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Bitcoin-Explain to me how to buy these things (3 Viewers)

stbugs said:
So BlockFi will go under if BTC hits a big downturn and they made a lot of loans?
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On the contrary, they likely take possession of a lot of BTC.  What they do with that BTC after they take possession probably has more to do with deciding how well/poorly they do.

 
TheDirtyWord said:
You can't default on a loan collateralized with BTC.  If the price of BTC drops, you either have to come up with more collateral or BlockFi simply takes formal custody of your original collateral.
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Of course you can default on a loan collateralized with BTC. And if you do, they can keep your BTC as repayment. Just like any other secured loan. 

TheDirtyWord said:
...I would think in terms of BTC.  When I took out a $45K loan, that equaled 1.22 BTC at the time.  The price of BTC today is $63K or .71 BTC.  So did I get a crappy rate of return, or did I make .5 BTC or $31.5K?  Is there a collateralized loan out there in traditional finance that could give me what amounts to a 70% rate of return in 3 months?  Maybe...haven't investigated.
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:confused:   The increase in price of BTC has absolutely nothing to do with the loan. You could've just taken out a traditional loan and held your BTC, and you would've made the same return. The loan didn't give you a 70% return, lol, the bitcoins you own did. 

Again, everything you describe sounds just like a regular old loan that has been around forever. This is like a few years ago when every company just added the word "blockchain" to their name or mission statement to sound more valuable. You just took out a loan, but they worked "bitcoin" into it so it sounds like some new groundbreaking product. 

 
Ignoratio Elenchi said:
Of course you can default on a loan collateralized with BTC. And if you do, they can keep your BTC as repayment. Just like any other secured loan. 

:confused:   The increase in price of BTC has absolutely nothing to do with the loan. You could've just taken out a traditional loan and held your BTC, and you would've made the same return. The loan didn't give you a 70% return, lol, the bitcoins you own did. 

Again, everything you describe sounds just like a regular old loan that has been around forever. This is like a few years ago when every company just added the word "blockchain" to their name or mission statement to sound more valuable. You just took out a loan, but they worked "bitcoin" into it so it sounds like some new groundbreaking product. 
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Guess I’m lucky then.

 
I think the main benefit is ease and quickness of the transaction. No lengthy paperwork.  No dealing with multiple tiers of banking bureaucracy.  No worrying about what hours the bank is open.  No having to deal with anyone.  

My business had to distribute funds to its investors the other week and despite submitting the ACH requests through my bank on a Thursday, the funds weren't received until the following Tuesday.  First, I guess I tried to process it too late on the Thursday (4 PM ET) to get it sent the next day.  Since computers need to take the weekends and Columbus Day off, it was going to have to wait four days before the funds could be routed.  

The traditional banking system is inefficient and stupid.  TDW has described one of many ways it's being replaced.     

 
Ignoratio Elenchi said:
:confused:
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Could you have taken out a collateralized loan with digital assets 3 years ago?  I don’t think that business model existed in 2018.  Sure, traditional loans have been around forever. So have cars.  Does that mean a car that runs on electricity isn’t a breakthrough because people have been getting from point A to point B for a century now using them?

Maybe I’m deficient in understanding what fungible TradFi collateral could have been used to where my original obligation to repay has been decreased by 40% in little over 3 months.  It would be good to know. 

 
stbugs said:
Got it. I wonder if these loans are covered under your credit. Meaning, are people able to walk away and say you can keep my collateral and it never hits their credit report. If so, then I’d assume they would have a ton of defaults. If I have the cash and can go buy BTC way cheaper now and just walk away, why wouldn’t I do that? If these are “special” loans BlockFi may not have a lot of protection. BTC can go down way faster than real estate and if real estate tanks, you can rent it out till you break even/prices come back. If BTC goes down 50% and there’s no repercussions, all loan holders will likely walk away.

I get the concept but it sure seems like they could get murdered if they’re really successful in creating loans. I’m also assuming that they haven’t given out a ton of loans yet. If they have and there’s no credit risk to consumers, they have a lot of risk.
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From BlockFi's FAQ it looks like yes, the loan is reported to the credit bureaus.

Even if it wasn't I would assume companies doing unsecured loans (which this isn't) would still report a default on a loan to a credit bureau, even if the actual loan wasn't originally reported.

For instance I was shopping for pool loans and BHG offered me a $100k unsecured personal loan at something like 10-12% APR.  Their big selling point (and reason for the high APR) was that there was no collateral and the loan would not affect my credit.

