Hidden Secrets of Rehypothecation and Why Bitcoin is the Solution

[Doan9269]

Take a look at it in a layman interpretation, you deposited your money in the bank, they make use of it for their businesses, earn profits for themselves with your money, then later you are also in need of money, take a loan from the banks with high interest. Is this what you want?

Some of us might have just been privileged of hearing the term rehypothecation for the first time, in case you are interested about knowing what it means, is a term use in financial economy that suggest how the banks make use of our money with them for various economical and financial purpose, you may need to learn more about rehypothecation and how many have been found under this captivity by the use of centralized financial institutions, firms and other regulator s to leverage on our assets for their own benefits out of our own ignorance.

So if you are the type that have not been appreciating the existence of Bitcoin being a decentralized financial currency, then maybe the time has come for you to realize various opportunities you have to benefit from bitcoin adoption and why you should not depend solely on the banks in controlling your financial assets for you, it has been over decades that people have been using this traditional system to hold their assets, yet the value decreases over time because of the incidence of inflation when we stand not to make profit from our financial holding, but the entire narrative has changed ever since the introduction of Bitcoin.

The ideology here is simple, recognize the benefits of Bitcoin adoption, you can earn it, buy or even mine Bitcoin, just ensure to use any legitimate means of having to hold bitcoin for your own personal purpose, make it your major asset of investment, hold Bitcoin or get
 other crypto assets management services that you could leverage liquidity upon, as everything about bitcoin has been made possible for us to continue holding our assets until we are profitable with it as long as we have the necessary information and knowledge on bitcoin investment, don't let the banks take charge of your assets, hold your wealth under a decentralized digital assets and make Bitcoin your priority to achieve the freedom you deserve.

[Obim34]

Have to be clueless not to know where to invest your money, I'm not pointing towards Bitcoin investment, but on a general investment level, with the high level of inflation in the country, huge amount shouldn't be bundled and kept in the bank, if the person is clueless about Bitcoin investment, what about other stocks and bonds that could be generating annual profits.

Yes, we will push Bitcoin at the front when describing investment options, but I will speak on a general basis of all investment, do not hold large amounts in fiats, "money na in go born money" aswell help beat inflation to a manageable level.

[Odohu]

Thank you Doan for sharing this fine article that explicitly explained the folly of keeping money in the bank to be eaten by inflation while the banks use the money to earn profits. Like you said, it is even terrible that people take loan from the bank using their deposits as collateral and still pay huge interest on the money, meaning the loss is in many ways. Bitcoin indeed is a way out of this for those who know what they are doing because it protects the investor from inflation and is one of the most profitable investment option for the past decade.

[Shadiq]

I don't trust banks at all, especially for long-term savings. One thing I see as positive is that I discovered Bitcoin and learned to use Bitcoin before I got used to the banking system. Now I stay away from banks for personal savings.

However, I still have to rely on banks in some cases, which sounds a bit annoying, but I am forced to do it. Although I prefer decentralized finance in terms of transactions, most of the time I don't prefer decentralized finance from the other side. This proves that Bitcoin is still far from a universal financial system.

Standing in long lines at the bank and exchanging personal information is nothing but annoying for me now. Even though it is bitter, it is true that banks make money by using our money instead of leaving it, which may be known to those who are regularly active with the banking system. If you are involved in banking services, you must accept this system, otherwise you will have to replace it with a decentralized financial system.

[Livingleged]

This is the reason since I got into crypto i don’t even know what it is like to save money in the bank again not just savings alone. I don’t even keep more 100k in my bank accounts again to be honest, I always  have some liquidity on USDT and bitcoin. I just swap it whenever I have the need to use the money. it’s my own way though, and I guess everyone has the way they handle their finances. Right now I’m a full crypto person.

[Coyster]

It is not a secret that banks invest with customer deposits, that is part of their business model and one of the ways they make money. There is nothing wrong in that, but you as a person would also want your money to work for you, that is why you should use your funds to buy appreciating assets, like bitcoin, stocks, gold, real estate, etc. Best strategy is to only keep emergency funds in the bank for liquidity.

That said, banks are still very important and we cannot do without them. The only thing to note here is that one should have a maximum amount they should have in their bank account at a time.

[Charles-Tim]

This is the reason since I got into crypto i don’t even know what it is like to save money in the bank again not just savings alone. I don’t even keep more 100k in my bank accounts again to be honest, I always  have some liquidity on USDT and bitcoin. I just swap it whenever I have the need to use the money. it’s my own way though, and I guess everyone has the way they handle their finances. Right now I’m a full crypto person.

The USDT that you bought, it is backed by assets like United States dollars. Do you know that Tether, the company that created USDT also invested your money and other peoples' money to make profit?

Do you also know that USDT is very centralized is a way that Tether has the power to freeze your coins on noncustodial wallet? Although , stable coins are convenient than domiciliary accounts.

