Quote:
Originally Posted by ShopCat
Using 2 BTC as collateral to borrow 1 BTC does not give you 3 BTC exposure to the change in values. You would need to use something like a stablecoin as collateral, otherwise any change is just owed back in BTC anyway. I know there are people like Michael Saylor who float the idea to use BTC as collateral for cash loans because in his mind, you are paying 5-10% USD (or whatever currency, crypto or no) interest while holding an asset that returns 100-200% annually. Of course speculating that that the past 10 year's performance will continue going forward.
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Yes, I agree - that doesn't make any sense to use Bitcoin as collateral against another Bitcoin loan - you would need to arbitrage against another currency in a speculative event.
Again, I'm not arguing that Bitcoin and crypto in general are very speculative at this moment - heck BTC changed 10% between the two times I checked it today. I'm sure there's plenty of money to be made. Assuming a currency eventually becomes stable in price relative to other fiat currencies, I'm still struggling to find a compelling real-world advantage for the average Joe (or company) to use it over the conventional banking system? International wire transfers can be a pain in the ass indeed, but converting into a crypto, then sending, and then converting back would also be a pain. Also, in general, accounting is done and reconciled in a single currency - I don't know how one would even account for foreign reserves (I guess International companies have to do it somehow).
What is the primary advantage of a decentralized exchange over a centralized one? Security?
-Wayne