It's that "bring out a new bigger loan" part that I find sketchy. I know the Bitcoin sits as collateral to balance the loan, but in my mind, debt should be temporary ðŸ«
Discussion
I hear you different frame of thinking for sure. I don't do it but if you think in % terms then it's easier to understand why people are comfortable.
$50k is 5% of $1M Loan 1
$500k is 5% of $10M Loan 2
Yes you have more debt nominally but as a percent of your assets it probably feels the same
If you have enough of something that's going up forever, Laura, the total amount borrowed will get ***smaller*** as a proportion of the total assets. In fact the total amount of bitcoin posted as collateral can go down over time if you are at this critical mass. If anything goes south, you can only lose up to this amount of the asset, and if not, you still at any time in the future have the option to discharge the debt by selling some of the asset and just go debt-free, though this would have to be for a good reason, such as changing jurisdictions, transferring the asset to an heir or anyone of your choosing, going under the radar, refinancing, or a change in living circumstances or emergency need for the asset.
For myself, I would never do the borrow indefinitely thing until I was pretty sure I was at this critical mass where the total borrowed, even with taking out new loans, went down in BTC terms over time. I plan on living for a very long time and using my bitcoin for much more than mere consumption, like a business and stockpile for my kids.