[Cryptomultiplier]

The banks are a centralized institution just as we have centralized exchanges that are now being regulated by government before accepting it for use. In both cases, these institutions are leveraging an investors wealth to generate more profit for themselves without any gains for the investor.

The failure or lapses of our traditional centralized banks is a part reason why Bitcoin decentralized system was created for self sovereignty, wealth preservation and that's its selling point.
Even though it might be difficult to abandon the traditional banking system mostly in countries where crypto currency is banned or not fully accepted, it ensures and is a better alternative to securing your wealth and value of currency without third party intermidiaries.

[Donk1]

We can all agree on one thing money is a medium of exchange and in as much as the traditional system is unfair, still it provides utility to we individuals the only problem is that the system isn't convenience when it comes to saving your assets in the bank because of inflation definitely your money will lose value or let me use the word depreciate.​That said as an economics student I will like to ask one question can you borrow money from bitcoin? I believe the answer is no. So yeah in as much as bitcoin serves us as a revolutionary alternative, we should never neglect the little advantages of the traditional system. Because in a broad perspective, every individual crypto enthusiast, business man / woman are all looking for profits and bankers aren't an exception.

​Overall in as much as the system is corrupt I believe that bitcoin being a safe heaven is a huge advantage to every enthusiast. Still bitcoin can't possibly do everything. So yeah we should understand that in a system of both decentralized alternative and centralised authority, the measurement of value and utility in bitcoin is higher than that of any traditional system but at times we just have to accept the fact that both worlds might just need to coexist for us to get the best of freedom and financial flexibility with unlimited utility well that's just a perspective ......

[promise444c5]

Do you also know that USDT is very centralized is a way that Tether has the power to freeze your coins on noncustodial wallet? Although , stable coins are convenient than domiciliary accounts.

One is Insane and the other is crazy, none is okay but one is still better  .. doesn’t eliminate “same  family trait” though.

He can have little in USDT [I will say tens to hundred not hundreds] so far he knows the risk behind it .. what’s bad is holding it  or using it as a store of value.. it may help a little in some aspect though since we have so much people  preserving their funds in $$ for a specific reason but the risk of seizure and control still remains intact.

[Charles-Tim]

He can have little in USDT [I will say tens to hundred not hundreds] so far he knows the risk behind it .. what’s bad is holding it  or using it as a store of value.. it may help a little in some aspect though since we have so much people  preserving their funds in $$ for a specific reason but the risk of seizure and control still remains intact.

They are not preserving their wealth in dollar, it is just the reason some average people become broke at old age when the fiat devalued than what they think.

Also fiat is not a store of value. Fiat value depreciates over time.

Many people that you think have fiat use it for businesses, but they do not joke with stores of value assets. Rich men are very wise in this aspect.

Although, some people leave the money in bonds or with better interest savings. At least, the fiat yield something.

[AVE5]

It's never the desire of anyone that the authorities should control their funds for them.
The negative figures from the banks isn't even only about how they uses their customers funds for their business and perhaps, that really sucks because after they've used the deposited funds to run their personal businesses, they runs out or cash and so some days they'll tell you they've run out it funds. This also should tell us a part the banks also plays that lingers to the Central banks printing more money and so on the over circulations devalues the cash.
The truth is that as long as bitcoin isn't a traditional finance it can't take the place of the fiats. Therefore, bitcoin will be MOST relevant for the users to hold as a store of values while there's very poor number of people accepting and using it for goods and services payments.

[Coyster]

Do you also know that USDT is very centralized is a way that Tether has the power to freeze your coins on noncustodial wallet?

Yes they can. It is a very terrible idea to hodl a lot of usdt or any other stablecoin for that matter. I'd not be able to go sleep well at night if i had most of my assets in USDT. Of course you can use USDT from time to time, but i do not advise that anybody should use it for long term storage, particularly when we are talking of a large amount here.

The USDT that you bought, it is backed by assets like United States dollars. Do you know that Tether, the company that created USDT also invested your money and other peoples' money to make profit?

Correct, but if we look at it from only the point of view of inflation, then it is a better idea to keep your funds in U.S. dollar backed coins than in Naira. They are both affected by inflation, but one is far more greatly affected than the other and we know which it is.

[Doan9269]

I've been seeing members coming to the forum to share some disadvantage they have experience with the use of stablecoins in how important it is to recognize the relevance of Bitcoin investment as the asset that is not centralized, and not only this, but having the foresight of understanding how bitcoin could be profitable assets of investment for us now and in the future, bitcoin has all that can make us have control over our digital assets, it possesses lesser risk and also assurance for maximum profitability when we hold over a longer time.

[Livingleged]

Yes they can. It is a very terrible idea to hodl a lot of usdt or any other stablecoin for that matter. I'd not be able to go sleep well at night if i had most of my assets in USDT. Of course you can use USDT from time to time, but i do not advise that anybody should use it for long term storage, particularly when we are talking of a large amount here.

