Would you dare to pawn your bitcoin?

[dothebeats]

If the rules on pawning bitcoin and other digital assets have been clearly established, why not? As DaveF pointed, this is no different than getting a loan and using your bitcoin as collateral. If the value of your bitcoin at the time of the loan is locked to what it is for the duration of the loan period, I think that's a good deal. If it's not, and the terms are favored towards the lender, I wouldn't do it and just get a regular loan instead.

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[Twentyonepaylots]

If the rules on pawning bitcoin and other digital assets have been clearly established, why not? As DaveF pointed, this is no different than getting a loan and using your bitcoin as collateral. If the value of your bitcoin at the time of the loan is locked to what it is for the duration of the loan period, I think that's a good deal. If it's not, and the terms are favored towards the lender, I wouldn't do it and just get a regular loan instead.

Indeed, question is whether the price would remain the same in the first place and interest would be the only sort of increase to be paid by the one who pawned it 'coz if not and the price of Bitcoin would be also considered, then it is where problem may arise. Lucky if it happen that Bitcoin's price suddenly fall therefore you'd be able to pay less but if it would increase in a sudden then you'd be in huge debt just to get it back and not to mention the interest into it, if you will choose to wait for its price to fall. It is better to use other collaterals I guess than to use something having a very volatile market price.

Also if it is pawning, I would prefer taking a loan to an amount I can afford to payback in a short period of time. Atleast in such way, I won't be minding no other additional payment other than the interest itself.

[Kryptowerk]

In Russia, there is a demand for digital deposites in pawnshops. According to information from forbes.ru, up to 100 requests for money secured by cryptocurrencies are received monthly. In this regard, the pawnshops asked the Central Bank of Russia to clarify the possibility of accepting cryptocurrencies as collateral on a par with gold. To which, the regulator didn't find grounds for banning such activities. For now.

I remind that in Russia the legal status of cryptocurrencies has not yet been clearly defined. Most likely, the legislative framework will be finalized and transactions with digital assets will be regulated so that they receive the status of a full-fledged liquid collateral. And now, it turns out that pawnshops in Russia can accept currencies as collateral, and there are no laws prohibiting this.

Currently, digital currencies are recognized as property only for the purposes of the laws "On Combating Money Laundering", "On Insolvency" and "On Combating Corruption", in other cases, "legislation doesn't establish the legal basis for the circulation of digital currency", says Central Bank of Russia.

Also, in that article (I warn you, the text is not in English), a probable problem is voiced when it is physically impossible to transfer cryptocurrencies to a pawnshop for storage. It seems to me that this is solvable. It is enough for a pawnshop to create its own crypto wallet, to which the client's cryptocurrencies will be sent for temporary storage (until the borrower's debt is repaid).

P.S. This is a slightly loose interpretation of information.


Now let's move on to the question posed in the topic title.
- Would you approve of the possibility of leaving crypto as a deposit in a pawnshop?
- Has such a service not yet appeared in your country of residence?
- How do you feel about the emergence of such new trends in the service sector?

I think that this service in a pawnshop will not be possible without the KYC procedure, which few will like.

Ready to discuss this topic?

Some very interesting insights on the Russian pawnshop situation regarding crypto. I know a lot of EU countries where this would most likely (I am no lawyer, but as far as I understand the law) be illegal for pawnshops without the correct (and very expensive) exchange-license to accept crypto and give out mones instead.

I think the main reason I wouldn't ever want to go near a pawnshop, is the fact they terms are usually way in favour of them. Meaning it is most likely a -EV (expected value) game for the person lending their money.
Unless you are desperate I wouldn't ever bother with this, even it were a possibility in my country.

[m2017]

No different then taking a loan against your BTC from some of the larger places that do it online.
The biggest issue I see is regulation and price volatility and the rules that you are agreeing to when you do it.

You give them 1BTC they give you $25000. If the price goes up can you get more cash from them? Or do they give you some back.
If the price plummets back to $15000 and you walk away do they have any way of going after you?

Personally I would not, but that is just me. Would rather just sell and buy back. Unless they are offering very low interest rates, which pawn shops are not known for.

