ETH-collateralized loans are permissionlessly accessible on the Ethereum blockchain. Right now it's a 0% APR.<p><a href="https://oasis.app/borrow" rel="nofollow">https://oasis.app/borrow</a><p>You can also get a Bitcoin-collateralized loan using the same service. A Bitcoin loan on the Ethereum blockchain. But, it's less secure because the WBTC "Wrapped Bitcoin" token on Ethereum relies on a network of custodians who redeem these tokens for actual BTC.
Aside from the brand name of Coinbase, this seems worse than similar offering from Nexo (nexo.io):<p>- Coinbase APR is 8%, Nexo is 5.9%<p>- Coinbase max loan is $20k, Nexo is $2 million<p>I can see the appeal of borrowing against your bitcoin or other cryptocurrency, but I'm not sure if there's much value in borrowing $20k. If you're in a position to hold $60k bitcoin on Coinbase, do you really have a need for a 1 year bridge loan of $20k? At a rate only slightly better than a credit card?
I wonder how they're hedging the risk of Tether/Bitfinex losing their case(s) against the NYAG and others and the likely resultant drop in value of BTC.
This is a very interesting development, especially given Coinbase's reach and visibility.<p>The unfortunate effect might be that people who have been so far stubbornly HODLing their BTC themselves (self-custody) will be tempted to surrender their coins to the exchange in exchange of immediate liquidity thereby increasing the concentration of <i>actual</i> custody of BTC by the exchanges ... the very thing Bitcoin was designed to avoid.<p>The temptation here is (at least on paper): you get to "keep" your Bitcoin while enjoying the benefit of them at the same time (betting. of course, that BTC will keep going up over time).<p>Here's to hoping hodlers will resist the temptation.
Sounds like a terrible idea given how much bitcoin's value can fluctuate. And they may call the loan. This is if you are really bullish on bitcoin.
Cryptocurrency was invented to remove middlemen and counterparty risk. Centralized finance (lending/borrowing) is the opposite of what Bitcoin was invented for. Decentralized finance extends Bitcoins vision beyond the small subset of finance that is currency. One such open source project is uniswap. Disclaimer, I founded a cryptocurrency.
Lending money with interest has been a known evil for thousands of years now, Judaism, Christianity, and Islam all prohibit it. Yet, we do not learn from the past.
Coinbase is supported by Goldman Sachs and JP Morgan[1][2] no wonder they told them to start giving loans and turned them into a bank. Satoshi wouldn't like this; you can make smart contracts directly on the blockchain and give loans if you want.<p>[1]<a href="https://web.archive.org/web/20130109041534/https://blog.coinbase.com/post/39672092708/fred-ehrsam-joins-coinbase" rel="nofollow">https://web.archive.org/web/20130109041534/https://blog.coin...</a><p>[2]<a href="https://www.wsj.com/articles/jpmorgan-extends-banking-services-to-bitcoin-exchanges-11589281201?redirect=amp" rel="nofollow">https://www.wsj.com/articles/jpmorgan-extends-banking-servic...</a>