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BTC199: Bitcoin's Collateral in Real Estate w/ Leon Wankum (Bitcoin Podcast)
We Study Billionaires - The Investor’s Podcast Network
Guard Your Assets: Use Bitcoin as a Hedge Against Loan Defaults
Bitcoin can serve as a hedge against default risks for both lenders and borrowers. Lenders benefit by including Bitcoin in loan agreements, as it enhances their security against borrower defaults; properly secured Bitcoin tends to appreciate in value, even if the business fails. Borrowers gain protection by ensuring they control the keys to the Bitcoin collateral. Utilizing a custodial model where keys are shared among the borrower, lender, and a trusted third party mitigates risks associated with defaults from either party. Furthermore, borrowers should consider using loan funds to purchase Bitcoin, since it can protect them against potential defaults by the lender and the downturn of their business. A practical example involves a real estate investor who, upon purchasing a distressed furniture business, prudently used part of his loan to buy Bitcoin, thereby safeguarding himself against adverse market conditions and rising interest rates.
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