Which part doesn't make sense? Happy to explain as best I can.
Discussion
Thanks man.
Really, I'm just wondering under what circumstances it makes sense to take out a BTC backed loan at 10% (for sake of argument) if I can get a different form of credit at 8%.
Is it just that you can just roll it over and essentially never have to pay it back. (i.e your collateral BTC tends toward zero)
Yes, for me it's that I don't have to make payments, no credit check, is relatively quick (can get the cash within 24-48 hours) and essentially never pay back, by much, assuming BTC goes up and I keep it properly collateralized.
I've done some calculations based on some assumed rates of return with some random variation and eventually concluded that I wouldn't go more than around 10% of your stack. Under my assumptions, its riskier than it seems at first.
I imagine they get theirs when you die or something?
They get the interest payments, at the least. At some point you'll want to pay it back to release the BTC back into your custody. It's not for everyone, that's for sure. Depends on liquidity needs, risk tolerance, etc.