This is an interesting model. Instead of locking up Bitcoin to get cash, you get a loan to buy Bitcoin with the Bitcoin you are buying as the collateral.
It looks to me like they give you a price quote and then you make payments toward the Bitcoin like you might a car loan.
If the Bitcoin price drops, it looks like there is not a liquidation situation.
I don't think they are offering this publicly yet, but it is something to keep am eye on. Curious what the stackers think.
Personally I think the more interesting model was the one mentioned by NewMarket (see here: https://www.youtube.com/watch?v=26bOawTzT5U)
TLDR. You apply for loan for real estate, lender provides excess cash which must be used to buy Bitcoin. The excess bitcoin becomes part of the collateral package of loan. After 4 year minimum lockup you can choose to sell bitcoin to pay down loan.
Example: You want to buy house for $500K - they provide you $600K in cash, 500K for house + 100K for bitcoin. The bitcoin is jointly held by you and lender (same as house) all part of same collateral package.
If at the end of 4 years Bitcoin portion is now worth $200K you can cash in and use that to pay down loan.
This could allow home buyers to get a 30 year mortgage and pay it off in say 8 years if Bitcoin booms in price.
That service looks like an amazing product.
Have you heard of this one?
https://www.sovana.io/
No money down, no monthly payments, no interest. A 5-year term that you can end early any time.
Here's how it works. Sovana buys bitcoin with our money—you pay nothing. At the end,***** you get half the gain if it rises. But if it falls, you cover the decline, secured by your real estate equity.
BULLSHIT.
You guys are so gullible and you will get rekt.
I had not heard of sovana. There are times that I feel a little guilty for not being more financially adventurous, but mostly I just don't like the idea of complicated and arrangements and so all I do is buy Bitcoin with the dollars I have.
how long have they been around?
The fiat mindset is strong with this one...
This is another trick to fool people NOT to use bitcoin.
I am curious.
So if I want to finance 1BTC over 10 years. I am essentially locking in today’s Bitcoin price with only 10% down. Let’s say 8k on an 80k price. Then I pay monthly, like a mortgage, principle and interest until it is paid off. If Bitcoin goes way up I am definitely compelled to pay but if it drops 90% and never recovers why wouldn’t I just default?
If this is the case I am guessing this will have pretty high interest rates.
If the rates aren’t absurd I would definitely be interested in this.
I guess it would depend of how much collateral they require. However if Bitcoin dropped 90% it would likely break everything.
Yikes I can see all types of leverage strategies happening with this product.
I'm kinda ignorant when it comes to these kinds of things. Can you give me an example of what you are thinking?
Like these contracts can be bundled up and sold like mortgage backed securities.
Nah. No way I'm giving up custody for the entire term.
Especially not after they put so much emphasis on how safe your bitcoin stays. Yeah, right. Never heard that go wrong before.
Now, if they released the stack pro rata into self custody as you pay off the loan, that'd be better.
Great point. There likely comes a point in the term of such a loan where they are holding a significant amount of your value. As the the nears conclusion, I'd think my rug pull anxiety levels would go up.
if you could prepay balance with no penalty to release it all that would mitigate the forced waiting risk if BTC 10x’d+
I immediately don’t trust services like this, but this could be the perfect fusion between smash buy and DCA.
Smash buy a lump sum with the loan and then DCA with the loan repayments.
When people will listen to my words?
American?
I can’t get cause I was bad 🥺