Bitcoin borrowing?

[skjwkn]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

[Oshosondy]

Just see it as someone has a land, but the person need money. The person may prefer not to sell the land just to avoid paying tax for the land sold and because he believes the land price in the next few years would have increased very well. These are the two main reasons someone can decide not to sell his asset or property, but borrow money instead.

[bitbollo]

Yes. It is a quick method to access to cash using a third party - mostly of the times accessible 24h all days of the year.
Quick = matter of minutes if you have already an account after you make the request

Why? Thats the same answer why you spend money. 
It has been something interesting to see as a process because in the meanwhile its very hard to receive a loan or borrowing with standard fiat banks (or in certain areas can be seen as completely illegal) ...

I have realized few months ago a simple file to track nexo loan. if someone would see I could provide in private the link for a live version.
If you see this as an instrument to get cash = it works fine.

It is worth it = Yes but ths is not the case for all users. In some cases you can realize impressive losses including the lose of collateral

[Rruchi man]

Just see it as someone has a land, but the person need money. The person may prefer not to sell the land just to avoid paying tax for the land sold and because he believes the land price in the next few years would have increased very well. These are the two main reasons someone can decide not to sell his asset or property, but borrow money instead.

You are not wrong about the reasons to want to use what you have; from your example, the land is collateral for a loan instead of selling it, but many people who have done that have lost their property to the lenders when they are unable to meet up with terms and conditions. It means you could also lose your bitcoin when used as collateral for a loan, so the terms and conditions, and importantly the interest rate for the loan, should be considered carefully.

You also have to consider the fact that the value of your Bitcoin is still affected by the market, and it will put you in a terrible position if the market takes a huge dip. You may be required to add something more of value as collateral for what you have collected.

[sergiorus]

If you mean borrowing, say, stablecoins against BTC on a centralised exchange - this is a very common practice. You can then withdraw the stablecoins or sell them for cash and do whatever you want with that money, your loan will be overcollateralised with your BTC and you can repay it later when you want to (just need to keep an eye on the loan health - the liquidation price that will go slowly up as the interest rate being paid from it).

If you mean borrowing against BTC in a bank then it's a very uncommon still as far as I know. Moreover, probably not a thing in the vast majority of countries too. Chances are, you simply won't have that option on the table anyway.

[terrific]

That is worth it if you have no other means of solving that monetary problem you're facing.
You'll get the money and your bitcoin holding is there but you'll need to be responsible if you choose to do it.

Just see it as someone has a land, but the person need money. The person may prefer not to sell the land just to avoid paying tax for the land sold and because he believes the land price in the next few years would have increased very well. These are the two main reasons someone can decide not to sell his asset or property, but borrow money instead.

The difference of it in land is that it takes time to sell it, but banks would also take it as a collateral.
So if you're in a hurry and that situation is important, you're not going to wait for those years of appreciation for its value.
You'll do any means of taking care that financial problem you're facing through borrowing against your assets.

If you mean borrowing, say, stablecoins against BTC on a centralised exchange - this is a very common practice. You can then withdraw the stablecoins or sell them for cash and do whatever you want with that money, your loan will be overcollateralised with your BTC and you can repay it later when you want to (just need to keep an eye on the loan health - the liquidation price that will go slowly up as the interest rate being paid from it).

He also need to take note that it's better if he'll not get the highest loanable amount for his bitcoin due to that.
Less than half is acceptable in my opinion or even lower so he will not be too pressured for the liquidation and interest.

[Donk1]

Well it depends on how you see it. Folks take loans just so they can avoid selling off their Bitcoin unnecessarily for any reason. It's easy to say that way you get to continue holding, and even if you want to pay back, you can as well pay using your normal daily or monthly income rather than selling at a loss. That being said I will advise against borrowing big amounts though, because if the market was to just suddenly dip it can actually liquidate you easily. Even at that you will still have to consider the interest rate of the loan, dip or not. So yeah perhaps keeping your loan small would be better. That's all.....

[leonair]

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

When you think of your asset as very valuable and want to hold on to it, you will try to hold on to it at any cost. It can be any asset. People who take loans by putting their Bitcoins as collateral really want to preserve their Bitcoins. Because they know that the price of Bitcoin will increase a lot and it will turn into a big asset for them in the future and because of this belief and confidence, they know that if they sell their Bitcoins, they will get instant money but they do not sell their Bitcoins and put them as collateral and they do not have a loan and they pay extra interest for that day. Still they hold on to their Bitcoins. It is just a love of wealth, faith and an attempt to protect wealth.

[Queen uloma]

I don’t really support borrowing money against bitcoin because if market falls, liquidation can make someone to lose his BTC. Bitcoin is a long term investment so I won’t risk what I have gathered for years because of loan. If I’m in need of money I will first of all look for another alternative that won’t endanger my bitcoin.

[ZAINmalik75]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

I've never done it, and I also wonder how it works in the first place, because Bitcoin is a volatile asset, and using a volatile asset as collateral to take out a loan is a difficult thing to understand, and I'll explain why I'm saying this.

Let's say, you have 1 Bitcoin, and you want to take a loan using that. If 1 Bitcoin is worth $100k, for example, you can get $80k for it considering the lender wants the collateral to be worth 20% higher than the borrowed amount. Now, what happens if the price of Bitcoin goes down or up? If it goes down, and the person who borrowed the funds defaults and doesn't pay back, what will the lender do since that 1 Bitcoin now isn't even worth what he gave the lender? I'm saying this because lenders obviously won't be into holding funds for years only to get their own funds back.

It's pretty confusing for me, to be honest.

