Crypto backed mortgage

[Cold_Joker]

I came across a very interesting post that I found very important.
Real estate is expanding and it’s an area of investment what exploring. Not just for investment purposes, the cost of housing has almost doubled if not more, so as a crypto person the topic CRYPTO BACKED MONTAGE is important.

https://cointelegraph.com/explained/what-are-crypto-backed-mortgages-and-how-do-they-work

The article above explains the topic to a very good extent. As a crypto holder especially when the market is down with the potential of going back up I think it is a smart move to use your crypto holding( could be any acceptable coin in your possession) as a collateral to become a real estate investor.

I think this can be a big opportunity especially for those who doesn’t meet up with the requirements of the traditional mortgage system. This will allow more people explore the real estate market and also enable long term crypto holders the luxury of not selling their crypto yet.

Some of my confusion is the valuation. I mean will the value be based on the value of the coin as at when the deal was made or will it be fluid and can go with the present price of bitcoin when the loan will be repaid.

[tbct_mt2]

I came across a very interesting post that I found very important.
Real estate is expanding and it’s an area of investment what exploring. Not just for investment purposes, the cost of housing has almost doubled if not more, so as a crypto person the topic CRYPTO BACKED MONTAGE is important.

With bigger adoption on Bitcoin and cryptocurrency, there will be more corporations, companies and services accept Bitcoin and altcoins. With this bullish trend of adoption, this news is not surprising with me but there is risk if you are a careful person.

Bitcoin is volatile, altcoins are more volatile and in risk management, I'd like to use my bitcoin as collateral for my mortgage and avoid altcoins. Atcoins are dangerous for holding as they can lose 90% or 99% in a bear market and if you use them as collateral of your mortgage, I really can not imagine what kind of nightmare and liquidation they will get at the end.

You make a mortgage to have a better and more comfortable life, not to destroy your life, so make sure don't use altcoins for this purpose.

[Darker45]

Bitcoin or crypto-backed loans are nothing new. They're offered by both crypto and traditional financial companies. Even in this forum, it's available. A crypto-backed mortgage is just another kind of crypto-backed loan.

But why do you think it's a smart move to use your Bitcoin or crypto as a collateral when the market is down? Although, yeah, it helps you avoid getting liquidated, it also means you're getting a much lower value of what you have. You're risking your Bitcoin to a third-party in exchange for, say, 40% or 50% or 60% of its value. Personally, I don't think it's worth it.

[avp2306]

Bitcoin or crypto-backed loans are nothing new. They're offered by both crypto and traditional financial companies. Even in this forum, it's available. A crypto-backed mortgage is just another kind of crypto-backed loan.

But why do you think it's a smart move to use your Bitcoin or crypto as a collateral when the market is down? Although, yeah, it helps you avoid getting liquidated, it also means you're getting a much lower value of what you have. You're risking your Bitcoin to a third-party in exchange for, say, 40% or 50% or 60% of its value. Personally, I don't think it's worth it.

Maybe he didn't see what's going around on Lending section https://bitcointalk.org/index.php?board=65.0

That's why he made that conclusion and got amazed on that possibilities. These situation is not new and for many years this crypto backed mortgage is running in crypto space.

I also don't know why they like the idea of using their Bitcoin and it make them looks desperate to get quick funds. They might just waste some opportunity to get good profits with their Bitcoin especially if they use it for collateral matters or other unwanted things.

[Cold_Joker]

Bitcoin or crypto-backed loans are nothing new. They're offered by both crypto and traditional financial companies. Even in this forum, it's available. A crypto-backed mortgage is just another kind of crypto-backed loan.

But why do you think it's a smart move to use your Bitcoin or crypto as a collateral when the market is down? Although, yeah, it helps you avoid getting liquidated, it also means you're getting a much lower value of what you have. You're risking your Bitcoin to a third-party in exchange for, say, 40% or 50% or 60% of its value. Personally, I don't think it's worth it.

Like you correctly said avoiding to get liquidated is the main reason I find it interesting. Well this might now be worth it but also selling of your bitcoin for real estate in my opinion is worse especially when you are holding bitcoin that can easily go parabolic at any time, also I find it interesting compared to the traditional means because it offers a less restricted real estate opportunity.

[Z-tight]

The interest rate is higher than traditional mortgage, so that is another thing to consider before opting for a crypto-backed mortgage. Volatility risk is also another problem and you should read this:

If the value of the pledged crypto collateral drops, you may need to add more assets or partially repay the loan to prevent liquidation.

So this means that if as a result of volatility, the value of the crypto you deposited in escrow drops, you would have to deposit more coins, or else the lender may liquidate your coins and claim them. So if you think avoiding liquidation is a reason to do this, you should also look at things from this angle.

[BIT-BENDER]

So this means that if as a result of volatility, the value of the crypto you deposited in escrow drops, you would have to deposit more coins, or else the lender may liquidate your coins and claim them. So if you think avoiding liquidation is a reason to do this, you should also look at things from this angle.

I don't know if this is the case, because what if the value of the Bitcoin deposited to escrow increases? I actually don't think the price value of Bitcoin is fixed, I don't know but I believe it's a gamble from the lender that what ever happens they get the same amount of Bitcoin initially deposited this is minus interest. But I think won't actually be taking this services.

[Saint-loup]

Some of my confusion is the valuation. I mean will the value be based on the value of the coin as at when the deal was made or will it be fluid and can go with the present price of bitcoin when the loan will be repaid.

