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I am just a regular Joe that is tired of paying high fees, and that understand the game th...
2 weeks ago
One of the risks of credit is that you could get into debt pretty easy and go beyond what your limits are very easy because plastic doesn't have the same pain points as cash, but 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 either, but this article is about cryptocurrencies and credit lines, so it is good debt, I could say.
Nexo and Celsius loans are secured credit lines because they only give you up to 33% of your capital value and if the market dumps you get liquidated that is in reality the risk and the profit for both services. If you borrow against your cryptos and go and buy more, essentially you are leveraging your holdings because if the market goes up from where you bought 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 own cash, and fast otherwise your loan could get a margin call and lose your initial investment.
That means you have to have an income that is enough to pay for your loan, and that can be your salary, some extra income, or even another loan, to cover your loan, paying debt with debt is never a good option. You will only pay your debt with more debt if you don't manage to get your loan cover in time so that the market doesn't liquidate you, that is why is very important to have credit cards with cash advance features if you are using your own crypto to buy more crypto.
Having good credit is an opportunity that you must learn to use after all credit is just another money tool, and it is a dangerous one to boot, it is nothing out of the ordinary, you just have to make sure that the amount you borrow can be cover from your wages, pretty much don't over-leverage yourself.
For example, right now I have a $920.00 crypto loan that is securitized against my 4.41 BCH, I think that I can cover at least $500 within the next 30 days with cash coming from my salaries if prices start to decline beyond the price I bought, I have another backup solution as well, in case of an emergency I will take a cash advance from my credit cards so that I can cover my loan. Credit cards indeed charge a lot of interest but if you don't have the cash at hand you must borrow.
I am using my credit as a backup to pay for my cyrpto loans in case I need to cover my loans that is not bad debt because I am getting more Bitcoin Cash, the idea is to pay my loan with the price difference but things not always go according to plan so you must always have a backup plan in case 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 better credit lines as well. 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 and it depends on how you use your tools that you will 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 idea is not good at all, but sure is fun.
And if you don't like the idea of using credit you can always buy more Bitcoin
Cash or any other cryptocurrencies from your own money and not get into debt, we all have different risk tolerance. Do not repeat what I am doing at home unless you know exactly what you are doing. Besides you may want to buy more of your favorite cryptocurrency with debt and never sell, if not to just close your loans because the Biden administration wants to tax the crypto market until is dead.
If you buy your cryptocurrencies using credit lines and you repay your loans but never withdraw or sell your coins for cash the Biden administration will find out can't tax anything even when it growing because everyone is just holding and holding and never selling, and instead of withdrawing people just 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 stuff if the other party is willing to accept as payment directly without any banks or exchanges.