Nostr Web Client

Uuuhhhh

Short term, groceries and living on the btc standard

Long term, invest in businesses/loan out btc with interest.

If I may interject: loaning out BTC doesn't make a lot of financial sense because borrowing BTC makes no sense, as it is an ever appreciating asset vs fiat.

Let's say you borrow 1 BTC for 1 year at 10% yearly. 1 BTC = $70k today, 1 BTC = $90k in 1 year. And you have to return 1.1 BTC. So you will be returning $99k.

Who would do that, if you can simply borrow $70k at 10%, and pay back $77k instead?

Also, borrow BTC to do what with it? Investable assets will continue to be priced in fiat for the foreseeable future.

You borrow 1 BTC to buy a laundromat, for instance. What's the advantage of borrowing BTC to do that? First, you're overpaying. Remember, $70k vs $90k in 1 year. Why not keep those $20k in your pocket?

Second, in most jurisdictions, you can pay in BTC or whatever you want, but as far as the government, banks, insurance, etc. goes, you will have to convert the value into fiat for the record. So why not, once again, just borrow fiat to begin with?

This is why people don't borrow gold either.

Reply to this note

Please Login to reply.

Discussion

hh 1y ago

And there's another thing, from the point of view of the lender.

Can you imagine the interest you will have to charge to cover for the risk of default?

You are lending out 1 BTC worth $70k today and possibly $90k in one year. And then the person you lent it to, doesn't pay you back. Now you need $90k to cover for that 1 BTC.

So how much would you charge to make it worth taking that risk?

Probably, until we reach gigantic market caps and BTC's price volatility is basically just the inflation rate plus a tiny premium, BTC lenders will have to charge absurdly high interest, which once again, make it not very attractive.