-Dave

You seem to have forgotten how pawnshops work. In return for collateral in the bitcoin you get money. Here and now. The current exchange rate is taken into account. And here is the volatility and the price of bitcoin with a reduction in price and a fall? I assume that upon repurchase, you will be returned the amount that was indicated in the contract. You gave them 1BTC and they gave you back 1BTC. What other interpretations can there be? This is not a way to mortgage btc for $10k and then get $20k. Pawnshops give you the opportunity to borrow quick money (but not cheap) when you really need it.

For me, every service in which someone gives its BTC for this or that reason is essentially wrong. Most of those who are active on the forum know what happened to companies that offered tempting interest on BTC deposits, and yet they were companies that operated at least somewhat in accordance with the law - while on the other hand, a pawn shop can literally disappear overnight and you can easily lose everything.

Of course, there is also the issue of KYC and the protection of this data, but also the problem of personal safety if it were physical branches - which leads me to conclude only one conclusion, and that is that this is a very bad idea no matter how someone presents it.

How will you lose everything? The pawnshop gives you the money in return for the pledged bitcoin. In case of unforeseen circumstances, you still have money on hand received from the pawnshop. As a last resort, this can be considered a forced sale under the most unfavorable scenario.



It's not that pawnshops are good or bad, but that the real, physical world is gradually and increasingly integrating digital currencies. Even in such a dubious way for users.

Everyone is waiting for an bitcoin adaption, and when this happens, I agree, in a very peculiar way, they begin to grumble. Completely forgetting that this event is, in fact, the acceptance of btc as a financial asset, on par with gold in a certain niche. Try to look at the news from a different angle.

[Poker Player]

- Would you approve of the possibility of leaving crypto as a deposit in a pawnshop?

I approve of everyone doing what they want with their Bitcoin, but it seems to me that the person who pawns them doesn't really understand what this is all about. To begin with, the money you put in Bitcoin should be money that you know you will not need for years, but even if I suppose that I had a big unexpected event that would make me need the money, I would rather sell part of my Bitcoins than pawn them.

- How do you feel about the emergence of such new trends in the service sector?

Well, it's just more crap like centralized exchanges or custodial wallets, which a lot of people will use.

[GreatArkansas]

Personally, I think it's a cool option to have. It could provide an alternative way for people to access funds using their cryptocurrencies, especially if they need a short-term loan. However, ensuring proper security and compliance measures, like KYC, would be crucial.

Depositing your BTC's into a pawnshop is kind of similar to every other service in which you must give up custody of your keys, it is similar to lending and earning platforms and centralized exchanges, though these platforms are regulated differently and the purpose of depositing is different, but the risk is the same, not your keys not your coins.
(....)

You don't get the point here. My own understanding about pawning is if you need emergency cash like you have a valuable item and in exchange, cash is extremely low compared to the item you pawned.
Pawning Bitcoin though is not standard practice here because at first Bitcoin is not a physical item, it will just fall into a loan with collateral.

To summarize, if really need that cash at all in an emergency, why just sell your Bitcoin? I understand about the value of Bitcoin could increase or decrease but the fact is you need money. So, it's still you are trading here because no one knows what will happen in the future. Some people are making profits by doing this but if it's not your goal, then no need to "pawn" your Bitcoin.

[wxa7115]

You don't get the point here. My own understanding about pawning is if you need emergency cash like you have a valuable item and in exchange, cash is extremely low compared to the item you pawned.
Pawning Bitcoin though is not standard practice here because at first Bitcoin is not a physical item, it will just fall into a loan with collateral.

To summarize, if really need that cash at all in an emergency, why just sell your Bitcoin? I understand about the value of Bitcoin could increase or decrease but the fact is you need money. So, it's still you are trading here because no one knows what will happen in the future. Some people are making profits by doing this but if it's not your goal, then no need to "pawn" your Bitcoin.

Pawn shops allows a person to get credit that they would not get otherwise while at the same time they keep possession of their items, pawn shops can also allow a person to get some money for their items that would be difficult to sell quickly, like collectibles and other similar assets.

However bitcoin has a very liquid market and you can exchange your coins for fiat in minutes, and depending on the place where you live you could pay with your bitcoin directly without the need to sell them, so while some people out there could make use of such service I do not see too much of a need for it.

[dzungmobile]

You don't get the point here. My own understanding about pawning is if you need emergency cash like you have a valuable item and in exchange, cash is extremely low compared to the item you pawned.

Pawnshops will value your items much lower than their real values on the market. They undervalue your items to reduce risk for their business when you don't bring cash and reclaim your items back. They will be able to liquidate your items on the market without losses or they even can liquidate those items with profit from higher values than what they assessed for your loan initially.

