BTC lending is getting interesting

[Tiaramane]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

[BIT-BENDER]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Bitcoin will never be used as a collateral because of its high volatile nature, using Bitcoin as a collateral will cause serious uncertainty for the lender and the loanee.
Rather than all this complications if you need money urgently and don't want to touch into your Bitcoin why don't you just get a loan normally without ever bringing your Bitcoin into play.

[Jasmyne]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Borrowing against BTC you plan to hold for longterm is a very risky something to do and I believe BTC investment is not meant to be used as collateral because on a second thought, what if things doesn’t go as planned and you didn’t get the money to pay back your loan, does that mean your BTC is gone? Yes I believe it will be gone.
Holding for long term, then protecting our BTC should be our major priority, if I’m in a very tight corner, no money and the only alternative is my BTC investment, I’ll rather sell a small portion and sort it out than borrowing against my BTC.

[Ambatman]

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

There are Contracts like DLC( discreet log contract) that makes use of existing OP Codes
In peforming this function.
They allow native BTC to be locked as collateral directly on Bitcoin with an Oracle providing external data like price.

DLCs (Discreet Log Contracts) — works with opcodes that already exist on mainnet, no OP_CAT needed:

Bitcoin will never be used as a collateral because of its high volatile nature, using Bitcoin as a collateral will cause serious uncertainty for the lender and the loanee.

That's not really true and too absolute
Stats are showing that as the years goes by volatility is reducing
It won't be wrong that we might get to a stage where volatility would be relatively low as Gold.

[hmbdofficial]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

I understand the attraction of borrowing against BTC, but I think using bitcoin as a collateral comes with a serious high risks that shouldn’t be overlooked. Bitcoin is highly volatile, and we can’t say it less. If bitcoin drops sharply, the lender will want to require more collateral or liquidate your BTC. And you may later end up losing the bitcoin you were trying to to avoid selling, especially during a market crash.

For me, if i urgently needed liquidity, i would prefer selling a fraction of my bitcoin than taking a debt again my asset that can actually move 20-30% or even more in a short period of time. Selling a fraction of it would give up some bitcoin exposure, but also remove the risk of interest, liquidation and being forced to sell at a bad price. Bitcoin may just be excellent as a long term asset but not collateral for debt.

[moneystery]

Bitcoin will never be used as a collateral because of its high volatile nature, using Bitcoin as a collateral will cause serious uncertainty for the lender and the loanee.

That's very possible. Usually, Bitcoin loan schemes use LTV (loan-to-value), which determines how much you can borrow from the lender. LTV on each platform varies, for example on Binance, the LTV they offer is 65%, so at most, you would only be able to borrow 65% of the value of your Bitcoin collateral. Later, Binance will adjust the collateral and trigger a liquidation if needed, if the value of your Bitcoin drops too much. With this scheme, borrowers can avoid risk.

Rather than all this complications if you need money urgently and don't want to touch into your Bitcoin why don't you just get a loan normally without ever bringing your Bitcoin into play.

Sometimes there are things that are so urgent that a person needs money quickly, or they are just too lazy to apply for a loan which usually takes time to process. By collateralizing their Bitcoin, they can get money fast and they can choose the duration for that loan.

[batang_bitcoin]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

I'd just sell a small portion of it rather than to borrow against it. The interest that I have to pay is just the same as buying it back after selling a small portion. While that makes me free from the obligation, I have no pressure against the lenders and there's no certain time table of when I might take back those small portions that I was able to sell. And that's why if there will be the time that I need, I'll choose to sell.

[MorganaX]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Bitcoin will never be used as a collateral because of its high volatile nature, using Bitcoin as a collateral will cause serious uncertainty for the lender and the loanee.
Rather than all this complications if you need money urgently and don't want to touch into your Bitcoin why don't you just get a loan normally without ever bringing your Bitcoin into play?

The way you say never, like it's never gonna happen at all. I'm not too familiar with the whole schematics of lending your Bitcoin for USDT, but I know it's not impossible to do. It's all on the agreement between the two patties, I mean, I can get a loan of my bitcoin worth the amount of $1000 for USDT of probably 500-600$ depending on the timeframe and the urgency of the loan and also as per interest and collateral values since bitcoin is a volatile asset and can result in the lender losing if the amount gets too low. But the whole deal is not gonna be something of a long-term deal, so the entire deal can be arranged and sorted.

