I haven’t written on Hyperfund for quite some time. Not because I’ve covered everything (because I certainly haven’t!), but because my time has largely been taken up supporting members of my fast-growing Hyperfund team, and helping some of them (the teambuilders, anyway), onboard new members and welcome them to the Hypercommunity.
Uppermind for me at the moment however is the subject of Bitcoin loans..something that up until six or seven months ago, I was largely unfamiliar with.
Fast track to today, and I’m a great believer in them, and how they can help many in the crypto space: be they Hypercommunity members or not.
The importance of a Bitcoin loan (often referred to as a bitloan) stems from the belief that one should never sell one’s Bitcoin, but rather, loan against the Bitcoin one has.
Why? Because the price of Bitcoin is widely anticipated to increase in value in time. The only question is, to what extent?
Depending on who you ask, and what you read, Bitcoin could exceed $100 000 in price by the end of this year. (Currently, the Bitcoin price is around $58 000). Others believe that the price of Bitcoin will be around the $300 000 by the end next year….and possibly higher than that the year after.
Of course, nobody knows for sure but if you realise that there can only ever be a capped 21 million Bitcoin in circulation and that a good 18 500 000 bitcoin have already been mined and are already in circulation, then it stands to reason that demand should push up its price over time.
This being the case, why sell it? Rather, loan against it.
Bitcoin loans are not new. Today, there are a number of lending platforms – with the likes of OKEX, Binance, Hyperpay and Coinloan being amongst the more well-known and reputable bitcoin loan providers.
Personally, I like Coinloan (And no, fellow Hyperfunders, that is no slight on Hyperpay, which I have also taken loans through).
Coinloan is a solid, trustworthy and easily navigable platform. And the fact that one can take out loans for up to 36 months at really attractive interest rates ticks two very important boxes for me.
Also, it’s an all-encompassing platform: with a crypto exchange allowing one to buy, sell or swop coins at the click of a button: an Interest Account, allowing one to store interest-bearing crypto assets; and Instant Loans, through which you can borrow against your crypto in a couple of minutes without any paperwork and/or credit checks. Other plusses for me are that coins can be bought using Visa or MasterCard; that the company is a registered and licenced financial services provider: and has a track record going back to 2017. See www.coinloan.io
Regardless of the loan provider, however – and regardless of whether one takes out loans in Bitcoin, ethereum, or any other cryptocurrency – the most important thing in my opinion is to take out a loan, and not sell your coins.
A bitcoin loan works like any other loan in that a lender loans its bitcoin to a borrower – and the borrower repays the loan with interest.
Borrowing bitcoin provides a way to put your crypto assets to work without having to exit your Bitcoin holdings. Before you take out a bitcoin loan (or, say, an ethereum loan), it’s important to have an understanding of the risks of doing so.
You need to know what to do if the price of Bitcoin falls below a certain level, and you need to know what to do if the Bitcoin price keeps on going up. (Remember that Bitcoin is a highly volatile commodity and it’s important to keep an eye on the charts). At what point do you add collateral? And at what point do you withdraw collateral?
One of the risks with having a Bitcoin loan – or numerous Bitcoin loans – is the risk of having your loan(s) liquidated, without you even being aware of the danger of liquidation. It could happen in the middle of the night when you are fast asleep and the Bitcoin price tanks, triggering the unwanted liquidation of your assets. This is something you’ll want to guard against at all costs! Realistically, we can’t be expected to stay awake night after night, with an eye on the charts…so what to do? (More on this later…)
Another risk is that of a Bitcoin lending platform collapsing, or running off with your crypto assets. Hence, the need to do a THOROUGH due diligence on your choice of loan provider!
Another risk is of hacking. Hence the hugely important need to take out loans only with lenders who have strict online security measures in place.
It’s a sad reality that there are many “bad actors” on the internet only too eager to get their hands on your Bitcoin, so any Bitcoin loan providers who do not have stringent security should be avoided at all costs. On this note, enquire from your selected provider if there is any guarantee in place to protect against any possible loss or theft of coins.
There are a number of scenarios where taking out a bitloan would make perfect sense.
Here are a few examples (and my gratitude to my extremely-learned and experienced business and crypto colleague Pierre, who has just launched a crypto hedge fund loan product and allowed me to borrow the following from his marketing literature….)
ALTERNATIVE HIGH RISK INVESTMENT STRATEGY
Frank has R100 000 (South African rands) in savings and decides to invest it in a high reward high risk investment, using a Hedged Protection Loan as part of his investment strategy. He activates his loan account and deposits R100 000 into the Loan Product. On depositing his funds, Frank receives R68 000 (68%) of his R100 000 paid into his bank account or digital wallet.
