Bitcoin continues to become the most pristine collateral asset

Investor · Oakland CA & Las Vegas NV · Member since 2019 · 72 posts · 112 votes

Milo, a US-based lender is now offering bitcoin-backed mortgages with no downpayment, no credit requirement, no DTI, no bank statements, and 100% financing. This is the start of exciting disruption and innovation as the digital assets space matures and further melds with traditional and antiquated finance.

Stack sats, use them to fund real estate without sacrificing the appreciation, invest the gains from real estate to stack more sats, repeat.

Bitcoin is the most pristine collateral asset that exists today.

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Bob E.

Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes

I still think Bitcoin has as much value as Dutch tulip bulbs. But hey, maybe this time really is is different.

It will be interesting to watch how the crypto market does during the coming recession.

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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
4y
Quote from @Rob Kishi:

@Account Closed Agreed. I think people realize Bitcoin isn't killing the existing system, nor is that the goal. Crypto improves the global financial system, not replaces it.

Bitcoin has never been hacked, operates 24/7 across the globe with 0 downtime, offers near-instant settlement, and doesn't require trust in a third party. Can we say the same for any bank, credit card company, or the like? That in and of itself is a MASSIVE improvement compared to SWIFT, ACH, Venmo, or any payment rail. Not to mention the sound money principles Bitcoin was created with (pseudo-privacy, self-custody, immutability, or a fixed and transparent issuance schedule to name a few).

The narrative of bitcoin being a currency is inaccurate at least in today's market. People need to stop thinking about it like that. It much better resembles digital gold, digital property, digital energy, or other scarce assets rather than a medium of exchange.

Also, bitcoin is not free nor is bitcoin mining. Those days are gone.
I can appreciate your enthusiasm for something you believe in. But it does lead to "over selling" crypto's properties.

To think that governments haven't cracked block chain is naive at best. All Internet activity goes through NSA (National Security Agency) nodes. That data is captured and analyzed.
If mere scientists in Universities can crack the DNA strand, which is far more complex, why would the NSA settle for less on crypto? The NSA, etc just want you to think your transactions are secure. They aren't worried about you but they are after big time terrorists, dope dealers, crazy governments and they have the money, computers and will power to make it happen. People aren’t going to flock to bitchain because it’s “unhackable”. They will use blockchain when it is “usable” like buying groceries and gas.

The original Nikola Tesla back in the 1920's & 1930's was a creative genius with electricity. Among other things he said that electricity had healing powers. That was the crypto claim of the day. So a lot of "inventors" created "electro healers" that unfortunately didn't perform as sold and they got shut down by the government. They "over sold" and killed the market.

Then in 1974 it turns out electricity CAN be used to heal and relieve pain as witnessed by the very widely sold & successful T.E.N.S. unit.

To say Bitcoin has never been hacked "over sells" crypto. Many articles of crypto theft show the statement is false, and doesn't do any thing except confuse people, making them skeptical.

To say crypto is Far Safer than having your money in the bank is a True statement and is a much more powerful argument for crypto.
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Rob Kishi
OP
Investor · Oakland CA & Las Vegas NV · Member since 2019 · 72 posts · 112 votes
4y
@Account Closed Bitcoin is a decentralized ledger run and constantly updated across hundreds of thousands of distributed unidentified actors in real-time all around the globe. Each node on the blockchain is essentially "checking the work" of others to ensure validity, and anyone with an internet connection can participate (with or without bitcoin). The greatest hack risk to the bitcoin network would require gaining control of at least 51% of the computers managing the ledger and having them all carry out malicious actions at the same time (double spend, 51% attack, sybil attack, etc.).

This is not impossible but it's highly impractical, improbable and illogical as the nodes/miners wouldn't crash their own network and the cost of executing something like that from outside parties would far outweigh the gain. It's secure because of the decentralization and incentive models, not magic. It's a cryptographic proof called the byzantine general's problem (byzantine fault tolerance) that bitcoin solved with proof-of-work consensus (mining).

There is a lot of content online if you'd like to learn more. A google search "can bitcoin be hacked?" or "what makes bitcoin secure?" should point you in the right direction.
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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
4y
Quote from @Rob Kishi:

@Account Closed Bitcoin is a decentralized ledger run and constantly updated across hundreds of thousands of distributed unidentified actors in real-time all around the globe. Each node on the blockchain is essentially "checking the work" of others to ensure validity, and anyone with an internet connection can participate (with or without bitcoin). The greatest hack risk to the bitcoin network would require gaining control of at least 51% of the computers managing the ledger and having them all carry out malicious actions at the same time (double spend, 51% attack, sybil attack, etc.).

