BTC lending is getting interesting

[batang_bitcoin]

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.

Yes, that's it. IMO it's better to sell and have less some bother in your mind because it's completely a sell of. And I agree that even in the bull season, it's easier to sell and you won't probably be thinking of loaning against your bitcoin. As for the fees, there will be for sure and on top of the interest there could even be other hidden charges. I haven't done it yet but for usual loans, I've been charged with that in the past.

[Merit.s]

I prefer not to use bitcoin that way but the real way why it was created because handing over your coins to a third-party is very risky and I don't like taking such risk.

It's better to take a loan with Fiat in a worst-case scenario than putting my bitcoin at risk. At least, I can use the profits from my bitcoin to pay back the loan or pay it back installmentally.

[OgNasty]

I'm not interested in lending BTC, but I do like the idea of receiving interest on deposits so if exchanges begin profiting from these sorts of services enough to offer interest, I'm all for them.

I do think using BTC to back a fiat loan is a decent idea for someone with bad credit and the rates are good enough.  The up front fees are a dealbreaker for me personally though.  If they can get that reduced to be competitive then I could see that becoming a legitimate way to finance a home if you have a large stack of BTC you don't want to part with.  This is even more attractive if you can get interest on your collateral BTC.

[ColdLava40]

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

I think it is something they call buy borrow die, where they invest heavily into things like stock and then use them as collateral to take loan from the bank.

It is a very smart strategy used my many billionaires to avoid taxes. All their assets too are purchased on loans.

It is still possible to use this method for Bitcoin since the main idea is to avoid selling in losses and it will help. I just don't know how many lenders would want to accept BTC as collateral looking at it's volatility.

[Doll2233]

If I invest in Bitcoin, I will hold it for a long time, I can never hold Bitcoin temporarily at my own will. Because Bitcoin is only compatible with long-term investment, in this you should use as much money as you can invest and be calm at the moment. You should not be aggressive in Bitcoin investment, otherwise your Bitcoin investment may be more likely to be in danger.

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

Why should I decide to sell my Bitcoin investment? Because I have formed an emergency fund along with my Bitcoin investment. If I need to, I can use the emergency fund to deal with external threats. Those who do not use emergency funds to sustain their Bitcoin investment for a long time are the ones who face danger in the middle of their Bitcoin investment and are forced to sell. Therefore, you must use an emergency fund to sustain your Bitcoin investment for a long time.

Bitcoin investment have enough benefits for everyone but always needs good strategy because just relaying on this can bring problems peoples those understand their own situation they always needs to have emergency funds for any purpose without doing this been never stay on Bitcoin its always volatile in emergency its can be gone on negative side just because of this peoples those are well aware about its nature never do this mistake.

Emergency funds are always important being human even things are never been easy predictable but still keep yourself ready Bitcoin lending is also good option on many platforms but still its never cost as needed due to its nature I personally now many peoples those are accumulating bitcoin for long term but they are also having their emergency funds are ready as well because they understand importance.

[Z-tight]

This is even more attractive if you can get interest on your collateral BTC.

Did i understand you correctly, how can a lending platform offer this service? why would they pay the borrower interest on their collateral and how are they supposed to run a profitable business if they do that. The only person paying interest here is the borrower and the rate would depend on the lending service in question.

[Freeveto]

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

It depends on what you want to use the money for. If you have an emergency and have no alternative, selling some part of your Bitcoin position will be your best option if you are not in loss that time. The reason we hold Bitcoin is to save and plan for the future, and we do have money set aside for emergencies, but if it has reached the stage where there is no more emergency money, it means it has gotten to another extent where there is no option to sell your Bitcoin at that time since you will be able to buy back it if you get back to your feet. Taking a loan of any kind can inconvineince you, it is better to use what you have and plan for another after solving the emergency case at hand.

[KingsDen]

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

It balls down to the personality of the person involved. There are people who doesn't like borrowing, whenever they are faced with any issues or challenges that will make them borrow, they'll try as much as possible not to. They will only go ahead to borrow when they're no alternatives. This set of people will rather sell a portion of their BTC to solve their problems than to borrow.