[Questat]

Just see it as someone has a land, but the person need money. The person may prefer not to sell the land just to avoid paying tax for the land sold and because he believes the land price in the next few years would have increased very well. These are the two main reasons someone can decide not to sell his asset or property, but borrow money instead.

Perfect example. Rather than losing its long term advantage, why not borrow some money first, at least you only lose a portion of bitcoin profits, you don't lose the whole bitcoin. This is also one of the benefits of holding bitcoin, you get to decide how long will you hold it, when to take it as a collateral, and when to finally sell it. As long as you are the sole owner, it does not only mean you have the financial freedom, but you also have the most flexible decision making with bitcoin as your tool.

[shinratensei_]

Could be many reasons beside to avoid taxable event like already mentioned above, you could leverage your bitcoin position. You borrowed stablecoin against the bitcoin you supplied, and buy bitcoin again, you're getting more upside exposure this way, usually useful if you want leverage at around 1.5x or so, leverage that don't usually exist in normal perpetual market, or you can even use the borrowed money to buy altcoin that you predicted to go up way earlier than bitcoin. Though, I don't think it's worth it because contract risk and so on.

[LogitechMouse]

---
Do you think it worked as you wished? Is it worth it?

Cheers

I'm thinking of a scenario where I did this one, and I can think only of one, and it's not Bitcoin that I used as a collateral but like many have said here, it's a land.

I used the title of a land to borrow some money that I can be used for a better purpose, and it worked perfectly fine for me. As for using Bitcoin as a collateral, TBH I don't see it happening on me because in the first place, I don't know anybody who is willing to let me borrow cash in exchange for Bitcoin as a collateral. Second, nobody or only a few people are into crypto in my area. Third is that, I don't trust them at all so... yeah I don't think that I'll be doing it.

In the long term though, this is a good idea because overtime, the price of Bitcoin increases, but the cash that you borrowed will go down in value due to inflation. At the end of the day, you can pay the lender the money that you borrowed plus you can gain profit as well just by selling the Bitcoins that you used as a collateral.

[Bd officer]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

No, I have never done that.

However, I have heard that some platforms allow you to borrow against Bitcoin, but there is a risk of losing the collateral. As many have mentioned above, I will also say that Bitcoin is not a stable currency, so it is risky to keep it as collateral. Bitcoin will not work as well as land or gold. People can easily borrow against gold or land, but I do not see it easy to borrow against Bitcoin.
Personally, if I need money urgently, I will try to use my emergency fund and if that does not work, I will try to borrow money without collateral, if that does not work either, I will plan to sell some of my holdings.

[Olatundespo]

Hey y'all,

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

Cheers

Personally, I hate borrowing money, but I was in an emergency situation two years ago where I had no other option but to withdraw my Bitcoin holdings. The emergency fund I had was not enough to cover the emergency.
A friend of mine suggested that I withdraw part of my Bitcoin, but I was not willing. I took out a loan from a financial institution to cover the emergency. My efforts to protect my Bitcoin holdings were great and I successfully paid off the loan a few months later.

[EarnOnVictor]

I'd love to hear your opinions on if/why you borrowed against your Bitcoin?

Do you think it worked as you wished? Is it worth it?

By this, I suppose you mean personal borrowing decision, and not what the companies force on you.

Well, it's cool, and I can do it myself, though I've not had the reason to do that. I could indeed borrow against Bitcoin; however, it must be smartly done. Bitcoin has not failed its cycle before, and until then, I think that could still work if the borrowing happens when its bearish season is about to end or when the bullish season has just begun.

This Is A Personal View. DYOR!

[mirakal]

I don’t really support borrowing money against bitcoin because if market falls, liquidation can make someone to lose his BTC. Bitcoin is a long term investment so I won’t risk what I have gathered for years because of loan. If I’m in need of money I will first of all look for another alternative that won’t endanger my bitcoin.

I understand your point. But for someone who is in dire need of huge amount of money, like its a matter of life and death, looking for some alternatives that would grant your request is time consuming, and you can't even gain the assurance if they will agree with your terms in repaying or give you the exact amount you highly need.

If you can benefit from your bitcoin from taking a loan, why not? It comes with case to case basis. Bitcoin is valuable, and we know that, but life is more precious than bitcoin or any valuable digital or traditional assets.

[traderethereum]

I never borrow money with Bitcoin as collateral because that is not worth for me. If I can't pay the debt, I lost my Bitcoin and that will not easily to collect Bitcoin same as the amount that I use it for collateral.

If they think that they can pay the debt and get their Bitcoin back, that is acceptable because they know what they will do with the debt.

Worked or not will rely on you because you have the plan and know how to use it. The debt will helps you to achieve your goals but for others, that might not recommended.

[Gozie51]

It is as the same as going to borrow cash from someone or bank. With banks you pay some percentage in interest for how long it will stay with you and that means at the point of repayment, you are paying additional money from what you took. This is same for bitcoin borrowing. We have such services here in the forum both for cash and btc. So it is always that you will pay additional from what you have borrowed except you are borrowing from a family member or friend who is not charging anything. If you are using a service provider on borrowing service then you have to be ready to pay for an addition.

However, people borrow bitcoin either they want to reinvest it especially during the bear season. They also want to convert it to money and use for different financial purposes. So it varies from what different people want to borrow btc. Maybe the opportunity they have is the services on btc of which they still convert to cash and use for the need of their borrowing.

[noorman0]

That is worth it if you have no other means of solving that monetary problem you're facing.

I can assure you that this is not the ultimate solution for people to resolve their financial problems; the concept of bitcoin-based loans actually emerged from individuals who take an extremely preventive stance regarding high costs.