He places this R68 000 into his high risk investment. For the first few months, Frank’s investment delivers on its promise but in month 6, his returns unexpectedly come to an end. Another month goes by and news surfaces that the investment has gone under. Frank lost his R68 000 investment – but remembers that he took out the Hedged Protection Loan before investing. He checks his statement and realises that 100% of his loan has been paid back through the Loan product’s unique built-in repayment mechanism. His original R100 000 collateral is safe and nicely protected and is available for him to use again to take out ANOTHER loan (if he so desires). Frank protected his assets before he invested in a high reward investment.
HOLD OR SELL DILEMMA
Sarah owns one Bitcoin, but she is not sleeping very well. Just before turning in one evening she reads an article about Bitcoin entering “bubble territory”, and that a market crash is imminent. Then she reads that the predicted price for Bitcoin by the end of 2021 could be around $100 000 and $300 000 by the end of 2022. What to do? Hold onto her bitcoin and risk losing a lot of money in the event of the market crashing? Or sell her Bitcoin at the current price, and risk losing out on a massive spike in the Bitcoin price? Fortunately Sarah has a friend who also holds Bitcoin and suggests that a way out of her dilemma may be a Hedged Loan. Sarah likes the idea. She takes advantage of the Hedged Protection Loan and receives 34 000 USDT, which she then places in a stable low-risk investment. A month later, Sarah goes through her Loan Statement and finds to her surprise, that from her 34 000 USDT loan, 1 850 USDT has already been paid back through the built-in repayment mechanism inside the loan. She pulls out her calculator and works out that at this rate, her loan will be paid oﬀ in 18 months. Not only that, but if the Bitcoin price goes up to $100 000, her bitcoin will be worth $100 000 and she would then be able to activate another loan. This, all happening while the borrowed funds she put into her low risk investment have been growing steadily.
USING SAVED FUNDS FOR UNANTICIPATED EXPENSES OR EMERGENCIES
LEVERAGE YOUR SAVINGS
Gill and Stefan have been saving money using their bond from the day their daughter Mia was born. This, with a view to paying for her education.
Their calculations are a bit oﬀ, though, having not taken into consideration all the increases in costs and fees. They realise that they have only enough funds saved for 2 years of university, and not the three for the degree Mia wants to pursue. They are unsure how they will be able to raise the additional funding, especially now considering that they have had a second child. Luckily, Gill spoke to someone who told her about the Hedge Fund Protection Loan, mentioning that it could be something worth looking into. The next day they submitted an application and activated their loan. Stefan withdrew the R200 000 he had saved up in their home loan account and deposited it into their new crypto loan. On doing so, he received R136 000 which was immediately deposited back into their bank account. Mia went oﬀ to university and her father was able to make available the funds as she needed it. Half way through the next year, he received communication advising that his loan was fully repaid, and his collateral was now available for withdrawal for a new loan. Not only this, but they saw that the price that their initial loan was taken out at had increased by 45% – allowing them to take out a second loan from a position of comfort.
The 3 examples above (and again, thanks to Pierre) hopefully help to illustrate how bitcoin loans can be used to one’s advantage.
So, all well and good. IF you have just one or two loans running.
But what if you have multiple loans running concurrently?
To be honest, it can get confusing if one is not always on top of things…
Up until recently, I had 15 loans running at the same time but started to find that I was spending too much time watching the charts and not enough time on my Hyperfund business. This resulted in my asking Pierre to take over the managing of my loans and administering them through his crypto hedge fund loan product – something he kindly agreed to do.
My loan strategy is to withdraw from Hyperfund daily, send the funds (in USDT ECR20) to his hedge fund and then, on receipt of the 68% loan collateral paid back to me, use it to buy additional Hyperfund packages which are then added to my bottom Hyperfund account with the aim of increasing my daily Hyperfund rewards.
Not only does this strategy help to minimise risk, it helps to accumulate more Bitcoin and importantly, repays my Bitcoin loans without me having to do so.
If you are a member of the Hypercommunity, have purchased Hyperfund packages and have a multi-position structure in place, this strategy may make sense to you.
But if not, it’s all good….what’s important is to be aware of the benefits of Bitcoin loans, to understand them and to take advantage of them where and if you can.
Not financial advice…just my opinion!!!
Up until recently, I was selling my Bitcoin when I needed to. No longer……
Aside from running South Africa’s smallest ad agency, Kavonic Hone – see www.kavonichone.co.za – Gerard has been in the cryptocurrency space for almost 6 years and is an active member of the Hypertech Group’s Hypercommunity. He is resident in Johannesburg South Africa. He is contactable on +27 83 444 9888 and on firstname.lastname@example.org or email@example.com His skype address is gerardkavonic. Anyone wanting information on the Hypercommunity’s daily webinars or weekend training sessions is welcome to whatsapp him on +27 83 444 9888 and anyone looking to join the Hypercommunity can do so on https://h5.hypercapital.vip/#/pages/register/register?code=banket1804 Anyone interested in a Bitcoin loan through Coinloan can open an account on https://app.coinloan.io/signup/?r=NL2YD3 As with all things crypto, it is of course hugely important to do a thorough due diligence before parting with one’s money and to be aware of any and all risks inherent.