Thinking out loud on the idea of taking a loan on your BTC to buy something (like a house or even a car)...

From what I have seen you have to store twice amount of BTC on the exchange to get half in a dollar loan at around 4% interest. I've also seen that the loan is for one year which means you need to pay it off each year.

Assuming BTC price is $50k and you need to buy a $50k car. You stake 2 BTC to get a $50k loan. In one year you owe $52k in dollars.

Assuming BTC is up to $104k (for easy math) in one year you can take out another loan with just 1 BTC to pay off your $52k payment and get your 2 BTC back.

Now, you're down 1 BTC and have 1 $50k car.


Otherwise, you sell the BTC at $50k and owe (assuming long term hodler at highest income bracket) $10k in (20%) capital gains tax on that sale. To get $10k you need to sell .2 BTC, which incurs $1k tax so you need to sell .02 BTC, etc.

Now, you're down 1.222.. BTC and have 1 $50k car (and you have also given $10k toward bombing women and children).


Bad scenario:
Assuming bitcoin crashes to $26k (easy math) when you have to pay off your loan in one year. You need to take out a loan with 4 BTC to pay off your loan.

Now you're down 2 BTC and have 1 $50k car.

Likely scenario:
Eventually the price goes to $1 million/BTC. You've paid yearly and now you can get a loan with .1 BTC to pay off your payment.

Now you're down .1 BTC and have a $50k car (and every year the amount of BTC goes down and down until there are no more dollars to take a loan out in).


This is assuming BlockFi (which I hear requires double the amount).

I have also heard of lending via BiFrost which is a way to take a loan in ETH with BTC with no third party custody. You can then convert your ETH to some stablecoin and convert to dollars with no tax implications. DYOR

I'm warming toward the lending scenario. But I need to trial a loan first. I also saw that BlockFi is under some legal pressure so the ability to go through them could go away in the next couple of months.