together with the terms and conditions applied.

I wouldn’t touch any of these platforms tbh. If you need FIAT just sell your other assets if you have any. If you have everything in btc, then you are doing it wrong anyway. You need to diversify your wealth into different assets  and you should definitely hold some FIAT. 10% is a good start and 15% ideal imo. Not too much, not too less. It won’t drag your portfolio down and it will have enough buying power to purchase a vacation or some health emergency.

Yeah it's the right decision go ahead at last all we want is some good time with our family and that's why it really matters , all the money the efforts and the time we are investing is for these good times.

And what you have thought it is good don't worry it'll not effect the worth of BTC in your wallet much. Just go ahead and have a good time don't think too much.

I never take any Bitcoin backed loans, so I didn't have any experience with that.

But, there's a good thing for you, you can ask a loan in this forum, just post the amount you required, rate, how long the loan and mention if you use Bitcoin as the collateral, post on this section Lending (https://bitcointalk.org/index.php?board=65.0)

There's such a thing in Binance, I've been using Binance ever since until their closure here in my country and never knew of that feature, I guess I didn't really use it for too long that I would discover such things, I only use Binance to do P2P after all and now that I know of this one, I hope that we can have Binance available here in my country and look for that loan section. How's the interest in that one though?

I don't know if there is any such thing as bitcoin backed loans but I can speak of using your bitcoin as collateral when borrowing from someone who knows the values of your bitcoin but perhaps a lot of people wouldn't want that to be the case because it's might be hard to be sure you're the right owner of the assets in a wallet if evidence not tendered.

High interest rates and liquidation are the side effects of taking loans from those Defi so if you don't have any other source then you're left with no option than to take their offers.

But why would you have extra funds to fund your lifestyle? It's absolutely against the methodologies which we have in bitcoin AFAIK, you must have at least an emergency funds that can last for at least 3 - 6 months and if you did that you wouldn't be caught out with situations like this, and perhaps it seems yiu don't have another source of income to facilitate your desires, the solution here is find someone closer loan/ borrow from em then you pay back when the time is due.

I have never tried these loans yet... But if you can repay the loan in the currency you borrowed, (usually dollars or another fiat currency), it could be a good option. I guess that the Bitcoin you used as collateral is returned to you once you fully repay the loan and any interest... If you default on the loan, the lender may liquidate your Bitcoin to cover the amount owed. If you trust the lender as well... It could be a worth a try

Bitcoin has a volatile price and it's not suitable for a collateral, even though some lenders might accept it as a collateral.
I've never tried borrowing crypto because I don't need loans. I'm pretty OK financially and I hate being in debt.
Nobody is going to give you low interest rates, when it comes to borrowing/lending cryptocurrencies. The risk is higher, so the interest rates are higher as well. I remember some BTC lending platforms from 5 years ago(Like BTCJam, if I remember the name correctly), but all of them disappeared. I assume that the crypto lending business model isn't sustainable in the long run.
Why don't you try to get fiat loan or a credit card?

There are a few platforms that offer such loans. If you look online, you will find them. But if the amount is small, you can consider taking a fiat loan and HODL your Bitcoins. The interest rates you pay on fiat will be significantly lesser than your gains on Bitcoin holdings. Hope this helps. - Aditya, The Bitcoin Guy.

Sounds very risky to me. Many DeFi have questionable decentralization, while Wrapped Bitcoin require you to trust company behind it. I'm not expert, but have you looked for loan offered by conventional banking/financial service? Depending on where you live and financial condition, you could get offer which doesn't require collateral.

Taking a Bitcoin-backed loan can be a good way to access cash without selling your BTC.

You can do this easily via the Binance, KuCoin, or other popular exchange platforms that provide lending features. They will give you a loan quickly with just your Bitcoin as collateral, and you can immediately get the money directly into your account. However, entrusting your Bitcoin to a third party means you lose control of your Bitcoin, and whenever they change their rules, your assets could be affected. So consider again if you want to borrow from a third party with your Bitcoin as collateral, because if you don't understand the risks then you will be the one who will be harmed.

Same here. I do not have personal experience with how op wants to have a loan but from research it seems that it depends on the platform you’ll be using the interest rates. Some would have higher rates while some would have lower.

Taking loans from personal friends or family members might be good but also pose some serious risks. For instance, due to personal relationships they can consider a lower interest rate. However this whole business might come in a way of your relationship.

Do what you think is best for you.

First thing I want to ask you.  Is this REALLY a priority, can you not live with out this vacation while trying to save more Money for the next one?

I would personally not trust my Bitcoin with these.  Wrapped Bitcoin is not Bitcoin.  I would keep my Bitcoin in my Bitcoin Wallet only.  Not locked up on some Shit Coin platform that promises to give me returns.

Is there no way you can get money other than throwing your Bitcoin into the pot?

Centralized exchanges have this feature so check it out with Binance and other popular ones like Bybit. I've checked what bybit has to offer and they've got flexible terms of payment.

