4 ms·
You keep your Bitcoin as collateral with a lender. They give you a loan which you can use for whatever you please. You pay off the loan with cash flow from othe
by asdev 6y ago
You keep your Bitcoin as collateral with a lender. They give you a loan which you can use for whatever you please. You pay off the loan with cash flow from other activities. You never need to sell your Bitcoin for liquid money then and your Bitcoin continues to appreciate. The only sketchy part is "not your keys, not your Bitcoin". The lender can make off like a bandit with your Bitcoin, so you need to be careful.
There's alot more to it and details on all the different platforms, I would take your questions away from HN though. People here are very anti crypto.
- Animats 6y ago"The lender can make off like a bandit with your Bitcoin, so you need to be careful." Uh oh. See the section in the article on "re-hypothication", where the same collateral is behind multiple loans. One problem with these things is that a small but widespread down period can turn into a collapse. Like the mortgage collapse in 2008. Anything that's paying 7% a year on borrowed funds is worrisome. No institutional investor will pay 7% a year for money.
- dingus9 6y ago> No institutional investor will pay 7% a year for money. The borrowing rate can be much higher than 7% for short positions. There are many different institutional investment strategies that are willing to incur wildly varying rates of interest.
- superflit 6y agoPlease senpai give me advice where to find real info.