Usually the lender give you fiat money or stable coins in exchange of your Bitcoins (or other cryptocurrencies) it takes as collateral. Meaning it will give you back your BTC only if you pay back your loan. So if at the end he asks you more money he gave you initially on top of the agreed interests to give back your full collateral he is a scammer. In the opposite way, if you dare to not want to fully payback the money he lent you initially along with the interets because the collateral that you entrusted to him has become worthless you are also a scammer. You can eventually negotiate to get back a part of the collateral during the repayment period because the value of the collateral has increased or because you have already repaid a large part of the loan, and the borrower can eventually ask you a bigger collateral in exchange of lower interests or a longer repaying length but it doesn't concern the principal paid back.

[Zoomic]

Some of my confusion is the valuation. I mean will the value be based on the value of the coin as at when the deal was made or will it be fluid and can go with the present price of bitcoin when the loan will be repaid.

I have often heard of crypto-backed loans but have never tried them out. The questions on my mind right now are:

What if the lender isn't reputable? They could collaborate with the escrow to dupe their victims. Although this can actually happen to a borrower who is just too careless to confirm details first. Yeah, I have heard of several cases where people receive fake credit alerts on their devices, but the same amount doesn’t reflect in their bank balance.

Another question on my mind is: wouldn’t I be tying down my crypto investment just to acquire a loan whose value may not match what I would have gotten if the price of my crypto investment (especially Bitcoin) suddenly rises? This seems more like a very risky move to me. Anyway, it is only suitable for short-term loans. For long-term loan purposes, it is strongly not advisable.

As for me, if I need a mortgage loan, I won’t put my bitcoins at risk,there are other options available.

[mindrust]

I wouldn’t touch that. Bitcoin and debt don’t mix well. Bitcoin is a quite volatile and unpredictable and that means either the lender or the debtor will get effed very badly. If I am going to borrow money, I’d rather borrow FIAT because I know it is shit. FIAT will always lose its purchasing power in the long term and that is a good thing for the debtor. Btc on the other hand has always been going up against the dollar. It doesn’t make any sense to borrow btc to buy anything.

[Etranger]

I think that with the pace at which Bitcoin and the entire crypto industry are developing, such crypto backed mortgages are becoming a very profitable option for those who provide credit money. After all, if the loan cannot be repaid, the lender is left with a crypto asset with much greater potential than the asset that he gave as funds for the crypto backed mortgage.

[coolcoinz]

I wouldn’t touch that. Bitcoin and debt don’t mix well. Bitcoin is a quite volatile and unpredictable and that means either the lender or the debtor will get effed very badly. If I am going to borrow money, I’d rather borrow FIAT because I know it is shit. FIAT will always lose its purchasing power in the long term and that is a good thing for the debtor. Btc on the other hand has always been going up against the dollar. It doesn’t make any sense to borrow btc to buy anything.

Which is why there are so many companies offering this.

Binance lets you take a crypto loan.
There's also a pretty reputable company called Ledn where you can not only take a loan, but also create a savings account.

I have nothing against these companies, but personally I wouldn't do it. Why? You're sending your coins to these people and we all know that it's a bad idea. Have you ever heard of Celsius? If not, read about them.
A loan in bitcoin sounds nice, like fast and easy money without exiting the market, same as with being a lender for 2% interest, but in the end you're risking your life savings along with the full potential that these assets bring to the table.

[Z-tight]

I don't know if this is the case, because what if the value of the Bitcoin deposited to escrow increases? I actually don't think the price value of Bitcoin is fixed, I don't know but I believe it's a gamble from the lender that what ever happens they get the same amount of Bitcoin initially deposited this is minus interest. But I think won't actually be taking this services.

If BTC was the coin used as collateral and its value while in the escrow address increases, nothing happens, the mortgage runs as normal, if the lender successfully repays the loan, they take their BTC. However, like i already said, if the price drops significantly, the borrower may have to deposit additional coins. Take note that the borrower does not have to use BTC, stablecoins will surely be used more by people who want to try this.

[Cryptohygenic]

The article above explains the topic to a very good extent. As a crypto holder especially when the market is down with the potential of going back up I think it is a smart move to use your crypto holding( could be any acceptable coin in your possession) as a collateral to become a real estate investor.

Another thread Worth to be discussed in the economy board. Because a thread has got to do with bitcoin should not automatically mean it is for suitable for bitcoin discussion board.
The real estate investment can not be overthrown when aware that it values disregards the economy deflation. That basically mean it surges lucratively during and inflation but resists to depreciates when the economy is poor. Instead it is better of keeping a stable value than following the suites of a fallen economy.
Due to financial enhancements following the fiats rates, it important to diversify your source of incomes in other to be beneficial to wherever the economy ratio flows in accordance.
So investing on bitcoin gives a privilege to the alternation of making profits in the sense that when the bitcoin is adhering to lower volatile, you can hold up to your real estate assets but when the real estate is not of good productiveness, your bitcoin can always alternate to diversify your earning.
So if you can own bitcoin and a real estate assets, you can muchly dare the fall of your financial portfolios.

[Aanuoluwatofunmi]

I think this can be a big opportunity especially for those who doesn’t meet up with the requirements of the traditional mortgage system. This will allow more people explore the real estate market and also enable long term crypto holders the luxury of not selling their crypto yet.

I have learnt this very important fact about cryptocurrency and bitcoin to be precise, any opportunity that may comes through its uses and adoption should be base on what i can personally participated in without having to depend or use any centralized exchange or institution in achieving my dreams with bitcoin, so if i have the wide application of all the necessary areas bitcoin could be of profit to me, then i don't need to go through any centralized service or company in realizing this than doing it myself, because this is part of what bitcoin stand to creates, (financial independence).