Why it is sometimes possible to take out a bank loan to buy BTC

[arwin100]

People have this stigma that its bad to borrow money and use it to invest on a risky investment options like Bitcoin.

But actually those risk they think doesn't always goes like that. Since we have this healthy investment choice and we can actually maximize our investment thru borrowing our some funds to expand our investment sizes. There's really no problem to take that decision especially if people could able to pay the money he owe from bank.

The decision will be bad if he don't have any intention to pay and just try to borrow without having a some plans on where they use or spend the funds they borrowed.

The only question is if the bank would really allow if the borrower would declare that he plan to use it to buy Bitcoin. Bank provably not gonna take action any action since they know the risk involve on taking that decision.

[Koadharber]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

There are people who are risk takers and there are those who aren't and you can be able to expect that there will be those people who would be saying negative things like this and like that on which these are actually true. The only thing what makes you hinder out is that neither you cant be sure that you would be able to repay those loans or you are just that totally scared about on the risks involved with it. There are just that those individuals that they can be able to repay those loans and they are prepared on whatever the risks that they might be able to face specially when dealing up with volatile space. When you do saw some opportunity specially if the market is making up some extreme bearish condition then it will be that up to you whether you should be taking it or not. Its just that impossible that you cant be able to know on what are those probabillities.

[Dr.Bitcoin_Strange]

Every investment involves risk but before one can go ahead with the investment they must also have a down plan to manage the situation in case things doesn't go as planned. For example, if I want to take loan to invest into Bitcoin, I must not only have the plan ofof repaying with the Bitcoin profits and that's because the Bitcoin might not yet be yielding any profit when the loan date will be due and if that happens, I can not repay the loan with its interest. To avoid being in such situation, I should have another source of income where I can rely on to repay the loan if the Bitcoin investment is not yet profitable.

[philipma1957]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

I like this question so you now have 1000 merits as I gave you 14.

here you are: a new legend:
https://bitcointalk.org/index.php?topic=5251894.new#new







Taking loans for risky shit is fine if you know you can pay the loan off.

Taking loans for risky shit when you know the risky shit has to hit is a terrible idea.


It really is not more complicated then this.

And to illustrate taking a 5000 dollar loan to buy Doge at 0.002 usd would have yielded  2,500,000 doge

which then went as high as 0.70 usd or 1,750,000 usd in under a year

this is off a bit but doge was 0.002339 on April 29 2020 and on May 15 2021 it was 0.559

which is 238x to 1 so 5k would be 1,192,400 in only 13 months


but lets take BTC and do bad timing you buy top in April 2021 68k. it is now 84k

a loan at 15% would mean about 60% over 4 years so the 68k cost you about 102k so you would have needed to sell when btc got to 109k

A terrible move for you.
I realize you may have paid the loan down fast with earnings so I dropped the interest a bit for 60% to 50%.

But you can see the math would be terrible for you. If you grabbed BTC in April 2021 on a loan

[Republikcoin.com]

If it is the company that is taken the loan I don't  think if there's anything wrong with that, because we are 100% sure that they will pay back the money in due time. Though sometimes a company can decide to take loan from bank or even from thier fellow companies, when they must have run out with cash/funds. However, is obvious that bitcoin is a very good asset in the future but anyone who can not afford to invest in bitcoin should not go for a loan. Because the market is decentralized Which means that no one have control over it, so if there's any dip or increase in the price there's nothing you can do than to panick.

Lenders in this era are also smart enough to see people or companies who want to lend their funds so that not all companies can do this if the lender knows that the company will soon go bankrupt. Because at this time all parties who often serve loans to other parties also have people who directly check them directly before the loan is given and this is done so as not to cause problems in the future. Moreover, some borrowers also do not know themselves that they are actually unable to pay if the sales of their company are not going well.

[gunhell16]

If you are going to borrow and you have other sources of income, especially if you have more than 2 business sources, I think it is okay to borrow as long as it should be in accordance with your capability as a borrower of course. It is difficult to borrow a lot but your source of income is small.

Then we cannot borrow without risk, because once someone lends us money, we have a liability to pay it monthly depending on the duration we choose until it is paid off.
So there are only two types of borrowers, first responsible payer and irresponsible payer

[Strongkored]

We can borrow money to invest in Bitcoin, but borrowing it from a bank for the reason that it seems impossible to be approved especially in my country, unless mention another reason but the requirements are very difficult.
I almost did that but not to the bank but to someone I know he is able to lend a lot of money and without interest, but finally changed my mind because I knew it would be difficult to gain the trust of that person because he is a conventional person where investment is only in something that is visible.
We can get a loan to invest in bitcoin as long as we can convince the banker or lender that bitcoin is also currently being considered as an asset that can be used as an investment.

