I don’t have enough Bitcoin (yet) to borrow for anything significant, but this is my ultimate plan. When I get enough Bitcoin, I would borrow no more than half its worth (in case the price drops), and then I would still have Bitcoin along with whatever property I buy with the borrowed money.
This seems like a smarter move than to sell the Bitcoin for fiat money. If I sell, then I have to pay capital gains tax. When the cash is borrowed, there is no tax. Since I still have the Bitcoin, then I will gain when the price rises. If I only have fiat, the “price” will always go down because of inflation.
I hope Bitcoin will eventually replace the fiat system, but until then, the market for cash favors borrowers over savers. This seems like a win-win situation.
Does anyone else plan on doing this?
So let me get this right:
You want to
1. Borrow fiat for half of your Bitcoin as collateral.
2. Pay off the loan by, what, selling Bitcoin profits for x amount of fiat or in the form of x amount of Bitcoin?
So either you are paying tax once you sell for fiat to pay your debt in fiat OR you pay in an agreed amount of Bitcoins. And seeing as Bitcoin is going up very nicely, you would actually lose out more on profits than you would have paid on taxes. Unless Bitcoin keeps falling. But thats not a bet I would want to take.