This is not impossible but it's highly impractical, improbable and illogical as the nodes/miners wouldn't crash their own network and the cost of executing something like that from outside parties would far outweigh the gain. It's secure because of the decentralization and incentive models, not magic. It's a cryptographic proof called the byzantine general's problem (byzantine fault tolerance) that bitcoin solved with proof-of-work consensus (mining).

There is a lot of content online if you'd like to learn more. A google search "can bitcoin be hacked?" or "what makes bitcoin secure?" should point you in the right direction.

And the Titanic is Unsinkable.
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Rob Kishi
OP
Investor · Oakland CA & Las Vegas NV · Member since 2019 · 72 posts · 112 votes
4y
Had to do it :)
6 Reply
Tanner Crawley
Realtor · Lone Tree, CO · Member since 2017 · 139 posts · 112 votes
4y
Quote from @Rob Kishi:

@Account Closed Bitcoin is a decentralized ledger run and constantly updated across hundreds of thousands of distributed unidentified actors in real-time all around the globe. Each node on the blockchain is essentially "checking the work" of others to ensure validity, and anyone with an internet connection can participate (with or without bitcoin). The greatest hack risk to the bitcoin network would require gaining control of at least 51% of the computers managing the ledger and having them all carry out malicious actions at the same time (double spend, 51% attack, sybil attack, etc.).

This is not impossible but it's highly impractical, improbable and illogical as the nodes/miners wouldn't crash their own network and the cost of executing something like that from outside parties would far outweigh the gain. It's secure because of the decentralization and incentive models, not magic. It's a cryptographic proof called the byzantine general's problem (byzantine fault tolerance) that bitcoin solved with proof-of-work consensus (mining).

There is a lot of content online if you'd like to learn more. A google search "can bitcoin be hacked?" or "what makes bitcoin secure?" should point you in the right direction.

Rob, nice high-level explanation for those unfamiliar with the security of Bitcoin. I am not sure how it is countered by a flimsy analogy to the titanic.

But again, a RE forum is probably the last place to find educated discussion about high-risk assets. RE is after all on the opposite end of the spectrum.
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Rob Kishi
OP
Investor · Oakland CA & Las Vegas NV · Member since 2019 · 72 posts · 112 votes
4y
Great point Tanner.
0 Reply
Brian Plajer
Rental Property Investor · Chalfont, PA · Member since 2021 · 190 posts · 90 votes
4y
@Rob Kishi , so this is really only an option for the rich because most middle class people have very little to zero bitcoin available to them and given current value, on a low week, thats not likely to change anytime soon
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Axel MeierhoeferPro Member
Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
4y
@Rob Kishi I am wondering why you or the lender calls it a mortgage?
If you need to give the equivalent of $250K of bitcoin to get a $250K house, I have 200% collateral in my book.
For me a mortgage would be if I give 20% of the $250K in bitcoin, they give 80% in USD so I can buy the property and the lien is against the property. If the lean is against 100% of the value of the property in bitcoin, I don't see why one would do it - even if it isn't a taxable event.

4 Reply
Zachary Inman
Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes
4y
You're on a real estate forum, so of course, I'm in favor of less speculative, tangible assets - and bitcoin is on the opposite end of the spectrum. Sure, throw in some capital from the high-risk end of your portfolio, but to have a 30yr mortgage that is based on bitcoin seems to counter to the low-risk benefits of real estate.
1 Reply
Account Closed
Investor · Tempe, AZ · Member since 2015 · 65 posts · 31 votes
4y
Quote from @Gary L Wallman:

Quote from @Bob E.:

I still think Bitcoin has as much value as Dutch tulip bulbs. But hey, maybe this time really is is different.
It will be interesting to watch how the crypto market does during the coming recession.

I have to agree with Bob. Not that Bitcoin will necessarily be worthless. I just don't see how something with such an unstable value can ever be considered money. One of the inherent qualities of money MUST be a stable value and store of that value. Bitcoin is 67k one day and 37k 4 weeks later. No thanks.
Do people own stocks? Are some volatile more than others? Do people in retirement sell them off annually to fund retirement? Do they own 100% of their Net Worth in these super volatile stocks?