[Findingnemo]

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

First of all, no bank will give a loan for investment, so he needs some collateral to take a loan against it with a low interest rate, depending on the nature of the asset. He can also go for an unsecured loan, like a personal loan, that is offered with no collateral, but the interest rates will be insanely high compared to any other. In my country, the interest rate starts from 24% and can go up to 40%, which means you have to make 40% gain to meet the need of the interest rate.

It maybe possible but adds stress and if the market doesn't go as expected you will be down in your capital but you need to repay the loan along with interest.

Why rich people take loans for investment? Which is a different story but on the short, even if they failed miserably, they got the potential to repay them, while an average user can't and ruin their credit history forever.

[fuguebtc]

The only question is if the bank would really allow if the borrower would declare that he plan to use it to buy Bitcoin. Bank provably not gonna take action any action since they know the risk involve on taking that decision.

But why do we have to tell them that we borrow money to invest in bitcoin, or have to present our plan specifically to them? They will ask us that but they have no right to force us to be specific and what they really care about is whether we have enough assets to mortgage the loan? Banks won't lend us money if we don't have collateral. But if we want to borrow money based on our salary (unsecured loan), we will never be able to borrow a large amount of money . With small loans, they will never give us a hard time .

When borrowing money to invest or do business , it is important that we have a plan to  use the money seriously, for the right purpose, and have a plan to repay the debt even if the investment/business does not go as expected .

[Fiatless]

The only question is if the bank would really allow if the borrower would declare that he plan to use it to buy Bitcoin. Bank provably not gonna take action any action since they know the risk involve on taking that decision.

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

According to the OP, the bank was willing to give him a loan to buy Bitcoin. I am also surprised that a bank exists that would give loans to buy an asset like Bitcoin. Maybe OP offered a good collateral.

[Frankolala]

The bank checked the guy's accounts. He probably has an interesting salary and has probably paid off his principal residence. He can afford to borrow 50,000 euros over 5 years and pay it back without any problem, since the banker has said Ok, so his file is solid.

He could invest in anything, shares, his cousin's business... He can pay back the 50,000 euros anyway. He won't need to sell within 5 years, barring a catastrophe.
 
So why not bitcoin? I don't understand how he's taking any risks if he keeps his bitcoins over the long term. But in any case, if the btc had disappeared completely, he'd have been able to pay it back with his salary anyway. He would have invested what he could afford to lose. And only investments make money, not salaries. In this case, he was counting on leverage, and I think that's a great idea.

Based on what you said above, it will be a wise idea to take the loan and invest in bitcoin because the person in question can still pay back his loan with his salary. Which means that he can even keep hodling the bitcoin and start paying gradually with his salary overtime. When he's already in good profits, he can sell part of it and clear up his loan. However, it isn't going to be that easy.

[rachael9385]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

In life, one need to make a lot of decisions on his or her own without involving others, so that if it doesn't end in your favor you won't shift blames to people. From what I observe on that ops post, he was skeptical about borrowing the money to invest them in Bitcoin that's why he seek the advice of the forum because this a Bitcoin forum and he needs advise. However he only make 3 post on the forum and I didn't read further to know if he later bought Bitcoin 2017 or take the advice of majority that's was against the decision.

[takuma sato]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

Because Bitcoin is extremely volatile and you may need to meet obligations at the wrong moment. If you have a stead source of income that would allow you to pay the loan's interest with no risk then go for it. The problem is, you may not have full control of your income. Black swans can happen. You could lose your income at any time, and the interest payments will come in no matter what. That could ruin your life. Debt is very stressful. So only get debt that you know you cannot default in. And this may make more sense at the bottom of a bear market, right now it may not be greatest idea, unless you can get some incredibly low interest rates at enough expiration dates, but not everyone can be Michael Saylor, this is why MSTR is a good investment if you want a call option on Bitcoin with very low default risk.

[Alphakilo]

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

After running a business that failed with my money and seeing another person run another business that succeeded using a loan at the initial start up time, I now think that it doesn't matter whether you take out a loan or not if the business will grow.

I think that if you have the business plan , and you know what you what to do and how to put the right things in place to achieve it, you will succeed and even repay the loan before the repayment period runs out

[bitgolden]

While it is "possible", it is not a smart decision. Because every month you will be paying it back slow by slow back to bank, and that means you are not going to be making enough to make it back. So for example, if you take out 100 and pay back 110, even if you have 20% return that wouldn't be enough.