[Alpha Marine]

I have never borrowed against my BTC, but I think I can. I've not been in a situation where I need collateral to take a loan, but if I ever do, I can use my Bitcoin.
There is nothing to lose. Worst case scenario, if I can't pay back the loan, the person takes the Bitcoin, which would be the same situation if I had sold my Bitcoin.
Besides, if I need to take such a loan, it would be a long term loan, and it would be a loan where the money would be used to do something productive. It wouldn't make sense to take such a loan for consumption.

Bitcoin will never be used as a collateral because of its high volatile nature, using Bitcoin as a collateral will cause serious uncertainty for the lender and the loane

Bitcoin is already being used as collateral right now for loans. Why would you say Bitcoin can never be used as collateral? The volatility is not a big issue.

[Tongley]

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

I would be more willing to take a loan depending on my financial situation. I would never decide to sell my Bitcoin unless I have passed the deadline and no matter how difficult the time is in between, I will try to cope with it as much as possible without selling Bitcoin. If I have the ability to make a loan, then I will definitely take a loan and I will be willing to solve that problem with a loan. However, if I can take it directly, I will be very happy, if I can take a loan directly without putting Bitcoin as collateral, then I will adopt this method.

[nelson4lov]

That's not the original vision for Bitcoin. The reality is that there would always be hundreds of needs and use-cases that users will want for Bitcoin and Bitcoin was not created for that purpose. You might only need native lending now but sooner or later, you will need native yield farming for your Bitcoins or other defi services.

If you really need such service, you might as well wrap your Bitcoin and bridge to defi protocol.

I personally just use my Bitcoin how it was meant to be used.

[Donk1]

Well if I may say everyone has their opinions and experiences, but for me I think it all comes down to the person's income source like how you make your money. Because if he or she borrowed money to invest in bitcoin, it doesn't mean they have to pay back with that same bitcoin they borrowed with, because that's technically an investment, not a short term pump and dump. Basically you can pay back what you borrowed with fiat, that's if you have a steady source of income....​But if you don't it would be hard telling if you are actually making a profit or just taking a random risk. Best to say you cannot tell when the market will rise so relying on facts like 'no matter how far Bitcoin falls, it will rise back up' doesn't mean the time limit for the money you borrowed would wait until Bitcoin rises..that's where most folks get caught in a wipe out.​So yeah perhaps sometimes selling a portion of it is worth it just for you to have  peace of mind.thats all......

[_act_]

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Yes, especially if I think the bear market is becoming over, I may prefer not to sell my BTC, but borrow USDT instead. I have done it before in the past. Although I did not see so much gain from it but I can still decide to do it again.

There are wealthy people that are doing something like this just to avoid paying too much money on tax.

[uneng]

I'd just sell a small portion of it rather than to borrow against it. The interest that I have to pay is just the same as buying it back after selling a small portion. While that makes me free from the obligation, I have no pressure against the lenders and there's no certain time table of when I might take back those small portions that I was able to sell. And that's why if there will be the time that I need, I'll choose to sell.

Hmm, that is an interesting point. If I have to pay interest over the borrowed amount, better to sell BTC without having that "extra prejudice" over finances. Unless we are talking about a bullish season, it must not be that risky to sell BTC and then purchase it again some time later for similar prices or even cheaper prices, considering it might be a bearish season. To take loans should be also the last alternative to be taken into consideration, due to the fees and interest involved.

[Fivestar4everMVP]

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Well, I would say it will solely depend on the condition of the market as at the time I need the money, and it will also depend on how much I need and how important what I need the money for is to me..

First, if I am already in good profit but simply waiting for the price of bitcoin to increase further so as to make more profit, I will likely choose to sell a small potion if the money needed isn't that much and what I need the money for; very important.
But assuming I am in a loss on my bitcoin as at the time I needed the money and the amount needed not so little, and what the money is needed for also being very important I can't use patience, then I would rather borrow against my bitcoin than sell.