So what is to stop me from taking the loan with BHG and then just never paying it off?  I would assume BHG would then report it if I ended up defaulting on the loan and it is only unreported so long as it remains in good standing, but I am just guessing.

 
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FreeBaGeL said:
From BlockFi's FAQ it looks like yes, the loan is reported to the credit bureaus.

Even if it wasn't I would assume companies doing unsecured loans (which this isn't) would still report a default on a loan to a credit bureau, even if the actual loan wasn't originally reported.

For instance I was shopping for pool loans and BHG offered me a $100k unsecured personal loan at something like 10-12% APR.  Their big selling point (and reason for the high APR) was that there was no collateral and the loan would not affect my credit.

So what is to stop me from taking the loan with BHG and then just never paying it off?  I would assume BHG would then report it if I ended up defaulting on the loan and it is only unreported so long as it remains in good standing, but I am just guessing.
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Are you in AZ?  I have some connections...

 
KGB said:
on a 10 day stake right now.  might jump in on a dip after  :thumbup:
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I'm home from 5 days of ignoring this business. that 10k move out of link into saita is up $7600. It was predicted within the over-exhuberant community to kill a zero (10x) this week after being listed on a major exchange. the listing fell through but is still in the works, and saita is still up 76% this week on the bad news. 

jmo, but i see this same as i did feg. i'm just a little smarter now, hopefully. 70% it's a frustrating hold that doesn't keep up with the market, 10% chance it keeps up, 10% it tanks on me, 10% moonshot. gl if you join me. for now it's way ahead of feg at the same point... who knows?

 
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Chaos Commish said:
I'm home from 5 days of ignoring this business. that 10k move out of link into saita is up $7600. It was predicted within the over-exhuberant community to kill a zero (10x) this week after being listed on a major exchange. the listing fell through but is still in the works, and saita is still up 76% this week on the bad news. 

jmo, but i see this same as i did feg. i'm just a little smarter now, hopefully. 70% it's a frustrating hold that doesn't keep up with the market, 10% chance it keeps up, 10% it tanks on me, 10% moonshot. gl if you join me. for now it's way ahead of feg at the same point... who knows?
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I still cant find it on uniswap.  I need to re look at the link you sent.  I know theres instructions there.

 
KGB said:
I still cant find it on uniswap.  I need to re look at the link you sent.  I know theres instructions there.
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saitama

Nevermind.  I just needed to adjust the slippage.  in for $3K test.  5 days left on my stake and then we shall see about adding.

 
I bet tesla take a jump tomorrow on earnings.

All my money is accounted for.  but might be a nice play

 
TheDirtyWord said:
my original obligation to repay has been decreased by 40% in little over 3 months
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I have no idea what you're talking about here.  You borrowed $45,000.  You still have to repay $45,000, plus interest, right?  In what universe has your obligation to repay been decreased by 40%?

Have you tricked yourself into believing that you somehow won on this deal because the price of bitcoin has gone up?

 
Ignoratio Elenchi said:
I have no idea what you're talking about here.  You borrowed $45,000.  You still have to repay $45,000, plus interest, right?  In what universe has your obligation to repay been decreased by 40%?

Have you tricked yourself into believing that you somehow won on this deal because the price of bitcoin has gone up?
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If you think in terms of BTC, I borrowed the equivalent of 1.22 BTC.  At todays prices I only have to payback .71 BTC.

Like I said, think in terms of BTC instead of $$.

 
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TheDirtyWord said:
If you think in terms of BTC, I borrowed the equivalent of 1.22 BTC.  At todays prices I only have to payback .71 BTC.

Like I said, think in terms of BTC instead of $$.
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Hint: this would be true if you had borrowed the money from literally anyone on earth.  This has absolutely nothing to do with the fact that you put up BTC as collateral. 

You're doing some MOP math.  

 
TheDirtyWord said:
HFSP
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I own a bunch of crypto. I'm a big fan. 

I'm just pointing out that you apparently made a grave miscalculation in your estimate of the benefits of your crypto-secured personal loan.  I'm sorry if your feelings are hurt that someone pointed it out, but c'mon man.  Literal pizza math going on here.  You would be in exactly the same place, financially speaking, if you had just taken out a 9% loan from any other lender.  You did not magically save 40% on your loan by securing it with bitcoin. 

 
TheDirtyWord said:
If you think in terms of BTC, I borrowed the equivalent of 1.22 BTC.  At todays prices I only have to payback .71 BTC.

Like I said, think in terms of BTC instead of $$.
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I could be wrong here.... but even if you didnt take out a loan, you wouldve made that money from the increase.  buy owning the coin.