Because you are paying it back month by month not all together, if there was a choice where you take out a loan and then pay back that loan all together a year later instead of monthly then yeah that would make sense, but that is not how loans work. So, the trouble we are facing at the moment isn't about how we could profit, it is about monthly payments making our capital smaller before we could make some profit.

[skarais]

People have this stigma that its bad to borrow money and use it to invest on a risky investment options like Bitcoin.

But actually those risk they think doesn't always goes like that. Since we have this healthy investment choice and we can actually maximize our investment thru borrowing our some funds to expand our investment sizes. There's really no problem to take that decision especially if people could able to pay the money he owe from bank.

It is true, it is not always bad to make a bank loan for investment purposes, even many businessmen do it to develop their business. But not everyone can make a loan from a bank especially when they do not have a source of income that they can use to pay monthly installments, so bank loans are not for them. If they have other safer options to generate capital such as selling some physical assets, then it is a good option recommended instead of making a loan from a bank.

Bitcoin or crypto investment is certainly risky, but the risk is proportional to the potential return. If I had a fixed monthly income, I would probably get a loan from the bank to invest in bitcoin. But I am lucky because I have capital that I think is enough to invest and that allows me to avoid loans.

[Oluwa-btc]

I remember this thread in 2017 in the French part.

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

Initially he might be making a good steps but a wrong choice because going to the banks for loan to start up a business or some sort of investment is always a bad idea and will result to some unrealistic expectations, though he having the mindset that borrowing the money to buy BTC or invest in it will profit or earn him good results in the long run it's a nice idea to start up with bit then he should be financially stable like having a stable income if peradventure he may be unable to meet up paying the loan, he can go by paying from his monthly allowance but it's a bad idea to take up such decisions.

[philipma1957]

The bank checked the guy's accounts. He probably has an interesting salary and has probably paid off his principal residence. He can afford to borrow 50,000 euros over 5 years and pay it back without any problem, since the banker has said Ok, so his file is solid.

He could invest in anything, shares, his cousin's business... He can pay back the 50,000 euros anyway. He won't need to sell within 5 years, barring a catastrophe.
 
So why not bitcoin? I don't understand how he's taking any risks if he keeps his bitcoins over the long term. But in any case, if the btc had disappeared completely, he'd have been able to pay it back with his salary anyway. He would have invested what he could afford to lose. And only investments make money, not salaries. In this case, he was counting on leverage, and I think that's a great idea.

Based on what you said above, it will be a wise idea to take the loan and invest in bitcoin because the person in question can still pay back his loan with his salary. Which means that he can even keep hodling the bitcoin and start paying gradually with his salary overtime. When he's already in good profits, he can sell part of it and clear up his loan. However, it isn't going to be that easy.

As  I pointed out if you took a loan in april 2021 and purchased a coin at 68k you likely lost money doing it

[Asiska02]

I remember this thread in 2017 in the French part.

https://bitcointalk.org/index.php?topic=2425439.0

At the time OP wanted to borrow to buy BTC. As we know today, he would have made a great deal (plus, a rare thing at the time, his banker was OK to lend him the money).

Yet almost everyone advised him against it. Why was that?

It seems to me that all investments involve risk. What makes borrowing to invest in BTC any more risky than investing in a start-up, opening a business or buying a house (which may be full of defects, for example)? If the person's financial situation is stable and the banker, after studying the file in depth, is OK, I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

That may not be the only reason why borrowing money to invest in bitcoin is discouraged but they could be more to what we see and also looking at from our own perspective. The person may be financially buoyant to take on the loan to buy bitcoin but since the future of bitcoin price is uncertain, you can’t expect bank to give you a loan over a period you’re not certain to have the money back or when the time reach to pay back you’re not getting back as much as you’ve invested in the first place. That will be a double risky investment move you’ve taken which will be a regretful one in the end if such happen. Risks make men to who they are today but some risk if not calculated and executed well, will lead you to more debts and lots of ‘had I known’ situations.

[Bd officer]

....,
I don't see why you can't borrow money to buy BTC. In fact, this is what some large companies do.

Bitcoin is risky so one should not invest in risky sector like Bitcoin with loan from bank. We know investing in Bitcoin requires long-term planning. Now if you take a loan from a bank you have to repay it within a certain period, but you may fail to repay the loan. However, I don't invest more money than I can afford to lose, I invest some money from my income, so why should I take a loan from a bank? You cannot guarantee 100% profit by investing in Bitcoin. So I think you should not invest by taking loan from bank.