Crypto currency vs. traditional banking

[Bobby Bucks]

Anyone else delving into crypto currency for banking, borrowing and credit/debit cards? It’s another world entirely. By using crypto currency as collateral, there are short and long term interest rates for loans as low as 1%...............cash back rewards debit and credit cards much more rewarding than TBTF bank cards. My guess is they have far less overhead than the brick and mortar BOA & Wells con artists. Of course they do use your crypto as collateral and basically “lock it up”, and stop paying interest on what was other wise earning 3-8%, but it’s a much better deal than banks. I'm getting tired of BOA sneaking in fees every time I turn around. Stable coins paying 7% or more is also appealing. There is one company in Bulgaria that pays 12% for several stables , but I’m being extra cautions with them, they appear to be above board and my only concern is them being former Warsaw Pact members. Naturally there is risk and the element of the unknown. My favorite is Gemini which is in NYC and they have a sterling reputation. I’m wetting my feet with it and would like to dip in again on my next rehab or flip.

 

[James Mpls]

Defi is about to flip Cefi in coming years.

 

[Elliott]

Bobby,
1% interest rates you say? Sounds enticing, but? So I'm trying to borrow $180,000, 30-year mortgage for updating a 30-year old house (new floor coverings, remodel baths, new roof, remodel kitchen). Thanks to FNMA and the Fair Credit Reporting Act they will give me $174,000 at closing at a 2.5% interest rate (buying down rate to 2.5% from 3.0%). I will have 360 monthly payments at $700 per month, setting it up with ACH the payments will happen each month using US Treasury Fun Bucks, and they print more and more each month.

This is where it gets fun. Dusting off my Elwood Table book, I turn to first tab, Compound Interest, Monthly Compound Interest Rate at 4% (Let's assume 4% inflation on average for the next 30-years). Going down Column 5, Present Value Ordinary Annuity 1 Per Period, to "30" years and it gives me a factor of 209.461241. So the Present Worth of making those $700 per month payments, discounted because of the Feds accounting system, essentially means that I only have to make 209 and a half payments when using today US dollars. What a bargain! I effectively get 150 free payments. That last payment of $700 has lost 70% of its value, so I'm only really paying $210 Fun Bucks. And did I mention Uncle let's we write off the interest, though I'm paying so little interest, I will just use the standard deduction.

I dunno much about Bitcoin loans, but I'm assuming you have to repay in BC. If BCs get more 'expensive' relative to Fun Bucks, then it will take more and more of those dollars to pay back my BC Mortgage (Does BC do 30-year mortgages?). Do I get to deduct BC interest? In 30-years won't all our electricity have to be used to run the block chain? As I heard more than once, "Only a GSE like Fannie Mae is stupid enough to loan money for 30-years based on a 10-year Treasury rate which is set by The Fed."

And if I spend $174K on the house, and let's say it increases my value $125,000, that $125,000 investment should increase my value (again going to my Ellwood Table), at a 4% inflation rate, annual, the factor at 30 years is 3.243398, so my $125,000 is going to be $405,000! What would my $125K investment in my house be worth with BC?

I've been around Fun Bucks long enough to know how it works. I don't know how BC works in the long run.

 

[Bobby Bucks]

Defi is about to flip Cefi in coming years.

I'm beginning to think Solana may flip Cefi.

Bobby,
1% interest rates you say? Sounds enticing, but? So I'm trying to borrow $180,000, 30-year mortgage for updating a 30-year old house (new floor coverings, remodel baths, new roof, remodel kitchen). Thanks to FNMA and the Fair Credit Reporting Act they will give me $174,000 at closing at a 2.5% interest rate (buying down rate to 2.5% from 3.0%). I will have 360 monthly payments at $700 per month, setting it up with ACH the payments will happen each month using US Treasury Fun Bucks, and they print more and more each month.

This is where it gets fun. Dusting off my Elwood Table book, I turn to first tab, Compound Interest, Monthly Compound Interest Rate at 4% (Let's assume 4% inflation on average for the next 30-years). Going down Column 5, Present Value Ordinary Annuity 1 Per Period, to "30" years and it gives me a factor of 209.461241. So the Present Worth of making those $700 per month payments, discounted because of the Feds accounting system, essentially means that I only have to make 209 and a half payments when using today US dollars. What a bargain! I effectively get 150 free payments. That last payment of $700 has lost 70% of its value, so I'm only really paying $210 Fun Bucks. And did I mention Uncle let's we write off the interest, though I'm paying so little interest, I will just use the standard deduction.

