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Imagine you give strike $40,000 of bitcoin for a $20,000 cash loan in business A, you take the $20,000 and your greedy self buys bitcoin with it, deposit it again to strike, and get a $10,000 cash loan in business B.

Remember; this is a 12 month term loan. At 12% interest. Immediately you are signing up to pay the back $33,600 within 1 measly year. ($2665 per month) in order to get back the $60,000 in bitcoin.

The only thing that would need to happen for you to lose everything and still owe the debt back is bitcoin to drop in price 50% (which is rare to be fair) You would to lose your entire bitcoin position AND still owe $2665 per month, every month for an entire year.

You’re essentially betting that Bitcoin won’t fall 50% or more over the next year. If it does, you lose everything.

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Discussion

caleb 8mo ago

What idiot posts their entire stack as collateral?

Logen 8mo ago

What idiot posts any of their hard earned stack as collateral

caleb 8mo ago

But that’s just a gay purity test

Logen 8mo ago

Bitcoin IS money, it doesn’t need to be collateralized to be used as money

₿k 8mo ago

But yes let’s put jpeg and arbitrary data on it.

Oshi (推し) 8mo ago

🤘🏼🔥

caleb 8mo ago

It’s money AND a growing store of value.

I spend and replace with bitcoin where I can, but that doesn’t go very far and if you are constantly swapping it into gift cards or fiat you’re losing 1% anyway to conversion fees. It’s an unpopular take right now (since we “should be filling up block space” and “making all purchases in bitcoin”) but I still prefer HODLing to paying 20% to Uncle Sam to make a large purchase.

If someone wants to risk a small amount of their stack with a loan, I don’t begrudge them that. It’s normal and they’re following rational incentives. Bitcoin will be financialized and we can bitch and moan about it and recognize some very real risks that come with it but we shouldn’t be a puritanical cult about it.

Logen 8mo ago

I’m not bitching or moaning about anything. I’m just stating facts. At the end of the day all I’m saying is have fun trusting the third party 🥳 Bitcoin Fixes This

They are going to rehypothecate your stack.

ESE 8mo ago

He bought, domp eeett

Logen 8mo ago

ESE 8mo ago

YES

hi I'm frak 8mo ago

1. You don't still have the payment if you get liquidated.

2. Liquidation at 80% LTV means you still have 20% of your BTC.

Logen 8mo ago

1. Fair. I could see how that’s true. You’d still be out all the bitcoin.

2. Liquidation is not possible if you never gave them your bitcoin in the first place

hi I'm frak 8mo ago

Not all, 80%. And you could always post more collateral to protect.

2 is correct.

wymike 8mo ago

Genuine question: which is the least likely, statistically speaking when looking at historical data?

A)12 months after any date Bitcoin will be up12% or more

B) During the 12 months after any date Bitcoin looses 50% of its value in fiat terms

C) During the 12 months after any date Bitcoin looses 80% of its value in fiat terms

If B and C are less likely that A some people will be a calculated bet that they can benefit from such a loan.

It’s not significantly different to getting a mortgage to buy a property and then borrowing again against that property to buy something else.

Sometimes it blows up in your face but this is also the playbook people use to increase their wealth.

Logen 8mo ago

I vow to never used a third party to place bets to “increase my wealth” my wealth is increased by working hard and buying the right asset

wymike 8mo ago

So you would never take out a mortgage to buy a house?

Logen 8mo ago

Buying a house has a utility value before it has a monetary value

𝕞ptf 8mo ago

Play stupid games, win stupid prizes. Crazy the amount of Bitcoiners want to get into "perpetuity debt" and never sell their Bitcoin.

I thought we were here to leave the debt system behind.