Pawning Bitcoin though is not standard practice here because at first Bitcoin is not a physical item, it will just fall into a loan with collateral.

If it is Bitcoin, they will feel more risk and value your bitcoin like -30% or -40% from market price. It is understandable as your loan can last one month or six months and many things can happen in this market after a few months.

To summarize, if really need that cash at all in an emergency, why just sell your Bitcoin? I understand about the value of Bitcoin could increase or decrease but the fact is you need money. So, it's still you are trading here because no one knows what will happen in the future. Some people are making profits by doing this but if it's not your goal, then no need to "pawn" your Bitcoin.

Just selling bitcoin when you need cash, even with loss if you don't have other ways to have cash without loans at pawshops.

It raises an old reminder that you will always need to have cash to use and for emergency. If you have a reserved cash, you will not have to sell your bitcoin at lost price when you need cash. Don't use all cash you have to invest in anything as you will need cash some days.

[avikz]

I personally wouldn't do that! Simply because the price of cryptocurrency is volatile. It has a definite chance to go in any direction at any point of the day. So if I keep my bitcoins as collateral in a pawnshop today, their value could be much higher in the next couple of days or vice versa. So there is an element of uncertainty. For the same reason, I am not much in favor of spending my bitcoins for regular purchases. I always keep the numbers in mind and the data shows that Bitcoin has a huge potential. So I am more in favor of holding it unless some emergency happens. That's my personal opinion though and it won't go well with the Bitcoin puritans for sure.
 

[bettercrypto]

If you are the type who has a deep understanding of Bitcoin, there is no reason for you to pawn Bitcoin. Just think about common sense, if you believe that a Bitcoin will be 100k$ next year, and at its current price of 30k$, and you make it a mortgage, you are a very stupid Bitcoin holder.

Then why would you mortgage it if you can just sell it on the exchange or take a loan from the exchange and make your Bitcoin holdings collateral, as long as you are sure of yourself that you can pay what you owe. That's probably how easy it is to understand.

[Jawhead999]

I'm the one who don't understand what's the purpose to pawn your Bitcoin when Bitcoin is a currency and you can immediately sell it to your fiat, then you can withdraw your fiat. Although it's possible to pawn your Bitcoin, but most of centralized entity still not accept it and most people don't have a good understanding of how Bitcoin's work. Most people would get scammed because they just blindly trust someone and might get scammed twice when they seek someone who can recover their Bitcoin.

[michellee]

I do not want to leave crypto as a pawnshop deposit for now. I prefer to keep it in my personal wallet. Such a service doesn't yet exist in my country; I still wouldn't want to use it if it did. I prefer to use other goods as collateral rather than crypto.

The emergence of new trends in the service sector can provide fresh air, especially if it is related to crypto, so people can get to know crypto and use it well. And such services indeed have to do KYC procedures because pawnshops are connected with the government.

We need to pay attention to the KYC problem for crypto users because many crypto users don't want their crypto data to be known by the government. It will limit our movement as crypto users.

[Nwada001]

If I can freely use my Bitcoin as collateral in any lending service, what difference does that make between that service and the pawn shop? I guess there is not much of a difference because it is just the same service as other lending services out there. I give out my BTC and you lend me some money, which the BTC could be used as repayment if I default on the loan, and if the price of Bitcoin goes up high within the loan period, I will be at an advantage, which might definitely be the purpose of me not selling my Bitcoin but rather taking a loan with it because I have a positive mindset over price. But if the price goes below the agreed average, I might be recording some losses because those BTC will be sold out.
 
The only thing that might make me not hand over my BTC to the pawn shop management is security and which wallet I am also sending it from, because every record will be properly documented and can easily be forwarded to the authorities since they operate under their regulation.

[jrrsparkles]

Just sell the crypto and repay the debt is simpler to me than paying interest on something which we already have money.Well if there is a situation then why not but the pawn shop should understand the risk cause the assets are highly volatile and it's never going to be safe as gold in my opinion. Also it's not possible to claim the ownership like we can do with gold so if one party involves in not returning back the assets then it's going to be a headache again.

[erep]

If it is Bitcoin, they will feel more risk and value your bitcoin like -30% or -40% from market price. It is understandable as your loan can last one month or six months and many things can happen in this market after a few months.

