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Author Topic: Taking a loan to buy bitcoin  (Read 23321 times)
gla22
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December 03, 2013, 06:06:38 AM
 #81

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

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December 03, 2013, 06:18:00 AM
 #82

i do not know that it is in bubble mode.  bubbles are fragile structures inflated by a force which, once withdrawn, results in the collapse of the structure.  forces implying a higher bitcoin price are increasing, not decreasing, and show no signs of being near the limits of their increase.  bubbles are not supported by the rationally discounted future fair value or cash flows.  the price of bitcoin is more than supported by its rationally discounted future fair value.

the only way you could infer that bitcoin was in a bubble would be if you were convinced that its future fair value, after discounting for risk-free rates and the error distribution attributed to your future value estimate, was insufficient to support current price levels.  you might be convinced of this by established fact and sound reasoning (necessary or probabilistic),  or you might be convinced of this by "intution" or "peer-pressure"  or "a skeptical disposition" or sunk cost fallacies, normality bias, etc.  if you have established facts and sound reasoning which leads you to such skepticism, please do share them.  no one can anticipate all unknown facts or creative proofs, and no one wants to be deluded by their ignorance or lack of time to explore the full space of inference.  if you do not, then please reconsider your convictions -  and especially please reconsider whether you should be spreading fallacious or delusional ideation.

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December 03, 2013, 06:50:00 AM
 #83

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

I couldn't care less if a BTC is ever used in a point of sale transaction.  There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.
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December 03, 2013, 08:57:36 AM
 #84

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

I couldn't care less if a BTC is ever used in a point of sale transaction.  There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.

Just to add to this, this doesn't necessarily mean "cashing out" to profit. Store of value isn't about day trading. It's just a store. It stays there until it's needed.
PenAndPaper
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December 03, 2013, 01:51:37 PM
 #85

I am considering a loan myself: but not until I have the cash-flow to avoid being forced to sell early.

Essentially, you should be able to comfortably service the debt for a year or more as the price of Bitcoin goes through it's usual roller-coaster. That implies you should avoid loans that require you to sell if the price of Bitcoin drops too much as well.


You should be able to pay back your loan even if the bitcoin price collapses. And by paying back i don't mean ruin your life to pay back. (like by selling a house for that matter)
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December 03, 2013, 02:37:49 PM
 #86

I think the general consensus is NEVER gamble with a loan..

You can't predict the markets so don't risk everything you have on something you know little about. People want to get rich now and end up losing it all. 

Start building your wealth with what you already own. Work to earn your money so you know it's true value. That way you will be less likely to make impulsive decisions based on emotions rather than reason.

The last 2 spikes in Bitcoin price were followed by a big drop so it would be entirely possible to invest $100,000 on 100 Bitcoins and have that turn into $50,000 in one day.

You can see that even though you have 100 coins worth $50,000 you owe the bank $100,000 PLUS interest. It's just a matter of time before you have to sell all your coins and then some to pay back the loan.



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BitchicksHusband
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December 03, 2013, 02:56:44 PM
 #87

Or you could sell 1 and make your payment.

So far, in retrospect, taking a loan would have been a good idea most of the time.  But you can never predict the future.  And you don't want to be the guy jumping out of a window because you took out a loan that you can never pay back.

I don't recommend it.  I'm not going to borrow to invest.  I only invest what I can afford to lose.

I did change my mind about borrowing from my 401k, since I wanted to put some of my retirement funds into bitcoin and there's no other way.  And I'm paying the interest back to myself anyway.  I can afford $50 per paycheck regardless of what happens.

It's doing well so far...  Smiley

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December 03, 2013, 05:24:44 PM
 #88

It's "lose" money, not "loose". I'm sorry, but i just need to get that off my chest. I don't know how many times I've read that in this thread.  Cry

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December 03, 2013, 06:36:15 PM
 #89

Don't just assume that BTC will go to the moon and which Ferrari you'll buy first. Play out BTC crashing 50% and bank calling your loan scenario. Will you loose your collateral? Your house, your car, your credit history? Will you get a second job to try and salvage what you can? Or you can always double down and dig deeper into the hole. Borrow from another bank at even higher % to pay the first one. Borrow from your friends/family? Work the corner or try to sell your drugs? Sorry to be a downer but there's a reason why no sane financial adviser would recommend taking a loan to finance an investment that you have no control over.  But ignore all that and let's just concentrate on Ferraris Lambos and those huge mansions 

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December 03, 2013, 06:43:05 PM
 #90

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

Maybe next year, but without better ways to quickly buy/sell Bitcoins for fiat like Bitcoin ATM, 10k a coin wont last long

I need crypto in my life and garbage out of it.
Gabrie
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December 03, 2013, 07:08:38 PM
 #91

I'm very new to bitcoin and read in this thread about a crash that BTC went through. What happened at the last crash of BTC? Did it go down very fast, too fast to respond if I need at least half a day to respond?

Say BTC indeed does go belly up, would you still have time to take your losses (sell at too low price) or is there a chance it would drop to zero all at once?

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December 03, 2013, 07:38:09 PM
 #92

I'm very new to bitcoin and read in this thread about a crash that BTC went through. What happened at the last crash of BTC? Did it go down very fast, too fast to respond if I need at least half a day to respond?

Say BTC indeed does go belly up, would you still have time to take your losses (sell at too low price) or is there a chance it would drop to zero all at once?
The bulk of the last crash happened within about 2 hours. After about a day, the price did drop in half again, but there is no guarantee that would happen every time.