Of course it is a terrible idea to keep your investment in USDT also, there is no any stable coin out there that is even worth holding  it on, but think I was misunderstood what I meant was i keep my investment in bitcoin but also keep a reasonable amount in USDT because of the devaluation of naira, when I need to use  some naira, in 3 mins I could swap and get it. but the higher percentage of my investment are in held in bitcoin.

Correct, but if we look at it from only the point of view of inflation, then it is a better idea to keep your funds in U.S. dollar backed coins than in Naira. They are both affected by inflation, but one is far more greatly affected than the other and we know which it is.

Actually you’ve just said it all. which is why I also prefer the US dollar. Though it’s my own personal idea so I’m fully reasonable for whatever plays.

[Karl_3000]

I've been seeing members coming to the forum to share some disadvantage they have experience with the use of stablecoins in how important it is to recognize the relevance of Bitcoin investment as the asset that is not centralized, and not only this, but having the foresight of understanding how bitcoin could be profitable assets of investment for us now and in the future, bitcoin has all that can make us have control over our digital assets, it possesses lesser risk and also assurance for maximum profitability when we hold over a longer time.

That is just it, you save their inflationary fiat, the bank use it for their own benefits, the government devalue it to scam the citizens, the fiat will worth less of what it was in the past. Need money, borrow from the bank which create debt. This is unlike bitcoin which you can hodl, make money from it and not borrow.

But fiat have their own merits. The rich men did not sell their stocks, gold, bitcoin because they want to avoid tax, they borrow fiat which is tax free while paying back but pay only the interest on the loan.

[TokenTikas]

Take a look at it in a layman interpretation, you deposited your money in the bank, they make use of it for their businesses, earn profits for themselves with your money, then later you are also in need of money, take a loan from the banks with high interest. Is this what you want?

First of all, I feel keeping a huge/big amount of money in fiat currency these days is not really a wise move. Looking at the current economic situation and everything happening around the country, people who are still not aware of these things are honestly falling behind. Everyone should carefully understand that where to invest their own money and where it can stay safe for the future. If someone still does not properly understand these matters, then the banking system may still be the safer option for them.

[Dreadboost]

Take a look at it in a layman interpretation, you deposited your money in the bank, they make use of it for their businesses, earn profits for themselves with your money, then later you are also in need of money, take a loan from the banks with high interest. Is this what you want?

Eventually, I cannot relate to this. People who would relate to this paragraph are literally those who dont know how to use their money. Money in a neutral bank account should be intended to cover expenses. It shouldn't be a large amount. A large amount should be kept in a fixed deposit account or invested in mutual funds. That way, the money is safe, and the institution may use it for other purposes, but dividends or interest will return to the account monthly or yearly.

If you are not investing in Bitcoin, do not keep your savings in Bitcoin because it will do no good except you are investing in Bitcoin, I repeat, except you are investing in Bitcoin. Instead, use a government-approved financial institution that returns marginal interest.

[Marvelockg]

This is the reason since I got into crypto i don’t even know what it is like to save money in the bank again not just savings alone. I don’t even keep more 100k in my bank accounts again to be honest, I always  have some liquidity on USDT and bitcoin. I just swap it whenever I have the need to use the money. it’s my own way though, and I guess everyone has the way they handle their finances. Right now I’m a full crypto person.

The moment you start investing, you will realise you've been loosing too much just by holding your money in your account without any possibility of earning through it.

Banks for long have sold the concept of savings to us and gradually, they got the trust of people to believe that the way to go is to fix there money in the bank and expect a certain small amount as Interest in the long run. While that might seems appeasing on the face look,  it's more like anytime you leave your money in the bank, banks are actually collecting Loan from you and they are using it to run there business while placing you on a very small interest. You do the same to them and your interest is way higher. Who then is loosing?

[Coyster]

Bitcoin isn't completely risk free its volatility can make you lose some money if sold early and there is no protection like bank if you lose access to your wallet or get scammed. Well not everyone like to become their own bank.

You no lie, but that is where diversification comes into play. Of course e no too sharp to put all of your money into bitcoin, even if you are great at being your own bank, you never know, you could suffer a $5 wrench attack or some other misfortune. So, in order to mitigate that, you should diversify your funds by buying different assets, for example: bitcoin, stocks, mutual funds, gold, silver, real estate, bonds, etc.

I like Bitcoin and decentralization but i don’t think we have to abandon bank completely. At least keep your money within the amount will be covered by insurance when bank goes bankrupt.

It is not possible to completely abandon the bank. But i'd rather diversify my assets into different appreciating investments/assets like i mentioned above, rather than keep it in the bank. My bank account is for emergency funds and for my day-to-day expenditure.