What others think is not important, but I'll tell you how I make money on inflation. The key is not to sell your Bitcoin (then you have to "realize" the loss), but to only use it as a collateral for a fiat loan. There are many ways to do it (I teach about several of them and it depends on how you are spending).
So strategy:
- If you have fiat, buy bitcoin
- If you need to sell, borrow fiat and spend it immediately
- If the interest rate is lower than the price increase (price inflation), that means when you pay it back, you will have to work less for it, so you are increasing your purchasing power the higher the inflation is
- hopefully the bitcoin collateral appreciates, but the key is, you do not have to make a decision to sell it ever.
- as bitcoin appreciates, you remove it as a collateral and back to hardware wallet
People of course don't like risking the collateral in some sort of (ideally decentralized or p2p) platform, but then they sell the bitcoin for consumption, which is immediately losing it completely. Of course there are risks and you need to overcollateralize, but this strategy has been amazing for me. And it actually removes the number of price decisions you need to make: always buy BTC, never sell BTC, spend carefully, but when you need to (not when BTC price is good).
More about this an many other strategies:
https://hackyourself.io/product/cryptocurrencies-hack-your-way-to-a-better-life/
(or https://www.amazon.com/dp/8057043482?ref_=pe_3052080_397514860 and also available in Slovak and Spanish)
And this is a more up to date course for this specific strategy: https://hackyourself.io/product/how-to-harness-the-value-of-bitcoin-without-having-to-sell-it-ebook-mini-course/
But the main strategy is: Have respectful disregard for other people and their opinions on your life š
Thatās basically leverage and very risky with such a volatile asset. Doing it on your own risk is fine if you like to, recommending it to others is irresponsible.
Furthermore no bank takes BTC as collateral, so you have to go the DeFi route which is a absolutely no-go. The risk of losing your whole collateral is quite high this way.
Or do I miss something? How do you borrow fiat against your Bitcoin?
Maybe something like ledn?
You send your Bitcoins to a centralized entity to play a dangerous leverage game.
There is a double risk:
1. You get liquidated. High probability with such a volatile asset
2. Centralized entity fucks up and your Bitcoins are gone. History shows this is a EXTREMELY high probability
How about firefish?
Several options.
1. Home baked loan with multisig
2. P2p with firefish or other entity acting as a broker
3. Defi
4. Futures
Also note:
- you can insure the collateral with options
- if your other option was to sell the collateral anyway, it might be a good option. I prefer not to sell btc.
- selling btc can have tax implications, loan is tax free
Yes, there are risks, I go through them in great detail. So it's not irresponsible when I explain all the risks (and I mean all).
Thatās correct, if you point out all the risk in detail, itās ok.
Still, I wouldnāt recommend it unless you really have to sell it. Especially putting your Bitcoin into Defi or giving it to a central entity bears great risk of losing all the collateral (history shows) and you have to overcollaterize a lot due to the high volatility. But itās ok to have different opinions.
Agreed, but... You always "have to sell it". If your strategy is to always buy BTC (or you are earning BTC), you probably have some costs, unless you are living a 100% self-sustained life, grow your food on your property, ...
If you have fiat to spend, it means, you have not bought BTC with that fiat.
So if you earn 100% in btc (if you get fiat, you convert it to btc), then you always have to sell it sometimes. I just think that selling btc is way worse option than using it as collateral. You end up with much better position than by purely spending fiat. And that's true even if you got hacked/rugpulled, because as the btc collateral appreciates, you withdraw it.
I agree, still I am not gonna put my Bitcoin into Defi or give it to a centralized entity. However, the risk-reward profile in Germany is different, since we donāt pay taxes if you hold BTC > 1 year
You have a false dillema there. There are more options than DeFi or a centralized entity. Firefish is on Bitcoin network, P2P, without a single centralized entity. You can make a home-baked loan with your family or friends (multisig). You can buy a future (that replicates the loan) - both centralized and decentralized. You are risking much less than you borrow in this case.
BTW: In case of tax in Germany, do you need to report the holdings? Because that would be a no-go for me, if I have to report btc holdings to a centralized entity.
Firefish whitepaper here: https://docs.firefish.io/firefish-protocol
No you donāt have to.
Anyway, putting your Bitcoin into Defi and sending it to a centralized entity is ok for you, but reporting it to a centralized entity is a no-go? Doesnāt make sense to me.
For me both is a no-go
(I understand that there are other options, I am still not convinced to take any risk on this asset for some upside. I donāt like the risk reward profile)
For me, putting bitcoin into defi (not a centralized entity) is much more ok than reporting it to a state.
KYC with reporting is a hard no for me.