[fredericktaylor]

One thing I’ve been wondering about lately:

If you’re holding BTC for the long term but suddenly need liquidity, selling it feels like you are about to lose your position and might never get it back at that price before you buy back in.

Borrowing against it makes more sense in theory, you get to keep the BTC, access liquidity, repay the loan, get your BTC back.

But the tricky part is doing this without introducing unnecessary custodians, bridges or wrapped BTC.

If native BTC can eventually be used as collateral while staying on Bitcoin, that could open up a pretty interesting lending market.

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

When investing in Bitcoin in the long term, it is very normal for investors to need money unexpectedly. From my point of view, it is reasonable to sell a small amount of Bitcoin, because Bitcoin is unstable, so taking a loan with Bitcoin as collateral is not reasonable. This can expose both the lender and the borrower to high risks and if you take a loan from a bank you will have to borrow a much larger amount of money than the principal, which can result in more losses for the investor. Therefore taking a loan with Bitcoin as collateral or paying a high amount can put the investor at a loss, so selling a small amount of Bitcoin is reasonable in my opinion. This will not create additional mental l pressure on the investor, so the investor will be able to buy Bitcoin again continuously.

[blockman]

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

I have thought about this last year when the bull run was there and I don't want to lessen my holdings because it might increase. But then, I ended up selling for what I only need to spend with. IIRC, there are now some platforms in my country when I can utilize and borrow against my holdings. I think it's a good option if ever we don't want to sell our btc and yet we want to maximize the usage of it and we can still have it back by loaning against it. I haven't done it yet but if ever I'll do it, it's only with a loanable amount that I can afford to pay with interest without even stressing myself out.

[Cryptomultiplier]

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Yes, especially if I think the bear market is becoming over, I may prefer not to sell my BTC, but borrow USDT instead. I have done it before in the past. Although I did not see so much gain from it but I can still decide to do it again.

There are wealthy people that are doing something like this just to avoid paying too much money on tax.

To me it's safer to sell some of my BTC even though I might be charged tax on it, but it won't stop me from DCAing to replenish what I sold off mostly if am consistent in my effort and am reinvesting what I sold into other investment that promises a good return, not for luxury purposes or frivolous spending or for gambling.

USDT might be a better option to borrow but I would in this sense prefer to borrow the USDT from someone I know or from a trusted party so as not to expose myself to some unforseen risk that arises.

[Cleanshit]

Would you personally borrow against BTC you plan to hold long term, or would you rather just sell a small portion?

Well, I would say it will solely depend on the condition of the market as at the time I need the money, and it will also depend on how much I need and how important what I need the money for is to me..

First, if I am already in good profit but simply waiting for the price of bitcoin to increase further so as to make more profit, I will likely choose to sell a small potion if the money needed isn't that much and what I need the money for; very important.
But assuming I am in a loss on my bitcoin as at the time I needed the money and the amount needed not so little, and what the money is needed for also being very important I can't use patience, then I would rather borrow against my bitcoin than sell.

What should be considered first is the ability to repay the loan not to only the market condition. BTC can still be put at risk when you’re taking loan without a way a reliable one to repay eveb if bitcoin is doing well it can be put to risk.

Borrowing do makes sense if one has another way of paying back through a stable income and knows how to pay back,If not selling a little portion can turns a safer option cause no liquidation risk or even debt.

[uchegod-21]

Bitcoin will never be used as a collateral because of its high volatile nature, using Bitcoin as a collateral will cause serious uncertainty for the lender and the loanee.
Rather than all this complications if you need money urgently and don't want to touch into your Bitcoin why don't you just get a loan normally without ever bringing your Bitcoin into play.

No, I disagree with you. You can't use the word "never" in something like this because this is something that can happen with just an agreement and understanding reached. Although this will be risky because of volatility, but someone like me will choose to take a loan using my bitcoin as collateral. In order not to default in payment, I will have to make sure that I myself have a clear plan to repay on or before the due date. If there are fluctuations in the price of bitcoin on the day of repayment, the loan terms should be able to cover any discrepancies. Taking a loan is better than selling your bitcoins when you're in for a long term journey. If there are other collateral options, you can go for it if you are not comfortable using bitcoin.