4 ms·

I don't think this is correct. Let's say you have one bitcoin. Your funds available for spending are $27,000 (we're assuming bitcoin has perfect liquidity, fo

by lottin 3y ago

I don't think this is correct. Let's say you have one bitcoin. Your funds available for spending are $27,000 (we're assuming bitcoin has perfect liquidity, for the sake of the argument). If you borrow $13,500 against your bitcoin, your funds available for spending are now $13,500. So, less than what you started with. This isn't a loan. A loan increases your funds available for spending, not decreases them.

latchkey 3y ago
If you have $13,500 that you didn't have before, isn't that an increase? I do see the distinction you're trying to make though. That's why I qualified it with the word "collaterlized". Let me also correct you: "Let's say you have one bitcoin. Your funds available for spending are $27,000". No, we're not talking about selling the bitcoin. There is no 'spending' here. What you're doing is borrowing against the value of the bitcoin that you're holding. You don't need to sell it, you're using it as collateral. The system can liquidate you.
- lottin 3y ago
  You started with more than $13,500. You started with $27,000. Then you used those $27,000 as collateral to borrow $13,500. Once you pay back the $13,500, you get your $27,000 back. So, you never have more than $27,000 at your disposal, which is what you started with.
  - latchkey 3y ago
    No, I started with 1 BTC.
    - lottin 3y ago
      Are you sure? Did it fall from the sky? No, it didn't. You saved up $27,000 and then you bought the bitcoin. So first you had to have $27,000, otherwise none of the subsequent steps would have been possible.
      - latchkey 3y ago
        I think I spent $200 in 2013 on it. Now that pet rock is worth more and I'd like to capitalize on it, without spending it. Just like people invest in a house and take equity out on it. Or they buy gold because they think it'll go up in value over time. Regardless, you're being pedantic at this point. Back to the original discussion, there is utility to crypto now, and I've proven a way.
        lottin 3y ago
        Yeah, I understand... these type of loans exist in finance, they serve a very specific purpose. The point is that, unlike consumer loans, such loans require that the borrower has savings before they can take the loan. For example, most people who take a mortgage do so because they don't want to save money for 30 years before they can buy a house. They want to buy a house now, and save later. A mortgage loan allows them to do precisely that. These other loans don't, and so they're less useful. They aren't completely useless. It's just that in most circumstances they aren't useful.
        latchkey 3y ago
        > The point is that, unlike consumer loans, such loans require that the borrower has savings before they can take the loan. EXACTLY my point. If we actually turned lending and borrowing around so that you had to have collateral first (1), that could actually transform an entire economy, as well as people's minds away from spending what they don't have. Credit card debt is at all time highs and they are raping people with high APY's on those funds. (1) In SE Asia, they don't have the concept of credit reporting agencies and thus their 'credit cards' are all collateralized (what we refer to as debt cards). Living there is what turned me onto this concept and how it is a better way to do things. You can't spend more than what you've already deposited and you actually earn interest on it too!

by lottin 3y ago

latchkey 3y ago

If you have $13,500 that you didn't have before, isn't that an increase? I do see the distinction you're trying to make though. That's why I qualified it with the word "collaterlized". Let me also correct you: "Let's say you have one bitcoin. Your funds available for spending are $27,000". No, we're not talking about selling the bitcoin. There is no 'spending' here. What you're doing is borrowing against the value of the bitcoin that you're holding. You don't need to sell it, you're using it as collateral. The system can liquidate you.

lottin 3y ago
You started with more than $13,500. You started with $27,000. Then you used those $27,000 as collateral to borrow $13,500. Once you pay back the $13,500, you get your $27,000 back. So, you never have more than $27,000 at your disposal, which is what you started with.
- latchkey 3y ago
  No, I started with 1 BTC.
  - lottin 3y ago
    Are you sure? Did it fall from the sky? No, it didn't. You saved up $27,000 and then you bought the bitcoin. So first you had to have $27,000, otherwise none of the subsequent steps would have been possible.
    - latchkey 3y ago
      I think I spent $200 in 2013 on it. Now that pet rock is worth more and I'd like to capitalize on it, without spending it. Just like people invest in a house and take equity out on it. Or they buy gold because they think it'll go up in value over time. Regardless, you're being pedantic at this point. Back to the original discussion, there is utility to crypto now, and I've proven a way.
      - lottin 3y ago
        Yeah, I understand... these type of loans exist in finance, they serve a very specific purpose. The point is that, unlike consumer loans, such loans require that the borrower has savings before they can take the loan. For example, most people who take a mortgage do so because they don't want to save money for 30 years before they can buy a house. They want to buy a house now, and save later. A mortgage loan allows them to do precisely that. These other loans don't, and so they're less useful. They aren't completely useless. It's just that in most circumstances they aren't useful.
        latchkey 3y ago
        > The point is that, unlike consumer loans, such loans require that the borrower has savings before they can take the loan. EXACTLY my point. If we actually turned lending and borrowing around so that you had to have collateral first (1), that could actually transform an entire economy, as well as people's minds away from spending what they don't have. Credit card debt is at all time highs and they are raping people with high APY's on those funds. (1) In SE Asia, they don't have the concept of credit reporting agencies and thus their 'credit cards' are all collateralized (what we refer to as debt cards). Living there is what turned me onto this concept and how it is a better way to do things. You can't spend more than what you've already deposited and you actually earn interest on it too!