For Bitcoin to go to zero, something drastic would have to have happened. I missed a $150-$300 buy window because I did not want to take a loan. I don't think the Price will drop below $300, but I don't know where the real "floor" price is.

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BitchicksHusband
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December 03, 2013, 09:00:25 PM
 #93

I'm very new to bitcoin and read in this thread about a crash that BTC went through. What happened at the last crash of BTC? Did it go down very fast, too fast to respond if I need at least half a day to respond?

Say BTC indeed does go belly up, would you still have time to take your losses (sell at too low price) or is there a chance it would drop to zero all at once?



I was watching and logged in to Coinbase when bitcoin dropped from $900.  I still had a hard time getting out at $733 on the way down to $450.

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December 03, 2013, 09:54:35 PM
 #94

I'm very new to bitcoin and read in this thread about a crash that BTC went through. What happened at the last crash of BTC? Did it go down very fast, too fast to respond if I need at least half a day to respond?

Say BTC indeed does go belly up, would you still have time to take your losses (sell at too low price) or is there a chance it would drop to zero all at once?



I was watching and logged in to Coinbase when bitcoin dropped from $900.  I still had a hard time getting out at $733 on the way down to $450.

And did you get back in before 733(plus fees) on the way back up? Day trading is risky if its not what you DO  (well, even then). Some do alright, most tend to go more backward than forwards. Of course, it is those people that finance the gains of the winners  Wink Personally, Buy, hold, accumulate - until such time as buying becomes insignificant to my holdings. Then its just hold, until its time to start taking profits. That is not for a while yet. Or is it? 2014 sounds like a great year to retire. Or to keep paying my loans and mortgage etc  Roll Eyes
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December 03, 2013, 10:34:17 PM
 #95

I couldn't care less if a BTC is ever used in a point of sale transaction.  There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.

+1337
gla22
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December 03, 2013, 11:38:55 PM
 #96

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

I couldn't care less if a BTC is ever used in a point of sale transaction.  There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.

Why would anyone use bitcoin as a store of value as opposed to precious metals like gold and silver? I think bitcoin has use as a means of moving money between countries, for purchasing items not priced in fiat (ie silkroad), or as a speculative investment.

The truth is those who are in bitcoin for speculative purposes have an endgame plan of holding USD. It is these people who will pump a bubble and sell into a crash.

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December 04, 2013, 01:03:30 AM
 #97

Not good advice, but this is what I plan to do: Take a loan, pay it back over 5 years. As in, I have 60 payments to make. Or 36 (3 years) or 24 (2 years). Whatever they will give me.

When I get the fiat, the question becomes: do I get bitcoins and just hold? do I buy a miner? do I explore alt-coins like those scrypt ones, litecoins, etc.

I'll make my own thread or start a blog when and if I do this.

Of course, as the saying goes, don't gamble what you can't afford to lose. The reason I take a 2 or 3 year amortization plan is because I can pay that from what I earn now even if bitcoin drops to zero. (And if I can't pay, for whatever reason, I am simply blacklisted from borrowing from any banks here, they don't send people to jail for non-payment of loans; not where I live anyway.)

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December 04, 2013, 01:16:40 AM
 #98

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

I couldn't care less if a BTC is ever used in a point of sale transaction.  There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.

Why would anyone use bitcoin as a store of value as opposed to precious metals like gold and silver? I think bitcoin has use as a means of moving money between countries, for purchasing items not priced in fiat (ie silkroad), or as a speculative investment.

The truth is those who are in bitcoin for speculative purposes have an endgame plan of holding USD. It is these people who will pump a bubble and sell into a crash.
It's safer than metals if you know even a little about computers in that it can not be confiscated. Also much easier to get than gold. And much harder to manipulate due to its transparent nature. And you can take it with you in your pocket.

For me it's also a hedge against failing fiat. Less of a concern for me since I'm not american or greek, but no western countries are safe.

There is no bubble.
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December 04, 2013, 01:35:54 AM
 #99

I'm thinking of getting a loan to buy more bitcoin, as I'm guessing we'll reach $10K in a few months it can be a good deal to lend at a bank against 5% anual rate

Did anyone do this before? Would like some experience advice

Debt.

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December 04, 2013, 03:06:36 AM
 #100

I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.

I couldn't care less if a BTC is ever used in a point of sale transaction.  There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.

Why would anyone use bitcoin as a store of value as opposed to precious metals like gold and silver? I think bitcoin has use as a means of moving money between countries, for purchasing items not priced in fiat (ie silkroad), or as a speculative investment.

The truth is those who are in bitcoin for speculative purposes have an endgame plan of holding USD. It is these people who will pump a bubble and sell into a crash.
It's safer than metals if you know even a little about computers in that it can not be confiscated. Also much easier to get than gold. And much harder to manipulate due to its transparent nature. And you can take it with you in your pocket.

For me it's also a hedge against failing fiat. Less of a concern for me since I'm not american or greek, but no western countries are safe.

I am a huge fan of bitcoin but:

It is not safer: Gold has been a store of value for thousands of years, bitcoin is going on 5. Gold prices although fueled by speculation is alot more stable, gold won't fall overnight too $1000/oz but bitcoin could fall to $50/coin within a matter of a few days.

Gold is very easy to get, you can buy it online or through multiple physical locations.

Bitcoin is much easier to manipulate than gold. Media and press can easily inspire confidence or fear in the coin to manipulate prices.

I agree holding a bunch of fiat is terrible, but bitcoin shouldn't be a wealth preservation strategy, but a speculative investment or a hobby.

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