Borrow fiat with your Bitcoin and never sell

[Cannabijoy]

I don’t have enough Bitcoin (yet) to borrow for anything significant, but this is my ultimate plan. When I get enough Bitcoin, I would borrow no more than half its worth (in case the price drops), and then I would still have Bitcoin along with whatever property I buy with the borrowed money.

This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.

I hope Bitcoin will eventually replace the fiat system, but until then, the market for cash favors borrowers over savers. This seems like a win-win situation.

Does anyone else plan on doing this?

[n0ne]

I don't get you. Based on what I understood you're planning to borrow fiat once you've got enough bitcoin. Does this mean you're planning to borrow money placing bitcoin as the collateral. For borrowed money you need to pay regular interest.

Maybe this can turn to be effective, if the borrowed money is invested on something that brings you regular income.

[Cannabijoy]

I don't get you. Based on what I understood you're planning to borrow fiat once you've got enough bitcoin. Does this mean you're planning to borrow money placing bitcoin as the collateral. For borrowed money you need to pay regular interest.

Maybe this can turn to be effective, if the borrowed money is invested on something that brings you regular income.

Yes, if I need something, I would borrow the money instead of selling the Bitcoin to purchase it. Michael Saylor talks about this. If I have to pay 5% interest, but Bitcoin’s price raises over 5% a year, then I would be making money. If I sell the Bitcoin for fiat, then inflation will eat up that money. This is apparently what everyone from Elon Musk to Donald Trump does. They don’t actually have any money. They just have property, and borrow against the property because the property is more valuable than the cash.

[Bitcoin_Arena]

Also remember that once you borrow fiat, you are giving the lender opportunity to make way much money using your collateral (Bitcoin) on top of charging you very high interest rates. If anything goes wrong and you default the loan, your valuable Bitcoins are gone.

I would rather sell a small portion of my bitcoins for survival, while I keep the rest for the future.

[Yogee]

....
If I have to pay 5% interest, but Bitcoin’s price raises over 5% a year, then I would be making money.

You're not really gaining anything unless you sell them right? You will just be paying interest regardless of the fiat value of your BTC. What would you do when you borrowed money and then BTC price drops?

It's easy to say things when you have not been into those situations yet. Focus on accumulating those bitcoins first before saying what you're going to do with them.

[hatshepsut93]

How do you plan to settle the debt without selling Bitcoin? Bitcoin is not a legal tender in most countries, so you will have to liquidate it.

And now imagine the worst case scenario. You borrow money, Bitcoin crashes, you now have to sell your coins for a very bad price to settle the debt. But if you wasn't so greedy and simply sold Bitcoin while it's high, you would have more wealth, even with taxes and inflation.

[KingsDen]

This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.

Does anyone else plan on doing this?

I have been trying to get the real picture of what you meant. I read through twice and I was able to understand that;
When you have enough bitcoin maybe amounting to $100,000 you will have to borrow fiat of half the value. Let's say $50,000 and use your bitcoin as a collateral. When your bitcoin rises to Let's say $130,000 you will pay your debt with the bitcoin and still have enough left in bitcoin. The whole scenario was sounding fine until you said that you will clear the debt without selling the bitcoin. Let's assume it was a mistake.

Meanwhile, how long loan are you gonna get, how will you know if bitcoin will bull or bear and how will you be able to prove to the lender that you own the bitcoin. By sharing the address for him to checkup on blockchain? Not a good idea, or by sharing your secret keys, not also a good idea or by showing the person your bitcoin balance?

Please explain your idea very well.

[Cannabijoy]

Have any of you heard of “Buy, Borrow, Die”? It’s what billionaires do, and it’s why they never pay taxes. If more Bitcoiners followed this strategy, the price of Bitcoin would also rise because we would have more holders.

Basically, you buy an asset that is sure to appreciate. What you lose in interest, you gain substantially more in equity- allowing you to borrow even more. This is why I said I wouldn’t borrow more than half of what Bitcoin is worth at any given time. This will ensure you do not lose all your Bitcoin.

https://www.wsj.com/amp/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583

This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.

Does anyone else plan on doing this?

I have been trying to get the real picture of what you meant. I read through twice and I was able to understand that;
When you have enough bitcoin maybe amounting to $100,000 you will have to borrow fiat of half the value. Let's say $50,000 and use your bitcoin as a collateral. When your bitcoin rises to Let's say $130,000 you will pay your debt with the bitcoin and still have enough left in bitcoin. The whole scenario was sounding fine until you said that you will clear the debt without selling the bitcoin. Let's assume it was a mistake.

