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> So, where am I misunderstand the situation here? It's pretty simple. They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. If the coin price goe
by onlyrealcuzzo 4y ago
> So, where am I misunderstand the situation here?
It's pretty simple.
They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. If the coin price goes down 1%, the borrower is wiped out.
You don't need fractional reserves for leverage.
- pbhjpbhj 4y ago>They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. // If that is all with the coin seller/creator then you're not actually borrowing the money they're just saying 'that $10 token you bought from me 1s ago is worth $1000, you're rich'; you bought $10 worth of coins, the market price is $10, there's no actual leverage involved it's just a deceit. If the seller is taking the $10 you pay to a different institution, borrowing $1000, then buying the coins, then legitimately they can say it's $1000 of coins. It's still clearly a scheme. The company lending that money are morons in this case unless they are doing it knowing full well that they are going to need to pursue people for the debt.