In the other hand, there are people who love borrowing... They could be saving and will rather borrow than to touch their savings. This set will rather use BTC as a collateral than sell it.

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.

Bitcoin is used as a collateral... Volatility doesn't affect it being used as a collateral. If I use 0.02BTC as  a collateral, even in 10 years time, I'll receive back 0.02 BTC irrespective of BTC price by then.

[Aanuoluwatofunmi]

I wonder what is interesting about lending Bitcoin; when does the profit you are supposed to end up with get taken by other centralized platforms that give you finance by taking your Bitcoin from you and giving you fiat or stablecoins? There are things we need to look at in the conditions before accepting them, because at the end of the day, they don't seem to favor us if considered.

[Silverstonez]

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

To me and few other bitcoin enthusiasts, selling the bitcoin we have held for many years is like selling a golden goose for a quick meal, and who earth would want to do that?  If I have an emergency and my emergency fund couldn’t solve the problem I will go borrow money from elsewhere and solve my problems.  Provided a debtor is still breathing he or she will pay off their debts, but selling my bitcoin is a no no because I have to buy back at a higher price which may not sit well with me.

[obuoma]

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.

There is nothing wrong about selling Bitcoin but it is better to hold and not put your Bitcoin in a position of using it for collateral to avoid something going wrong and you lose your Bitcoin. This is why emergency funds is a requirement for long term investment in Bitcoin to be able to handle things that comes under emergency which were not planned for but must be attended to. With emergency funds in place, there will be no need to borrow money for any reason.

[Myleschetty]

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.

Platforms such as Hodl Hodl lending have been offering these services since 2018, along with Chainflip lending and Lava, which have been providing similar services for years.

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.

However, there remains the concern of counterparty risk, particularly if the oracle goes offline, acts maliciously, or delivers inaccurate price information; in such cases, the Bitcoin that is used as collateral might be incorrectly liquidated or locked, correct?

[bhadz]

I'm not interested in lending BTC, but I do like the idea of receiving interest on deposits so if exchanges begin profiting from these sorts of services enough to offer interest, I'm all for them.

The only problem with this is that we have to fully entrust our BTC to the exchange.

I do think using BTC to back a fiat loan is a decent idea for someone with bad credit and the rates are good enough.  The up front fees are a dealbreaker for me personally though.  If they can get that reduced to be competitive then I could see that becoming a legitimate way to finance a home if you have a large stack of BTC you don't want to part with.  This is even more attractive if you can get interest on your collateral BTC.

It's going to create a new credit scoring I think and I agree that it's a better way for those who are holding some BTC and doesn't want to spend it. But they should also have the means of continuous cash flow for it so that they won't default. Because the loan amount is always low compared to the collateral and including the interest rate, that's headache if the borrower is irresponsible.

[Russlenat]

I prefer not to use bitcoin that way but the real way why it was created because handing over your coins to a third-party is very risky and I don't like taking such risk.

It's better to take a loan with Fiat in a worst-case scenario than putting my bitcoin at risk. At least, I can use the profits from my bitcoin to pay back the loan or pay it back installmentally.

Or you can just sell a small portion of your bitcoin so you won't get bothered thinking on how to pay the growing interest of your cash loan. Paying back the cash loan from bitcoin profits may still be risky as no one knows if bitcoin price may surge high or drop its price in the next coming days. At least, you won't get worried even if bitcoin does not perform well in some days, as we are all aware how unpredictable bitcoin price is.

While btc lending is interesting, but those who benefit it the most are those lenders, not those who are taking loans.

[Aanuoluwatofunmi]

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

To me and few other bitcoin enthusiasts, selling the bitcoin we have held for many years is like selling a golden goose for a quick meal, and who earth would want to do that?  If I have an emergency and my emergency fund couldn’t solve the problem I will go borrow money from elsewhere and solve my problems.  Provided a debtor is still breathing he or she will pay off their debts, but selling my bitcoin is a no no because I have to buy back at a higher price which may not sit well with me.

