0 sats \ 1 reply \ @Nuttall 31 Dec 2023 \ parent \ on: Loan shark: Super Testnet's non custodial, bitcoin only borrow and loan tool bitcoin
A risk here can be that in order to buy Bitcoin fresh the fiat price may be astronomical and you may not have enough fiat to buy back the bitcoin you need to cover the loan. Also, what if no one wants the fiat anymore.
This is probable even if it looks like a small risk now. I like the Loan Shark application, but I also like to flush out risks, too. Maybe it's a FIDO situation? Fuck It Drive On.
From my experience I bought two bitcoin miners from a vendor using bitcoin. 6 months later the sats I paid were buying double the USD. The miners were to be used at a location and the location was no good. I was given the opportunity to get a refund. I wanted my BTC back but they only paid me the Fiat value in BTC plus I had to AML/KYC. It was bullshit. I lost on the deal.
The reality was in me using bitcoin that I would have gained more fiat value by not buying those miners. Even in the earning from mining I would have lost because my cheap sats today will always cost more tomorrow in the melting ice cube.
I wanted to throw away my Time Value Money calculator but maybe I shouldn't.
you may not have enough fiat to buy back the bitcoin you need to cover the loan
Yes, a borrower who spends their principle essentially goes short on bitcoin. They must hope the price of bitcoin doesn't rise so high during the loan's term that they are unable to pay it off at the end of the term. Conversely, the lender essentially goes long on bitcoin.
Which is interesting, it implies and demonstrates that you can execute long and short contracts directly on bitcoin without touching any other currency. Timelocks are very powerful tools.
I like the Loan Shark application, but I also like to flush out risks, too.
I greatly appreciate your thoughts on this and your feedback, thank you
I lost on the deal
I am sorry for your loss. At least it sounds like you learned something.
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