Bitcoin, the ultimate collateral

Little by little, more and more lending services are apearing in the market offering loans backed by Bitcoin. Yesterday I attended a meetup organized by Barcelona Bitcoin Hub where Andrés Camarés a spanish content creator and philosopher, talked about fighting against todays government control to free our society. The meetup was organized by one of the local Bitcoin groups and there was about 70 people.

One or the organizers is the promoter of Firefish, a peer to peer lending platform where you can get USD, Euros or stablecoin loans colaterized by bitcoin. I was able to get a copy of the book you see in the image, which you can also download freely from their webpage in several languages.

The idea is to use your bitcoin to get depth and live out of it expecting that bitcoin price will keep increasing its price over time. You basically get a loan with a small portion of your assets and after a year, before the loan expires, you get a new one from another small portion of your assets, pay the old loan plus its interests and use the resting money to spend until next year expiration date. This concept is called loan rooll-over, it has risks in case price does not go up, that is why it is recommended to use only 10% of your portfolio as collateral to get the loan.

Of course, these services require KYC and you get the lended fiat into your back account so it is not recommended for those keeping their assets away from the regular banking system, but you can get the loan in BTC to increase your crypto asset exposure, get it in stable coin or any other crypto and spend it with services accepting crypto for debit card payments, or exchange small amounts using peer to peer services such as HodlHodl or Bisq. Actually you can already request peer to peer BTC backed loans on LendHodlHodl without KYC.

There are risks and you may have to do all the process using different platforms, but the lending roll-over offers an opportunity for those willing to live out of their crypto assets (right now only BTC but you can swap any crypto to BTC using CEX or DEX services) as collateral so they don ever have to it.

It is interesting to see how new services keep pumping up offering new ways to use your crypto even without spending it.