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1 sat \ 2 replies \ @south_korea_ln 24 Dec 2021 \ on: Question: Who enforces bitcoin loans? bitcoin
You're putting up a high BTC collateral (don't quote me on the numbers, but could be twice as high as the loan you are getting). They can take the collateral if you don't pay back your loan.
ledn.io is starting to offer a product where you put up housing property as collateral. They are just doing it very locally for now, because indeed, it's harder to claim a house than to claim btc you've given them control over.
So in order to get the loan, you need to already have twice as much as the loan is worth? Why would you need the loan then?
Also, that kind of robotic rule set is scary. I would really want some humans involved if I got a big loan and for example had to be late on a payment for some unexpected circumstances. Imagine losing your job, missing one payment, and the cold machine destroys your life.
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I have read about Ledn's mortgage product on their website. My understanding is that they will issue a loan that is backed/collateralized by a combination of the underlying real estate being purchased AND and an equivalent USD value of Bitcoin as a single collateralized account. They express this as 50% LTV, but I believe you could imagine it as 100% LTV against the BTC.
So one use of such a loan would be to let you continue to hold Bitcoin while purchasing a home which is equivalent in value to the Bitcoin you hold. This would be an alternative to selling the same Bitcoin to purchase the home. This helps you 1) continue to hold and have exposure to BTC future price movements, 2) avoid having to realize capital gains (thereby avoiding having to pay the corresponding tax) on the sale of BTC.
I would guess there are humans involved in handling missed payments for this type of product instead of liquidating the BTC, but I'm have no specific experience with this lender.
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