But you might be surprised with the interest rate that they're going to give you. For 7 days of payment term, you'll already getting 20%+ of interest rate.

And more with the longer payment term.

https://www.bybit.com/en/trade/spot/loan

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Anyway, this is more than a tip. If you can't afford to get into vacation because you are lack of funds, don't go and save more.

The matter of loans when it comes to your relatives or friends is from the fact that you're going to not just be loaning their money but also their trust of you and it's a really difficult thing to break for you because once you do break it, it's over for you, that trust won't be mended so easily once broken, that's why loans should be the least of your priorities, as best as you can, you should never consider it if you can find a way for yourself to make some money.

I suppose it really depends on a country one's from and the local culture there, but the idea of taking a loan to go on a vacation sounds kind of wild to me. I mean, I understand the desire to go on a vacation, and I understand that sometimes money can be tight while you also don't want to miss opportunities to share experiences with your loved ones. But taking a loan for that, knowing that you'd have to pay it back, would make me nervous about going, and the op even has the funds to avoid taking loans but simply doesn't want to sell BTC for that. I think it's better to sell and go and not worry about debt later.

First of all I want to say that even though investing with bitcoins can make huge pockets, it will never guarantee you the percentage of profit you will get over time.  And the price of Bitcoin will not only go up, it can also go down.  So of course you have to be at a risk if you invest in other cryptocurrencies including Bitcoin. But in the meantime if you hold on to your bitcoins and meet your loan needs it will be much more risky for you. So I will not suggest you. You can sell your bitcoins for your emergency needs and later buy bitcoins again as per your ability.

There are such products available in the market but I have never used it ever. The only reason is the high interest rate. So if I take loan from my local bank, the interest rate is lower. That's why crypto backed loans never appealed to me.

There is a website called Sovryn which claims to lend bitcoin at zero interest rate. But as I have never used such services, I can't vouch. Do your own research.

It's a must for personal research because many of us have never used the loan service on many exchanges yet, perhaps due to high interest rates and the fact that one's account or wallet can be tempered with upon failure to redeem the loan after the grace period.
Even with the local fiat banks, taking out loans comes with heavy interest rates that if one ain't careful, can't be paid back. The loan service options for BTC will only serve those with a certain amount of BTC in their HODLings and those who constantly receive payments for transaction and services via cryptocurrency.

I had never took loans using bitcoin as collateral mainly because in the past bitcoin used to be way more volatile than today, so that means the risks were way higher. And probably I wouldn't do it today either anyway. Just one thing: you want to take a loan to go on holiday with your family? Of course that's your business but I would never take a loan for something like that, if you can't afford going on holiday you simply don't go, it's not an emergency. But again, your money, your life, your decision.

Honestly, you are not in the right path with your investment journey. First, the reason why you want to get your bitcoin involved into a loan is not really important. Secondly, you should have savings or any funds for emergency purposes that could also be used to such occasions like family vacations. And third, you are risking your bitcoin to a DeFi platform with wrapped bitcoin.
Well, if you really wanna do it, I advise to just look for someone who can get you the money and make that bitcoin you have as a collateral or go look for a bank that could offer you loans without involving your bitcoin, because you're just gonna pay it anyway in fiat, right?

The answer choice is wise because selling BTC is the same as selling the most valuable asset for a while. If you want to try a little more, there will definitely be someone willing to help where the potential for payment is there.

As for collateral, of course it is very strong because it can be withdrawn at any time and anywhere, only if the borrower believes in it. If it is true that it is a friend or close relative, I am sure it will be lent without any collateral, as long as there is a history and profile of the borrower.

Thank you guys for your replies and advice. 3 things I have learnt after reading all replies:
1. Nobody in this forum ever used loans backed by BTC and never wanted to.
2. My investment strategy is bad, because I believe too much in BTC and don't have savings for 3-5 months that can cover my emergency needs.
3. I shouldn't do vacation if I don't have spare funds.

That's pretty fare. I take it. Thank you, but I don't believe nobody ever used loans backed by crypto in this forum, please reach out...

#3 is critical if you want to remain in bitcoin.  There were plenty of people who did similar things. Coinbase used to offer it for example, and another place is ending it shortly although I am not sure which one.  The key is that if you don't have the private keys, you don't have the coins so I'd advise against it and that is why I never did it.

I haven’t been really into the loan taking thing but, it would be interesting to know how some of these processes go and so,

When you talk about wrapped BTC loans, you mean like, a system in which, you would have like a multi sig with the company in question, where by your BTC eventually serves as a collateral but, not one that would be taken after a period but rather, one that would propel you to pay and get full custody of your coin. Also, you get to pay interest on what you got from the loaned USDT, I got that right, did I?