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Chad McMahan
Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 754 posts · 504 votes
4y
Quote from @John M.:

A bitcoin backed mortgage? The problem with that is that nothing backs a bitcoin! So when bitcoin crashes do they recall the loan or take possession of the property?

I agree that BTC and all crypto is volatile and backed by very little. However, BTC is backed by a lot more than US currency. US currency is purely fiat and just "trusted" paper with zero backing of any kind. It's pretty silly, really. It's part of the reason why our inflation is so ludicrous and our economy is so soft.

I digress.
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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
4y
Quote from @Rob Kishi:

Had to do it :)

Lol. The funny thing is both are correct.

I prefer gold and silver but they are impractical for today's purchases. Wheat futures are a little hard to manage, tulips faded in the 17th century, buttons worked for a time in Manhattan, Rai stones don't fit in the pocket, salt & spices are nice but aren't universal, hockey pucks are useful but you can't carry enough of them to buy a property.

I guess I have to accept a fiat, worthless, piece of paper that promises it is worth something to someone, called the dollar. Actually few people even touch a dollar anymore.

As I stand in line at the store, everybody in front of me is using a strange plastic rectangle that is produced for pennies and yet the clerk allows the buyer to leave the store with whatever odd conglomeration of produce and commodities they arrived at the check out stand with.

I asked the operator of the strange device that interrogates the strange plastic rectangles, if people could still walk of the store with their groceries if the power went off.

He looked at me with a vacant stare and said "no, of course not".

So, when I think of the number of times storms, earthquakes, hurricanes, tornadoes, wild fires etc keep the power off and how dependent people are on a little cheap piece of plastic to buy groceries and gas and to feed their family, I realize how people actually give up control over their lives, to their peril, for a little “convenience.”
0 Reply
Rob Kishi
OP
Investor · Oakland CA & Las Vegas NV · Member since 2019 · 72 posts · 112 votes
4y
@Brian Plajer Bitcoin is divisible up to one hundred million times, doesn't require more than $1 to buy, and is accessible by every country and anyone in the world with an internet connection. This is for everyone, not just the rich.

@Axel Meierhoefer I agree, the debt is much better structured the traditional way, but it opens the door for new products down the road and offers a solution to a growing niche.
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Gary L Wallman
Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
4y
Quote from @Rob Kishi:

Bitcoin isn't money @Gary L Wallman. In the United States, bitcoin is classified as property. Think of it more like digital gold rather than a currency and it makes more sense.

I'll happily take volatile appreciation over guaranteed depreciation any day.
source: https://howmuch.net/articles/r...

Definitely not defending fiat. Gold is money and always has been throughout history. Bitcoin is a nice idea to avoid government issued dollars.
I still say it can't serve as money (semantics) because it is inherently to unstable.
Gary
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Johnathon Sesi
Realtor · Rochester Hills, MI · Member since 2018 · 27 posts · 18 votes
4y
@Joe Villeneuve
What happens if the US dollar crashes and burns?
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Johnathon Sesi
Realtor · Rochester Hills, MI · Member since 2018 · 27 posts · 18 votes
4y
@Joe Villeneuve
Perhaps it is the very control you are mentioning that has caused the dollar to be worth less than its ever been.
1 Reply
Randy Gutierrez
Investor · NY · Member since 2019 · 171 posts · 80 votes
4y
I can't see myself buying bitcoin anytime soon but accepting bitcoin or crypto currency as rent isn't out of the question.
0 Reply
Brian Plajer
Rental Property Investor · Chalfont, PA · Member since 2021 · 190 posts · 90 votes
4y
@Rob Kishi I know you can buy fractional units. My point is one Bitcoin costs around $47K today so unless you purchased Bitcoin early on or during a low-price period it's too expensive to provide any benefit with regard to purchasing Real Estate. if you can afford to go buy three bitcoins then you can afford the down payment with cash
2 Reply
Account Closed
Investor · Tempe, AZ · Member since 2015 · 65 posts · 31 votes
4y
Quote from @Brian Plajer:

@Rob Kishi I know you can buy fractional units. My point is one Bitcoin costs around $47K today so unless you purchased Bitcoin early on or during a low-price period it's too expensive to provide any benefit with regard to purchasing Real Estate. if you can afford to go buy three bitcoins then you can afford the down payment with cash

