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The Ups and Downs of Crypto Loans (Speaking Of Bitcoin Episode 496)

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On this episode of “Speaking of Bitcoin”, join hosts Adam B. Levine, Andreas M. Antonopoulos, Stephanie Murphy and Jonathan Mohan for a discussion about loans in the world of crypto.
HODL. It’s crypto-land philosophy for not selling your preferred token even when things look their most bleak. But where philosophy intersects with real-world concerns like shelter, food and the niceties of life, tactics have emerged offering both opportunities and risks. From smart contracts to bitcoin collateralized mortgages, the hosts discuss their experiences with loans in the world of crypto.

Credits
Today’s show featured Andreas M. Antonopoulos, Jonathan Mohan, Stephanie Murphy and Adam B. Levine, with editing by Adam B. Levine and music by Gurtybeats.com. Our episode art is a picture provided by The New York Public Library, modified by “Speaking of Bitcoin.”
Any questions or comments? Send us an email at [email protected]

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22 COMMENTS

  1. You know this is the end of the bitcoin run when people are speaking about taxes. Bitcoin is not coming back for many years if at all. Back to gold and silver 😉

  2. If you take a loan against your bitcoins, that means you are planning to sell some of them somehow (either by having less money each month to DCA buy bitcoins because of the down payment either by selling some bitcoins to pay back directly)

    I think the good use-case of such a loan is to take it to pay the house and then BCA (Bitcoin Cost Average) to buy fiat: you sell the same amount of bitcoin regurlarly no matter the fiat you obtain against it and you use the fiat to pay back the loan regurlarly. That way you are selling the coins at a higher price than just selling everything one shot, the volatility is your friend exactly like when you DCA to buy bitcoins.

    Outside of this, a crypto loans is too risky too me, crypto is not a good collateral.

  3. As you said it is a completely legitimate way to use an asset as collateral, after one big liquidation for me i simply realized i over collateralized, so today i don't pass the 20-25%, so BTC needs to drop a good 75-80% before i get liquidated.

    This current dip i got zero liquidation but it also required me to be at peace when the collateral is at 70% becuase i KNOW I'm close to bottom and yes in case of an emergency i can repay some collateral in case BTC drops 80%, which i simply don't see it happening.

    Great topic! Ty🙏

  4. You guys are a reputable show, why not invite Alex from Celsius and then revisit this topic. I love your show, however, knowledge on this matter seemed limited.

  5. Some lending platforms will let you go up to 50-60% loan to value, but try to Keep loan to value below 30%. Try to repay back loan as price goes up. Should be safe from liquidation this way. Liquidation doesn’t sound like a big deal and some platforms will tell you small repayments will be made after loan to value reaches a certain level but the small payment decreases the value of your portfolio triggering further repayment snowballing effect… so you really can get rekt

  6. What if you put up 2 BTC for down pymt collateral and the price of BTC doubles? Is the lender going to return 1 BTC? No.

    The only way I would be comfortable is if a LN private channel could be created where equity shifted between lender and borrower as the price of fluctuated- if BTC price decreases, then equity shifts to the lender and if BTC price increases, then equity flows to the borrower. As monthly mortgage payments were made, the capacity of the channel would be reduced and the reduced capacity would flow to the lender's BTC address where the lender would be free to liquidate, hodl, or lend out. The LN channel could not be closed unless a) the mortgage were paid off, b) the home was sold and the mortgage paid off, c) no mortgage payments were made for x amount of time, d) no property taxes were paid for x amount of time, or e) you got caught making bathtub crank next to your stash of TNT.

    * Otherwise, the IRS allows up to $40K per year in long-term capital gains before they are taxed. If you bought 2 BTC at @ $20K and sold them @ $40K, you don't owe any tax.

    *Not financial advice

  7. While bitcoin’s wild <price movements might seem random, they are often driven by the same fundamental catalysts as in the traditional markets. Some claim bitcoin is impervious to shocks that affect global finance; it’s a hedge against things like inflation and a sure bet against tides of uncertainty. Moves within traditional finance can boost or burn bitcoin’s price because they determine how easy it is for financial epicenters like Wall Street to invest in bitcoin..We were already on shaky footing with historically low volume and almost pure whale pumps, narrowly avoiding a long-term bear market. This is the worst possible time in history to invest as so many don't back up their crypto assets. More emphasis should be put into day trading as it is less affected by the unpredictable nature of the market. I have made over 11 btc with 2.1 btc from day trading with Oliver John's Signal in few weeks, this is one of the best medium to backup your assets incase it goes bearish. You can reach Oliver on ͲeIєɠɾαm👉OliverJohn10 or What'sapp✙14242621873

  8. I think this entire concept using central banking is dumb. Crypto should remain total ownership. A Bitcoin mortgage should be entirely in the crypto sphere and not tied to the conversion to USD. Sell the house for 50 Bitcoin and the buyer pays back that certain amount over a contracted period. If they can’t pay it in full they get a fraction of their money back. If they complete the purchase the seller gets their percentage and the house is now sold to the buyer.

  9. Like Andreas said many years ago, we just have to completely exit the ship of the conventional banking systems. Leave them as you would a derelict sinking ship. Their corrupt and hurt the human race by keeping humanity on it's knees.

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