If am anything close to your intuition, I would say,
If the vacation isn’t absolutely necessary as I feel it isn’t, given that the funds to sponsor the time isn’t readily available and in most cases, you don’t know what your going to meet on your time out, unforeseen circumstances, you might as well let it slide for the time being.

Hmm, that's silly mate !
I never experienced a bitcoin-backed loan. But To be honest for Mee it's unusual to take a loan as collateral of Bitcoin. Because there is no one who can be trusted as collateral for Bitcoin, that is, no one is able to give you a complete guarantee that your Bitcoin is safe, even if there are no exchanges. Everyone is well acquainted with the fact that no one can keep your Bitcoin safe except yourself. However, even if a loan is agreed upon, it is not completely certain that he will return your Bitcoin tomorrow. 
 
So I don't like it for myself to hold my Bitcoin in someone else's hands. I can't put myself at risk for a loan. My opinion is that the OP should exchange some BTC of his Bitcoin for fiats and enjoy his family vacation and take the idea of a Bitcoin backed loan from his heart because you should give his Bitcoin to other hands and You are putting yourself at risk by giving it to others.

I have never gone for this loan it seems very bad to me as far as I know. It is better not to take a bitcoin backed loan. It would be a good idea to sell some if I already have bitcoins. Here there will be no worry of repaying the loan and there will be no need to pay interest. If something goes wrong while taking a loan, there will be no possibility of getting back the bitcoins, so I will never take such a big risk.

You go from Bitcoin to a token Wrapped BTC, that is not Bitcoin.

With this first step, you no longer own any bitcoin, but own a token which can has value pegged to bitcoin price but can be zero if its peg losses like a bad stable coin UST depegs in 2022.

A next step is also bad, lock your Wrapped BTC token to a DeFi platform, in their staking or liquidity provider pool. You can not know that DeFi platform will stay or collapse or bankrupt like Celsius, Voyager, BlockFi, or scam exit.

Looking for high interest rate (high APY), you are taking bigger risk.

If you see you take risk with all three steps, is it still safe for you to do this?

The Trades That Triggered TerraUSD’s Collapse (https://www.chainalysis.com/blog/how-terrausd-collapsed/)

Try to find a job, or second job, get money to use and hold your bitcoin, don't exchange it to Wrapped BTC and lock it anywhere.

taking a loan with bitcoin will be at risk of experiencing an increase in value every time the loan has to be paid and that is also added with interest in the form of bitcoin. But when the price of bitcoin falls it will indeed provide profits. but I prefer to borrow in Fiat because it will remain stable and there will be no increases whatsoever. some people even make loans with bitcoin and a few days later the price of bitcoin pumps and that makes us have to pay more for bitcoin if we have to rebuy bitcoin and return it.

THORChain offers 0% interest Bitcoin backed loans, with no liquidation risk, and no expiration. You can use native Bitcoin as collateral, without the need for wrappers. The collateralizaton ratio is really high, and you will need to provide twice the value of your loan amount as collateral. Currently, however, borrowing against BTC isn’t available due to having reached their cap.

Another option, would be Debifi, which also lets you use native Bitcoin as collateral. I saw a demonstration of it on the BTC Sessions YouTube channel (https://youtu.be/KIBBtH-y-lg?si=M-2XjtJJZuTAPtsb). From what I saw, the interest rates seem to be really high. If you really need the loan, I would check it out to see if any offers with reasonable interest rates have become available.

One of, if not the most unfortunate things to happen in an investor is having to sell their bitcoin due to lack of funds. It would certainly make an investor think of a mullion what ifs. There might also be a chance where he can’t immediately replenish or replace the money he had sold. With bitcoin’s price right now, I wouldn’t recommend selling because if you want to buy it might be too high or too expensive already,

Am not too certain but I think the CEX binance offers some kind of loan feature where your BTC will be held and USDT will given to you with little interest too although am just saying haven't really tried it before but I assume thats how the service work. You can check it yourself or someone who is more experienced with it can shed some light.

Well, what you think is also good is a BTC-backed loan, which is a loan that you haven't touched or reduced the amount of bitcoin you have. As far as I know, I only see that often on DEFI platforms, and if I know anything about the CEX platform, it's only Binance; I don't know about others. 

I just don't know if you have experience with such borrowing from BTC-backed loans. Maybe you can try Blockfi and check for yourself. It's just that what they lend you depends on the size of the of the amount you have. For example, if you have Bitcoin worth 200k, they can lend you around 100k, or if you have Bitcoin worth 50k, they can lend you around 25k, and the duration until you pay it depends on them.

Most you take a loan because you want to go on a vacation with your family. There are things that we need to take loan for and not because we want to have pleasure with friend or families. Loans should be taken for very vital reasons or for investing.

You can go to the lending board on the forum and see if anyone will give you a loan. However, if you are good at paying back your loan at your bank and they find out that you don't delay in paying back your loan, then you should take the loan in fiat as you will need no collateral. If you don't always pay up your loan in your bank for long, you will not be given a loan without collateral. ll