5 Thoughts On How A Bitcoin Backed Strike Loan Changed My Finance Habits \ stacker news ~econ

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5 Thoughts On How A Bitcoin Backed Strike Loan Changed My Finance Habits

2823 sats \ 29 comments \ @BlokchainB 10h econ

We Americans We Love Fiat Debt!

Most Americans know taking on debt has become engrained in our lifestyle. In my early years I used to say debt is the American Way to rationalize my behavior for taking on large sums of debt through my life.

Things that used to be paid with cash back in 1950 all need a loan in 2025. Any large purchase an American plans to make it is almost guaranteed that a some sort of debt will be needed. Purchasing a car, house, or paying college tuition almost always require a loan of some sort. Add in a credit card and now the debt spiral can supercharge for some folks. I have always kept manageable debt loads but now I am at a point in my life when I am tired and debt and I have desire to be debt free.

Bitcoin Backed Lending Changes Behavior!

While we wait for hyperbitcoinization to take place many bitcoiners are shackled with fiat bills every single day. Not to mention the massive amounts of fiat debt we carry from buying a home or paying off student loans. The fiat debt burden most people have is still quite massive.

After battling the IRS for about 6 months I finally got a tax refund that was pretty sizable. Instead of paying off my debt I decided to open a bitcoin backed loan via Strike back in July. Now that I am three months in I can report on how I think about the Bitcoin Debt versus debt I may have on a credit card.

5 Thoughts on how A Bitcoin Backed Loan Changed my Financial Behavior

Every payment I make early to the Strike loan it feels like I am unlocking wealth that is going to come back to me. I often find myself thinking wow once I pay back this loan I get all this bitcoin back!
Paying off other debt early doesn't feel as rewarding. Debt via a credit card, mortgage, college, or car loan the asset is already in hand. Paying it off early doesn't give me that same sense of euphoria that I am going to get something back besides the peace of mind of not having any debt.
Since you are putting up way more bitcoin than you are getting back in dollars the creation of the loan isn't fractionally reserved. If I go bust and can't pay back the loan no sweat to the bank they liquidate my bitcoin and are made whole. No systemic risk exists as the loan isn't treated as an asset as in the case of other forms of fiat debt.
It eliminated the chase for yield. I thought about taking some of the strike cash loan and putting into Robinhood to earn "passive" income but I often thought to myself why do this? I am already leveraged (my current LTV is 38%) if bitcoin wicks down by 80% it is nice to just the cash balance and just pay off more balance to protect my bitcoin. Plus as the bitcoin price rises I will capture all of that upside soon as I pay off the loan.
In the case I really need sats in a pinch Strike allows you to withdraw sats up to 50% LTV. So while I made "early payments" I always have the option to take sats out if I need them which gives me more flexibility for my month to month spending.

With this loan I was able to pay off the following debts

A 2017 solar loan (about $5k)
A 0% credit card loan (about $5k)
Principle payments to the loan (why the LTV is down from 50% to 38%)
Interest payments totaling ($589.42)

I still have some debt I need to clear but so far I am off to a good start and that is with bitcoin tanking well below the purchase price in which I bought the bitcoin to open and establish the loan with.

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68 sats \ 7 replies \ @Scoresby 9h

This is interesting. Thanks for posting. I've been pretty reluctant to do any loans secured by my bitcoin, but I see the value.

148 sats \ 1 reply \ @j7hB75 7h

I’m in the same boat. Very reluctant because I don’t see the point. Can you help me see the value in this?

0 sats \ 0 replies \ @BlokchainB OP 27m

You buy bitcoin instead of paying off debt. It’s a leverage play. Risky and not for the faint of heart.

0 sats \ 3 replies \ @DarthCoin 5h

but I see the value.

Which value? Creating more fiat?

51 sats \ 1 reply \ @j7hB75 5h

This is what I’m trying to figure out. It’s all unicorns and rainbows but nobody seems to explain the value in doing this.

0 sats \ 0 replies \ @BlokchainB OP 26m

Buying Bitcoin instead of paying off debt that is all that is happening here.

0 sats \ 0 replies \ @BlokchainB OP 27m

Buying more bitcoin

0 sats \ 0 replies \ @BlokchainB OP 25m

Yeah you have to be comfortable with risk and be honest about paying down your debt. If you have suspect cash flow I wouldn’t recommend doing this.

166 sats \ 1 reply \ @grayruby 8h

Bitcoin backed loans are great in a bull market because your collateral keeps going up in value. Not so much in a bear as you will have to keep adding collateral to maintain the LTV.

I had a B2X loan with Ledn where you post bitcoin and then they buy you the equivalent amount. I only did it for 10M sats back when Bitcoin was 20k and I closed it out when Bitcoin was 30k. Unfortunately they no longer offer than product to Canadians so I didn't really have a choice I wouldn't have been able to roll it over anyways. But essentially I posted 10M sats collateral and got 15M sats back.

