One of the credit risks is that you could get into debt pretty quickly and go beyond your limits because plastic doesn't have the same pain points as cash. Still, there is all sort of debts, there are debts that may pay you later on and bad debt which only gets you buyer satisfaction at most, and you end up with a lot of things inside your house that you don't need and can't pay for them. Still, this article is about cryptocurrencies and credit lines, and it is good debt, I could say.
Sovryn Zero Protocol loans are secured credit lines because they only give you up to 110% of your capital value, and if the market dumps, you get liquidated. That is, in reality, the risk and the profit for both services. Suppose you borrow against your cryptos and go and buy more, essentially. In that case, you are leveraging your holdings because if the market goes up from where you purchased, you keep the difference as profit and pay your loan only with the price appreciation. But if the market goes against you, you will have to cover your debt with your cash fast; otherwise, your loan could get liquidated, and you lose your initial investment.
Suppose you have enough income to pay for your loan, which can be your salary, extra income, or even another loan. Paying the debt with debt is never an excellent option to cover your loan. You will only pay your debt with more debt if you don't manage to get your loan covered in time so that the market doesn't liquidate you. That is why it is imperative to have credit cards with cash advance features if you use your crypto to buy more crypto with a collateralized loan.
Having good credit is an opportunity that you must learn to use. After all, credit is just another money tool and dangerous if you don't educate yourself about credit first. It is nothing out of the ordinary; you have to ensure that what you borrow can be covered from your wages.
For example, I have a $920.00 crypto loan securitized against my crypto. I think I can cover at least $500 within the next 30 days with cash coming from my salaries if prices decline beyond what I bought. I have another backup solution as well. I will take a cash advance from my credit card to cover my loan in an emergency. Credit cards indeed charge a lot of interest, but you must borrow if you don't have the cash and are near a loan liquidation.
I am using my credit as a backup to pay for my crypto loans if I need to cover my loans that are not lousy debt because I am getting more crypto with my crypto. The idea is to pay my loan with the price difference, but things do not always go according to plan, so you must always have a backup plan if you need cash and fast.
I am also looking into the possibility of using cash advances to get more crypto next, but to do that, I must have a better credit file and credit lines. That will be built with time and a good history of payments on time.
Credit lines and credit cards are not bad things, just tools; it depends on how you use them to get results. As always, my article is not financial advice nor a get-rich-quick scheme is just my ideas. After all, I am not a financial advisor, and probably my concept is not good at all, but it sure is fun.
And if you don't like using credit, you can always buy more cryptos with cash. We all have different risk tolerance. Do not repeat what I am doing at home unless you know what you are doing. The Biden administration wants to tax the crypto market until it dies. One way to save on taxes is by borrowing against it instead of selling, at least that is true in the US.
If you buy your cryptocurrencies using credit lines. You repay your loans but never withdraw or sell your coins for cash. The Biden administration will find out they can't tax anything even when it grows because everyone is just holding and holding and never selling. Instead of withdrawing, people borrow against their holdings to buy assets that will pay off instead of consumer goods. If you sell your cryptos to buy useless stuff, you deserve to be taxed 99% because you should only sell your cryptos for things if the other party is willing to accept as payment directly without any banks or exchanges.