We don't know the details of the collateral value of bitcoin assets from the deposit regulations, but very worried that they determine the lowest market value of bitcoin from $ 15k-30k maybe they set a value of 23k-25k as the collateral value of bitcoin or it could be lower than -40% of the market price.

Just selling bitcoin when you need cash, even with loss if you don't have other ways to have cash without loans at pawshops.

It raises an old reminder that you will always need to have cash to use and for emergency. If you have a reserved cash, you will not have to sell your bitcoin at lost price when you need cash. Don't use all cash you have to invest in anything as you will need cash some days.

We must determine financial management to avoid dealing with loans in pawnshops, because all financial aspects have been planned and have been arranged to need funds at any time without interfering with bitcoin investment, I personally determine 30% for long-term crypto investments, other allocations for emergency savings and gold investments , I will take advantage of both aspects if I need high funds for urgent needs without borrowing funds from a pawnshop.

[boyptc]

I do not want to leave crypto as a pawnshop deposit for now. I prefer to keep it in my personal wallet. Such a service doesn't yet exist in my country; I still wouldn't want to use it if it did. I prefer to use other goods as collateral rather than crypto.

I will not also do this but maybe if in total need and when there is no option anymore, might be forced in doing so but hopefully not gonna be into that situation.

It's not giving me that confidence of letting my bitcoin be with the pawnshop because you'll never know what's on the mind of these pawnshops especially if this is like a new service to them.

And as long as I have other things to pawn or if I don't have to do that, I wouldn't do it and it doesn't make sense to take a loan for nothing at all. Might keep it plain and there until the bull run arrives and sell it, I'll follow the style of delayed gratification if the thing I want can be saved and bought in the nearest future.

[Baofeng]

Nah, I wouldn't go that far to pawn my BTC, I would rather pawn physical objects, like jewelries or even your car. The worst thing that can happen is that you totally lost your bitcoin here just because of some technicalities.

And there is also the trust factor involved, and as far as I know, as what we have been preaching, not your keys, not your coins.

I'm totally against it. And even if this service is available in my country, I wouldn't do that. So voted for No.

if you have other means to exchange your btc to your fiat, why not do it and not use the pawn system? i do not see the logic of this move unless the person in russia has no other option to convert his btc to his fiat and he badly needs his fiat.
i can agree with other physical belongings to be pawned but crypto or btc, i don't think it is acceptable when we are already in this digital age where you can practically transact over the net.

That's my point mate, most likely it might be the last thing to do, if you are really in dire needs then why not just sell it though instead of pawning right?

If we take the case of Russia right now, if you are just a ordinary individual and might be suffering from the effects of war, then sell your BTC to survived. I don't think that Bitcoin is designed to be pawned, it's not a physical objects and I don't think that Satoshi did even think about that when he created it. Transactions should be irreversible, once you let go, it's gone.

[Darker45]

It's going to be an option, of course. If a time comes when I really needed money and I'm left with no choice but to dip into my Bitcoin stash, I'd probably be looking into it. It would either be selling or using it as collateral for a loan or pawning it. I'd be choosing whichever is best in my circumstances. 

I'm not sure if pawnshops here in my country are legally allowed to accept Bitcoin as a guarantee, but I suppose it's already happening as far as individual private deals are concerned. Also, Bitcoin largely remains a thing to be studied.

Online, however, it's a lot easier for anybody to use Bitcoin as a form of collateral. It's not much different from pawning it.

[Chivas Regal]

The lending section is littered with users who are using their alts as guarantee and more often than not using bitcoin as their payout (or visa-versa - not sure would have to look that one up)

Effectively they are treating the lending section as a poor-man's pawn shop.

[Blitzboy]

From where I stand, pawnshops taking crypto as collateral is a leap forward, etching tangible acknowledgment to the worth of this digital asset. It's an open secret that cryptos, mainly Bitcoin, have shown a knack for steep value climb, sometimes even leapfrogging gold.

The rollout isn't going to be smooth sailing, though. We need airtight laws to supervise this shift, ensuring consumer safety. If Russia's Central Bank greenlights it, it'll likely set the stage for others.

Where I reside, this service is yet to launch, but I see it as a future inevitability. KYC checks might rub some the wrong way, but they're indispensable for nipping scams in the bud and maintaining a clear picture. As a crypto enthusiast, Im rooting for such future-facing leaps in merging crypto with traditional systems.