Meanwhile, how long loan are you gonna get, how will you know if bitcoin will bull or bear and how will you be able to prove to the lender that you own the bitcoin. By sharing the address for him to checkup on blockchain? Not a good idea, or by sharing your secret keys, not also a good idea or by showing the person your bitcoin balance?

Please explain your idea very well.

Not exactly. I don’t plan to live on Bitcoin alone. I will still have a job that ensures I can make the payments until I invest in enough things that offer a steady return.

[moderator's note: consecutive posts merged]

[bittraffic]

It could be a tragic end when there is a bear market and more than half of BTC value drops. If the lender is not reassuring I guess this will work. Isn't something like this already in a Defi platform?

I wouldn't be getting into a loan if I have BTC. What I can suggest is to keep your coins and when ATH, you sell. That's what you should do and then wait for the bear market to come as it always does. You can do whatever you plan with that fiat.

[sheenshane]

Have any of you heard of “Buy, Borrow, Die”? It’s what billionaires do, and it’s why they never pay taxes. If more Bitcoiners followed this strategy, the price of Bitcoin would also rise because we would have more holders.

I get you and this is how I love how Robert Kiyosaki inspired people about debt and taxes and it might it's good if you watch this short clip of him.
https://www.youtube.com/shorts/vZv-7NqI3NM

This man I most admire, it's sure you've learned a lot with him and I think this idea is also good to apply if you want to invest in Bitcoin and aim for a target range time so that you can get paid the interest.

Your idea seems good, but make sure you can handle it very well.  There should be a game plan.

[Uang_kartal]

if you are looking for posts about bitcoin lending in the future, you can check this https://bitcointalk.org/index.php?topic=5137889.0

pending the requirements that the Op wants and the minimum requirements for submission.
if there is no urgent reason such as paying fees or any fees, you should not borrow if the goal is for long-term investment. I believe in your enthusiasm and prejudice in the bear market (analysis can change at any time). money itself which is not an emergency. Borrowing money, either fiat or crypto, can burden you and make you uncomfortable with the timeframe and interest requested.

[Cannabijoy]

It could be a tragic end when there is a bear market and more than half of BTC value drops. If the lender is not reassuring I guess this will work. Isn't something like this already in a Defi platform?

I wouldn't be getting into a loan if I have BTC. What I can suggest is to keep your coins and when ATH, you sell. That's what you should do and then wait for the bear market to come as it always does. You can do whatever you plan with that fiat.

If I sell Bitcoin once it reaches an ATH, and it continues to rise, I will never be able to recoup my Bitcoin. People sold their Bitcoin when it reached an ATH of $10. Suppose they made a million dollars. If they held their Bitcoin and could borrow against it, they would have $1,000,000 to invest in a business, plus $2 billion in Bitcoin.

[ChiBitCTy]

There is always a level of risk involved in things like this, and if you’re borrowing fiat monies while putting up bitcoin as collateral, then you’re going to have to pay interest on those dollars borrowed. Are you aware of that being the case? I’m not sure this makes sense, would need a little more background info on everything. 

[Cannabijoy]

Have any of you heard of “Buy, Borrow, Die”? It’s what billionaires do, and it’s why they never pay taxes. If more Bitcoiners followed this strategy, the price of Bitcoin would also rise because we would have more holders.

I get you and this is how I love how Robert Kiyosaki inspired people about debt and taxes and it might it's good if you watch this short clip of him.
https://www.youtube.com/shorts/vZv-7NqI3NM

This man I most admire, it's sure you've learned a lot with him and I think this idea is also good to apply if you want to invest in Bitcoin and aim for a target range time so that you can get paid the interest.

Your idea seems good, but make sure you can handle it very well.  There should be a game plan.

I have seen videos with Robert Kiyosaki before, and he makes a lot of sense. You don’t want to borrow money against your Bitcoin for something like a car. You want to borrow the money to invest into rental properties or some other business that will make you money. You could sell the Bitcoin and live your entrepreneurial dreams; or you can borrow the money, live your entrepreneurial dreams, and keep your ever rising Bitcoin.

[Fundamentals Of]

There is of course both advantages and disadvantages to this. But the problem with borrowing fiat using your Bitcoin as collateral is probably that you will send your Bitcoin to the lending platform or company. And the amount of Bitcoin you are sending is definitely bigger than the fiat that you received.

Now, the lending platform is hardly to be trusted. Not only is this company centralized and in control of your funds, meaning its owners could suddenly exit and vanish into thin air, this company could also go bankrupt anytime. When that moment comes, your Bitcoin will be stuck.