I dunno much about Bitcoin loans, but I'm assuming you have to repay in BC. If BCs get more 'expensive' relative to Fun Bucks, then it will take more and more of those dollars to pay back my BC Mortgage (Does BC do 30-year mortgages?). Do I get to deduct BC interest? In 30-years won't all our electricity have to be used to run the block chain? As I heard more than once, "Only a GSE like Fannie Mae is stupid enough to loan money for 30-years based on a 10-year Treasury rate which is set by The Fed."

And if I spend $174K on the house, and let's say it increases my value $125,000, that $125,000 investment should increase my value (again going to my Ellwood Table), at a 4% inflation rate, annual, the factor at 30 years is 3.243398, so my $125,000 is going to be $405,000! What would my $125K investment in my house be worth with BC?

I've been around Fun Bucks long enough to know how it works. I don't know how BC works in the long run.

Elliott I don’t think crypto can compete with interest rates on owner occupied properties due to the tax write off benefits which are subsidized by the federal government out of our tax dollars I do see possibilities for auto loans, investment loans and consumer loans where someone needs quick cash, no credit checks and no hoops to jump through. Those loans aren’t only available with Bitcoin, but for many other crypto currencies, you do use that specific collateral for the loan and they do factor in the volatility of the asset. The best analogy I can think of would be borrowing from one’s stock portfolio, IRA or 401 K and using a portion of it as collateral for a 1 % loan. I’ve experimented with it on a small scale and as long as one doesn’t get addicted to investing, it’s good know the option is there for a rainy day.

 

[DTB]

I've been around Fun Bucks long enough to know how it works..

THAT is how it's done sir!

 

[Elliott]

WSJ9/8/21: "In the latest bout of volatility, bitcoin lost more than $100 billion in market value since Sunday. Other cryptocurrencies also took a hit: Ether has lost about $67 billion, and Cardano’s ada shed about $17 billion.

The largest cryptocurrency by market value edged about 1.9% lower from its 5 p.m. ET level on Tuesday to trade at about $45,896.30 apiece, according to CoinDesk. It briefly dropped 17% over the course of a few minutes on Tuesday, and ended the day down about 10%. Other digital assets also have lost steam: Ether, the second-largest, slid 1.1% Wednesday.

There hasn’t been a single catalyst to precipitate the recent selloff. A 70% run-up in bitcoin’s value since late July—combined with the euphoria tied to El Salvador adopting bitcoin as a national currency starting Tuesday—could have prompted traders to book profits, analysts say. Investors have also been stepping up bets on other cryptocurrencies in recent months, giving a boost to the Ethereum and Cardano blockchains and driving up prices on nonfungible tokens."

 

[Bobby Bucks]

Leave it to the WSJ to do an establishment hit piece on BTC and El Salvador on the day they adopt Bitcoin as legal tender,. Conspiracy theorists would suspect skullduggery at work inside foggy bottom. I’m surprised they didn’t team up with the New York Times and MSNBC and call for a military invasion to save Chase Manhattan et al from crypto currency and the people of El Salvador. Your graph and math may be correct, but as a Certified General, you must agree that if one makes 60% over a period of several months and loses 22% of it in one day, he’s still making a profit, even a slovenly residential guy like me can do that math on that one…..without using an HP-12C.

Hey, I’ll give you a tip. I bought ETHE which is Grayscale Ethereum Trust at $33.14 in my IRA when the end of the world was occurring yesterday, I will sell it within the next few weeks and make 10-15% and put it in Berkshire Hathaway or something similar, it’s my personal piggy bank method. I’ve done it 3 times so far. Elliott I think you would like the crypto that has utility, it’s like owning a rundown rental in a bad area, with good tenants that’s about to be rezoned for the betterment of all. To the moon.

 

[Terrel L. Shields]

It's real effect I think will be to see a risk of what the Peruvian economist Hernando de Soto called the "informal" economy- the cash black market. I've basically went to that personally with non-taxable transactions, buying selling private firearms, buying/selling antiques, etc. That are not business, but simple exchanges - So...I will be even more cautious.

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In the latest move towards complete tyranny, the Treasury announced a proposal to have the IRS collect all transaction data from every single financial account with a balance exceeding $600. This includes bank accounts, investment accounts, and accounts with crypto exchanges.​

 

[Elliott]

I can't remember the source, but a comment was made regarding 'vaccine mandates' and when it runs into our 'freedom of movement.' And I said to myself, "Is that one of those 'rights' in the First Ten Amendments?" Nope. Turns out its in the US Constitution, supported by court cases.

I got a notice last week from a small bank that Congress and the IRS was letting everyone know that the the bank was being required to upload all transactions to the IRS. WTF.

 

[Bobby Bucks]

Monero may be the hole card, Bitcoin is partially anonymous, Monero is completely anonymous, the quantum computers may change that in the future, but I suspect Monero and products yet to be developed will be one step ahead. IRS and Big Brother will only get more intrusive.