Brian you could combine the two ideas. If you study Gresham's Law it would say that Real Estate (and now Bitcoin??) are superior forms of money. So short/spend/borrow USD and long/buy/hold Real Estate + BTC. My ideal situation would be to have 4 BTC ~200k ("long" exposure to BTC upside), borrow/short USD by taking a loan 100k (50% LTV is common) against the BTC, and buy/long real estate while taking a 30 year loan (again essentially shorting the US dollar).
2 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Quote from @Johnathon Sesi:

@Joe Villeneuve
Perhaps it is the very control you are mentioning that has caused the dollar to be worth less than its ever been.
It's not the control, it's the individuals in control. Would you blame the steering wheel if someone got in an accident?
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Quote from @Johnathon Sesi:

@Joe Villeneuve
What happens if the US dollar crashes and burns?

It has...more than once.
0 Reply
Wale Ajayi
Investor · Edmonton, AB · Member since 2021 · 9 posts · 7 votes
4y
@Bob E. As a professional investor who teaches retail investors, I tell people to run and be careful when people tell them "this time is different". We'd all see how things unfold this time, best guess it will just like the last time.
1 Reply
Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
4y
Quote from @Dave Carter:

@Mike Hern That’s not how this works. Your Bitcoin is not stored on a single computer. The blockchain is accessible from many places like your phone, your computer, or a wallet. As long as you record your key phrase, the idea of dropping your laptop off a cruise ship and losing all of your Bitcoin just isn’t a realistic fear.
Maybe I missed your response. If the guy who lost his drive is so frantic to find it, why doesn't he simply go to any other computer to access his Bitcoin. That's very puzzling to me.
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Lesley Resnick
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
4y
Digital currency…Yes.
Private currency…NO
How to turn 750,000 into 450,000. Ask Odell Beckham.
If I borrowed 100,000 in bitcoin, roughly 2 (47k today) coins. For argument sake, it goes to 100,000. You owe 200,000 in real dollars terms principal plus interest on the original 100k.
On the other hand if it crashed, you would owe less in real dollars. Inflation is a decrease in buying power and a currency going up a 1000% sounds like that very definition, 7% inflation and people are losing their minds.
Someone needs to explain to me why a 64 digit number code, is not a FIAT currency? The US could sell the Grand Canyon to Coca Cola, there are assets available in a liquidation sale. If your bank account is hacked, the bank will refund your money. What happens if your bitcoin account is hacked. Some will say, thats not possible. It is a simple as you leave your laptop and go the bathroom at Starbucks and some one walks off with it. Since password are so difficult to remember and manage, you set the auto login on Chrome. There is no record no authority to help you out. Your money is gone.
Some people say, well I could get on a plane with $1m on a thumb drive. Who are you Pablo Escobar? The biggest winners in the current digital currency war are the narcos, terrorist and people who live outside the law and social norms.
With certainty I can say the world governments are going to take over Digital currency. For no other reason than it will undermine governments power and they are not in the business of giving up power. We have gone to war over oil, we will go to war over keeping the world reserve currency. For those who advocate a financial system based on bit coin or some other currency, you are betting against your own standard of living. You will see un-thinkable booms and busts. This is the best of the worst choices. If you are successfully trading and flatten your account every day, own no real property then you should be fine. Stable long term financial systems are best for long term wealth creation, including those who depend on rents being paid. Some have theorized that the war in the Ukraine is to try to unseat the US dollar as the reserve currency and trade oil in Renminbi and Rupel. China has outlawed digital currency except for their own.
People who are in favor of Bitcoin are zealots for it. They have a level of confidence in its viability that is truly scary. I could be completely wrong and I am watching this asset class evolve. "It is different this time is the battle cry for all things new." Things will always change, but it does not automatically mean change for the better.
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Nick Barlow
Warsaw, IN · Member since 2017 · 229 posts · 270 votes
4y
@Rob Kishi I ask this to learn, not challenge: how is Bitcoin scarce?
Yes, there is a limit to the blockchain for how many Bitcoins coins can be made. But there seems to be no limit to the number of coin types: etherium, doge coin, shibu coin, etc..,,
I can’t get past that. It seems to me governments would use blockchain to transact their currencies well before they use it to replace them. Venezuela and Zimbabwe might be noteworthy exceptions.
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