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Japanese exchange will pay you 5% interest to borrow your Bitcoin for a year
- mbgaxyz 9y agoHow can they generate more than 5% yield on an asset which provides no cashflow? From proprietary crypto trading? Selling and investing in high-yield junk bonds? It can't possibly be just speculation on a rising price.
- jonex 9y agoCould just be speculation on falling prices. 1. Borrow BTC 2. Sell borrowed BTC at high price point 3. Buy BTC including interest at lower price point at any time before payback date. 4. Give back BTC including interest at payback date. Basically just a way to short sell BTC.
- lippel82 9y agoThis is the opposite of speculating on a rising price. It is a way of shorting cryptocurrencies. Sell now and pay back your creditors after the crash.
- phire 9y agoThe best case is the exchange is shorting the btc they borrow from investors. Worst case, the exchange is insolvent and needs BTC to allow withdrawals to continue.
- notyourday 9y agoThis is equivalent of getting a locate for short selling. 5% is the loan interest.
- jimrandomh 9y agoDoing this would be betting that there's less than a 5% chance of this exchange going bankrupt. If they did, you would be an unsecured creditor and would be last in line to get paid back in bankruptcy proceedings.
- deleted 9y ago[deleted]