> So the stability fee you pay is 4.50%.

The fees I am seeing on Uniswap/Aave are much much higher than 4.5%. Even at 4.5% that equates to six figures of additional interest payments over my 30 year mortgage.

> and you didn't have to pay a capital gains tax.

This isn't true. Any conversion between crypto assets is technically a taxable event...even if we both can agree that the rules are silly.

> Eventually, some companies are working on tokenizing homes, so once that happens, you could potentially deposit that as collateral just as easily, but that's still far out.

Okay great, but how does this promised future development help me secure a loan for the home I want to buy? Or the business I want to start? Again, I do not have 500k in bitcoin laying around nor a "tokenized home."

It was super easy to get approved for a 500k mortgage just based on my income.

The idea is that it's not a conversion, it's a loan. The collateral is held in a smart contract and when you pay off the loan you get it back. In much the same way, people take out loans on their stock portfolios, and they don't pay capital gains either.

Is there any definitive source on this? I get lots of conflicting information from my brief google search. Equities and Cryptocurrencies are not treated the same for tax purposes by the IRS. It seems like they are treated as property and do not qualify as a "fungible" asset like stock or USD.

I don't know and I haven't consulted a CPA, which is why I described it as an "idea" instead of a fact. I know technically how it works, but not how the IRS will view it.

But to my amateur mind, treating it as property doesn't seem like a problem for this view. If you get a loan from a pawn shop, you're not selling them your property, you're just putting it up for collateral while you pay back the loan.

This. It took me a long time to understand this. I was so focused on the volatility that I failed to look at the larger trend. It clicked for me only a couple of months back.

Same here, it took me a while to understand why anyone would get an over-collaterized loan until it just clicked, then I was like this is the future, it doesn't make any sense to sell the most valuable and appreciating asset ever, but you can still use the money from it.

> sell the most valuable and appreciating asset ever

What happens when it stops appreciating? Or is the premise that bitcoin will alway outpace interest rates?

In the short term it could do anything, in the long term you'd expect it to constantly appreciate.

It's a scarce/deflationary/limited supply asset which is compared against an endless money printer.

The 2008 financial crisis in a nutshell

Margin call.

Do you not pay the loan back in Bitcoin? How would you exercise the 300% gain while also paying the loan back?

So if Bitcoin grows 300%, that means your collateral is now worth 300% more.

You can either withdraw a portion of it back to your normal wallet or you can just borrow more against the same collateral. So it's like a credit line that's always appreciating in value.

If one day, you need the whole collateral for whatever reason, then you'd pay the loan to unlock it fully and withdraw it.

Antigravity for finance. The ages long problem of how to integrate debt and money into society is solved.