With that being said...  It does appear that people in the hex/pulse community are interested in a thing called "Liquid loans"

I assume its for buying more coins though.  not sure, just looking into it.

 
The process/capability TDW is describing will be especially important with NFTs.  Imagine being cashed strapped but having a Bored Ape worth $100,000.  You'll be able to post it as collateral for a loan.  Try pulling that off at your local Chase.  

 
Captain Cranks said:
The process/capability TDW is describing will be especially important with NFTs.  Imagine being cashed strapped but having a Bored Ape worth $100,000.  You'll be able to post it as collateral for a loan.  Try pulling that off at your local Chase.  
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Correct, if I'm ever in a position where I need $100,000 cash within 24 hours, I will probably not be able to get it from my local bank with a picture of a cartoon monkey.   +1 for crypto loans. 

 
Ignoratio Elenchi said:
Correct, if I'm ever in a position where I need $100,000 cash within 24 hours, I will probably not be able to get it from my local bank with a picture of a cartoon monkey.   +1 for crypto loans. 
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The bigger point is you could scratch "with a picture of a cartoon monkey" from your sentence and still be right.

 
BTC is up almost 100x since this thread was started.  If we all weren't dummies, and each had put just $10k into BTC at that time, we'd each have a million bucks.

 
And of course, the shark move would have been to dump in $50k - $100k back in 2016.  Then we're basically talking immediate retirement. 

 
Otis said:
BTC is up almost 100x since this thread was started.  If we all weren't dummies, and each had put just $10k into BTC at that time, we'd each have a million bucks.
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Fortunately for us there are many future 100X coins to find right now.  KGB already found one headed that way.  

 
So far this altcoin season has been a lesson in patience.  Of course, I blame the 5,000 Twitter and YT influencers who say my "face is going melt with these gains."

 
Captain Cranks said:
The bigger point is you could scratch "with a picture of a cartoon monkey" from your sentence and still be right.
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I know, I know.  I'm excited about all the potential in this space.  I like to poke fun at the many inevitably worthless NFTs with no utility, and the loan example upthread didn't make any sense, but overall don't want to give the impression that I'm anti-crypto or anything.  Couldn't be further from the truth.  It's just important to me to separate the actual exciting real-world potential of these technologies from the hyped-up buzzwordy nonsense.  Securing a loan with bitcoin is cool I guess but it's not fundamentally different than what has already existed forever, and it's obviously not some way for borrowers to magically save a bunch of money relative to traditional loans. 

 
If Bitcoin does bust through ATHs like it's certainly primed to, and the crypto market behaves like it has in the past, BTC will likely consume the oxygen in the room in the near term. That means alts will continue to take a back seat until funds rotate out of BTC into large cap alts and then lower cap alts.  

 
I had closed out some misc junk alt's last week and moved into ETH. Just skimmed some off ALGO/ADA/SHIB and moved into BTC to grab some profits off the current run. Had already moved out of some other alt's to bolster my BTC position but this is too good to not grab a little loot in the short term.

 
KGB said:
I could be wrong here.... but even if you didnt take out a loan, you wouldve made that money from the increase.  buy owning the coin.

With that being said...  It does appear that people in the hex/pulse community are interested in a thing called "Liquid loans"

I assume its for buying more coins though.  not sure, just looking into it.
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Would I have had fiat liquidity though?  Yes, the price of BTC goes up, my paper value goes up.  But if I sell the BTC to secure $$, then I produce a taxable event in 2021.  When the loan term is up in May 2022, assuming the price of BTC is higher than $37K, then what I pay back to BlockFi is less in BTC than it would have been to sell it in May 2021 to secure the $45K.

I don’t know much about the HEX protocol (other than what’s been discussed on this thread), but there certainly are folks who are using their crypto as collateral to secure loans to buy more crypto.

 
TheDirtyWord said:
But if I sell the BTC to secure $$, then I produce a taxable event in 2021.  When the loan term is up in May 2022, assuming the price of BTC is higher than $37K, then what I pay back to BlockFi is less in BTC than it would have been to sell it in May 2021 to secure the $45K.
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Or you know, just hodl your BTC and take out a traditional loan. All of the above would still be true. There's no magic in the crypto-secured loan. 

 
TheDirtyWord said:
I don’t know much about the HEX protocol (other than what’s been discussed on this thread), but there certainly are folks who are using their crypto as collateral to secure loans to buy more crypto.
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This is the type of stuff that makes you go hmm. Seems like a lot of leverage. What could go wrong?

 
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