0 sats \ 0 replies \ @BlokchainB OP 20m

This is key!! Must avoid liquidation but even if you do get liquidated you don’t have any debt obligation to the loan origination. While it sucks for the borrower the overall system is healthier.

212 sats \ 1 reply \ @zapsammy 8h

https://www.etymonline.com/word/finance

finance is already based on debt; debt is not meant to be paid back in the corrupt fiat system - it is meant to be rolled over, never settled, and i bet that on the back-end, the debt u think u got paid off never gets settled, since there are many ways in which it has already been packaged, repackaged, and sold many times over; rewatch The Big Short and understand what is really going on!

7 sats \ 0 replies \ @BlokchainB OP 24m

This true in the debt based money we have today. Strike could be selling my loan as an asset to some other bank collecting 9.5% APR. but that I will never know.

178 sats \ 1 reply \ @lunanto 8h

It’s wild how Bitcoin-backed loans flip the script on how we think about debt. That feeling of unlocking wealth with every payment is so motivating

0 sats \ 0 replies \ @BlokchainB OP 24m

👏👏

53 sats \ 1 reply \ @Undisciplined 9h

Since you're putting up full collateral, this is basically for the purpose of managing fiat cash flow, right?

It saves you the hassle of doing a bunch of BTC to $ transactions.

42 sats \ 0 replies \ @BlokchainB OP 28m

Correct. I tried getting on zero fiat but between the exchange slippage and tax burden it was more headaches and stress than what little benefit I got. Plus why use windfall fiat to pay off debt when you can buy Bitcoin use leverage and live the best of both worlds!

100 sats \ 5 replies \ @DarthCoin 5h

That's why I wish BTC price to go to $100 so all these fiat debtors will get REKT. You guys are the real problem to the shit we are in it today, because you never stop creating more fiat than it ever exissted.

Right now Strike and their backers (banksters) are just laughing about you losers how you go deeper and deeper into debt and they just clicked a button to create the money you took.

46 sats \ 1 reply \ @SpaceHodler 4h

Strike loans don't create new money. It's money already in existence.

That said, creating more fiat is good for the world, because it's bad for fiat.

0 sats \ 0 replies \ @DarthCoin 4h

OMG the dissonance is strong with this one...

YNGMI

1000 sats \ 1 reply \ @Lux 5h

instead of "Bitcoin fixes this" it's "Bitcoin perpetuates this"

0 sats \ 0 replies \ @BlokchainB OP 18m

In the beginning until society flips

0 sats \ 0 replies \ @BlokchainB OP 16m

I wouldn’t get rekt. So let it fall im all good!

100 sats \ 4 replies \ @Lux 6h

We Love Fiat Debt!

there's no hope for the wicked

100 sats \ 0 replies \ @DarthCoin 5h

100 sats \ 1 reply \ @DarthCoin 5h

They are the puppets of the crooks

US people will be the last ones in escaping from fiat.

0 sats \ 0 replies \ @BlokchainB OP 20m

Duh we are $37T in debt

0 sats \ 0 replies \ @BlokchainB OP 19m

Bitcoin is hope

0 sats \ 0 replies \ @beyond_turbulence 2h

The Ship & The Sea

We are all sailors on a sea of cash, bailing out a leaking ship with a rusty bucket. The water we scoop is the same ocean that surrounds us—each bucketful a temporary reprieve from the deep.

For generations, the goal was simply to bail faster than the leaks. Now, a new craft has surfaced: the Bitcoin submarine.

Bailing on the old ship is a desperate, endless struggle against the elements. The satisfaction is hollow, the labor lost to the sea. But inside the submarine, the work is different. Every cycle of the air purifier, every early repayment of the system is like reclaiming your next breath. The clarity inside the vessel increases with your own effort.

The old ship was a web of rotten timbers and fractional planking—a collapse in one section may sink the holy vessel. The submarine's integrity is acknowledging strength of its hull. Its sealed compartments are its defense; a breach is contained, not catastrophic.

So the lesson from the deep:

The old way was to bail on a vessel you never owned, but the new way is to command your own depth.

The sea of cash once defined the horizon, but now, from inside the Bitcoin vessel, you see the water for what it is—a chaos mastered not by frantic bailing, but by the silent power of a contained and sovereign world, school, marriage.

0 sats \ 0 replies \ @j7hB75 4h

So, let me get this straight, you get a fiat loan that’s backed by Bitcoin. You can make monthly interest payments or pay principal and interest at the end of the term. Over the period of the term, you need to save in fiat to repay the principal as well as interest. This is where I’m conflicted. Why not just save in Bitcoin and pay your credit cards in fiat? I get that there’s upside during a bull market but timing the market is foolish. Just seems very risky and almost unnecessary. I get how it’s beneficial for Strike. Still waiting for someone to explain this simply enough to convince me.