[gunhell16]

I don’t have enough Bitcoin (yet) to borrow for anything significant, but this is my ultimate plan. When I get enough Bitcoin, I would borrow no more than half its worth (in case the price drops), and then I would still have Bitcoin along with whatever property I buy with the borrowed money.

This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.

I hope Bitcoin will eventually replace the fiat system, but until then, the market for cash favors borrowers over savers. This seems like a win-win situation.

Does anyone else plan on doing this?

So according to what you said when you have Bitcoin you will borrow money for no more than half of the Bitcoin you have? Are you referring to a Bitcoin? You didn't say anything about the amount of bitcoin, you just said that when you have Bitcoin, do we know if you are only targeting half or 1 bitcoin. It's a bit like what you're saying is just confusing or just a little messy. But in my understanding, maybe it's better not to borrow money if you have 1 Bitcoin. It's like you injured yourself if your body is fine.

Also, there are many ways in this forum to earn bitcoin or even altcoins as long as you just research and ask questions here, there are even other members on this platform who lend here like @darkstar, Shasan and others as long as they will see that you have a source of funds to pay what you borrow.

[Poker Player]

I don’t have enough Bitcoin (yet) to borrow for anything significant, but this is my ultimate plan. When I get enough Bitcoin, I would borrow no more than half its worth (in case the price drops), and then I would still have Bitcoin along with whatever property I buy with the borrowed money.

....

Does anyone else plan on doing this?

You are late for this. This is so 2021 what you are saying.

The one who popularized this last year was Michael Saylor, to the point of recommending to people that if you have a paid off house, take a mortgage and buy Bitcoin with the money they give you. Soon other Youtubers jumped on the bandwagon, like Max Kaiser.

The problem is that we are in 2022 and many of the entities that allowed you to borrow against you Bitcoin have gone bankrupt, and people who had deposited Bitcoin in them, to borrow against it, for trade or other reasons, have been left without their Bitcoin and we will see if they get it back.

Remember: "not your keys, not your Bitcoin".

If you acquire a significant amount of Bitcoin it is much safer to sell or spend small parts than to borrow against it, even if you have to pay capital gains tax. Better to pay tax than to lose your Bitcoin.

[bigjuk]

I don’t have enough Bitcoin (yet) to borrow for anything significant, but this is my ultimate plan. When I get enough Bitcoin, I would borrow no more than half its worth (in case the price drops), and then I would still have Bitcoin along with whatever property I buy with the borrowed money.

It's okay to borrow money, all of that is the right of the consumer, the borrower doesn't want to know what the money is being lent for.

Buy crypto loans and investments, if you are able to face monthly interest for borrowers, there is nothing wrong with holding on for the next few years, obviously you have to consider the risks that occur or before they happen.

[worle1bm]

It's not fiat that you can put as collateral because once the person is having access to your funds they can be gone with a blink of eye and you need to pay the debt also so it's not a win-win situation as you are assuming it to be.You can wait for some time and in future when your btc holding are worth significant amount you can buy stuff with it you like and it will be adopted in most of the region without even risking your coins.

[aoluain]

It could be a tragic end when there is a bear market and more than half of BTC value drops. If the lender is not reassuring I guess this will work. Isn't something like this already in a Defi platform?

I wouldn't be getting into a loan if I have BTC. What I can suggest is to keep your coins and when ATH, you sell. That's what you should do and then wait for the bear market to come as it always does. You can do whatever you plan with that fiat.

If I sell Bitcoin once it reaches an ATH, and it continues to rise, I will never be able to recoup my Bitcoin. People sold their Bitcoin when it reached an ATH of $10. Suppose they made a million dollars. If they held their Bitcoin and could borrow against it, they would have $1,000,000 to invest in a business, plus $2 billion in Bitcoin.

Yea the trouble is that you will have to hand over Bitcoin to whomever you borrow the FIAT
from, this means you lose control of that Bitcoin and when the value falls you will have to
give them more Bitcoin to cover the value of the FIAT loan, its like a "Margin Call".

Alternatively you could do what I did twice before and its something most others would
frown upon but it worked for me. Just get a FIAT loan without touching your Bitcoin
and buy more Bitcoin with it. Timing is everything and I have done it 6 months before
the halving then 12 months after the halving sell the Bitcoin you bought to do what
you want or just part of it to pay the complete FIAT loan back.

* of course i cannot guarantee this will actually work just based on fast performance alone!