What do you think others that are interested in giving you their own assets I'm taking your own bitcoin from you really have in plan, they wanted to make use of your bitcoin to stand as an asset to them, take some additional profits from you and also apply some service fee as well for you, while you don't get the same proportion of the asset you are using in exchange for what they are offering you, which shows clearly that these people are only after their own business and not really helping you it's the long run if you go through them.

[angrybirdy]

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?

Tbh, this is so risky because BTC is volatile, so I don't think it's okay to consider it as collateral if you want to borrow liquid money. Why don't you just sell a small part of your holdings? In that way, you don't have to take out a loan for your emergency usage. Or better yet, keep your BTC as it is and wait for its value to grow higher. There are a lot of ways where we can borrow money if that happens. Banks are already there, you just have to ask for a lower interest rate if you insist on getting a cash loan.

[Tamaperdana]

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?

No, I wouldn't do that, because with all the preparations I've made so far, I already have sufficient emergency funds for when the unexpected happens. So, I'm unlikely to take out a loan or sell my Bitcoin. Speaking of using Bitcoin as collateral for a loan, I think that sounds a bit off at the moment. But I don't know for sure, but it seems unlikely that many would agree to it at this point.

Bitcoin is an asset that fluctuates quite rapidly, so banks certainly won't accept Bitcoin as collateral. Even if Bitcoin could be used as collateral for a loan, I personally am very reluctant to borrow money. I'd rather sell some of my Bitcoin, as it's more mentally calming than having to borrow money. It's mentally damaging, in my opinion, because the stress of having debt is incredibly stressful.

[Webutxo]

There is nothing wrong with selling a small portion of your long-term holding if you get stuck in any emergency situation.
Because once you overcome your emergency situation, after that point you can again start accumulating using a DCA strategy. I faced such a kind of situation a long time ago, when I needed to sell my net Bitcoin holdings to fulfil a very necessary need.

I don't know why holding these days want to look like cult situations where you don't have right over your freedom. If you what to hold Bitcoin, you need conviction and strong hand to hold it due to small temptations especially when you are profits but I don't care what anyone will say about selling Bitcoin when you are in problem because tell me what's the purpose of holding Bitcoin as investment if I can't sell for any reasons, it doesn't make any sense.

This is a very long story that I have discussed many times on this forum, as far as I remember now.
Meaning of saying there is nothing wrong with using or comsuimh you little part of a long-term portfolio if you don't have any other option left. This is my point of view, not any financial advice to follow. DYOR!

I will not borrow another fund for Bitcoin I can sell small on the market. There is a reason why DCA existed, you can sell as much as much as you need and similarly you can buy more when you have more money. DCA is one of the best approach and whether you think your actions might slow the market, it will not because billions worth of Bitcoin is traded everyday.

[Rgram]

This is even more attractive if you can get interest on your collateral BTC.

Is that even possible? I thought it was always going to be the other way round. Don’t see how I would be the lender, helping the person taking this loan to hold to keep their Bitcoin as collateral, hedging against price while staying in the market, I give off my own Bitcoin which ought to have serve the same purpose for me and I don’t get an interest on it. Don’t see how that would be happening.

The way to go is always having to sell a portion of your portfolio for me. Paying interest on Bitcoin held as collateral would be a little unsettling for me, especially when I wouldn’t be holding the coin for a long term and Bitcoin might end up dumping within the time frame and if I’m to hold such coin for a long term, then the possibility of paying a collateral is likely going to be unfavorable.

[TheUltraElite]

Someone who is willing to provide P2P loans with crypto as collateral can run a business on this basis.

At present in this forum we have people who are lending out BTC in terms of altcoins or other valuable as collateral. Most of their loans are non-collateral, so they risk default.
But indeed this is a large untapped market and we will have to see how the legal papers would work out when loans backed by BTC get defaulted.

Certain altcoins have tried to become BTC backed loans with the altcoin owners getting a discounted interested rate. But none of them have really been going up.