Bitcoin will be worse than communism.
You are always quite amusing, my friend.
It's the opposite.
Here we go. Finally.
Anyone here know more about how to earn yield with your bitcoin using lightning network, how safe it is and what level of yield is realistic to earn for a newbie and how easy is it to execute? Is it worth the risk?
Where are we going?
Up to where we should be already.
My current cold storage wallets for crypto are quite old so I’m looking to upgrade to something new. Any recommendations for what are the best cold storage/hardware wallets and why?
Coldcard is supposedly very solid, open source, and among the most trustworthy as a result.
Coldcard mk4 or Q…dual secure elements from multiple vendors. Feature rich, but can be used very simply as well.
It is difficult for a newbie. It’s not worth the risk in my opinion unless you have a very advanced understanding of LND or CLN protocols. If you dedicate 20 hours a week to channel balancing, as well as running a node on clearnet (not Tor), you could maybe make a profit, but there may be only a few nodes in the world, like lightning service providers, that can make 10%, and only a few more that can make 1%.
I’ve had some scary moments when I did some things I shouldn’t have, but luckily didn’t lose anything except some on-chain fees. The best way to run a lightning node is on Tor as a personal node with private channels, and just use it for yourself. I’ve run a lightning node for 4 years and that’s my advice.
Another way to earn yield is by selling inbound liquidity, but you need probably minimum 1 BTC and it doesn’t pay much, maybe 0.5%
Really there is no need to seek yield on bitcoin, since it doesn’t bleed value. Holding on to it into the future is the goal. Work to earn more money, or sell your services for bitcoin instead, unless you are a technical expert in LND or CLN.
Maybe AI will make channel balancing and routing easier, but when that happens, yields will not be 10%…it’s only that good for a few people because there isn’t as easy way to be a routing node yet.
You don’t think the higher end ledger wallets are good?
My understanding is that Ledger was a popular wallet until they introduced an online seed-recovery system that many in the BTC community do not trust. And their code isn't fully-open source.
I have a Trezor which I like just fine, but Coldcard tops most of the "best wallet" lists I've seen in the recent past.
And what about when you get to the point where you have a decent Bitcoin bag and want to retire off your Bitcoin?
Borrowing against your Bitcoin is very pricey currently interest rates are 10
- 15% depending on the lender.
And lending your Bitcoin carries credit risk and you only get a 2 - 3% yield at most for taking on that risk.
Selling your Bitcoin can trigger potentially large capital gains taxes.
My guess is some of these issues will be resolved in the next 3 - 5 years (lower interest rates on Bitcoin loans, higher yield for lending your Bitcoin, capital gains tax free to sell or at least spend a certain amount of Bitcoin, etc).
The spreads are insane in Bitcoin for centralised borrowing and lending on Bitcoin. 2 - 3% for lending your Bitcoin and you pay 10 - 15% to borrow against your Bitcoin. That is a spread of between 7 - 13%. In trad-fi the spread between borrowing and lending for example the spread between a 5 year mortgage and a 5 year term deposit is only typically 2 - 4%. This is an issue which Bitcoin clearly needs to address.
Yes, this is one of the main issues BTC has, first certainly with smaller transactions (thus the congressional attempts to at least exempt $200 value and less transactions).
The entire idea of borrowing and lending Bitcoin is nonsensical. First of all, what are you borrowing Bitcoin for? If you borrow 5 BTC from me, what are you going to do with them? Use them as collateral for a fiat loan that you can actually utilize for a productive economic purpose? Why not just take the loan in fiat to begin with?
Secondly, due to the deflationary/finite nature of Bitcoin, it doesn't work at scale for lending purposes. This is because the interest must be repaid from the same finite pool of Bitcoin that already exists, which means those Bitcoins MUST be taken from someone else who currently holds them. So over time (and this would take much less time than you think), the lenders of Bitcoin would necessarily acquire ALL of the Bitcoin that exists (or else the loans would simply stop being repaid - which means they would stop being made, which goes back to my point about Bitcoin being unsuitable for lending at scale).
This is actually the great advantage of fiat: the lending of money (debt) is itself the creation of money, and the repayment of money (debt) is the destruction of that debt. Thus the money supply can expand and contract to meet the demands of the real economy. The interest to service the debt is not created at the time of the loan, but can be extracted from the money created by other loans throughout the system. Because money is constantly being created through the issuance of new loans, and then destroyed through the gradual repayment of those loans, a relative balance exists between the supply of money in the economy and the economic activity it enables.
The entire purpose of money is to facilitate exchange and stimulate economic activity. People like to harp on the evils of fiat ("bruh it's literally money created out of thin air!"), but this ignores the glaring fact that being able to create (and destroy) money through the issuance and repayment of debt (ideally for productive investment) actually carries with it many advantages in a modern, advanced economy. This is what I mean about fiat having helped create the modern world - it is inarguably fantastic for juicing the economy and encouraging productive work and investment (which are the true sources of all wealth).
Secondly, due to the deflationary/finite nature of Bitcoin, it doesn't work at scale for lending purposes. This is because the interest must be repaid from the same finite pool of Bitcoin that already exists, which means those Bitcoins MUST be taken from someone else who currently holds them. So over time (and this would take much less time than you think), the lenders of Bitcoin would necessarily acquire ALL of the Bitcoin that exists (or else the loans would simply stop being repaid - which means they would stop being made, which goes back to my point about Bitcoin being unsuitable for lending at scale).
This is actually the great advantage of fiat: the lending of money (debt) is itself the creation of money, and the repayment of money (debt) is the destruction of that debt. Thus the money supply can expand and contract to meet the demands of the real economy. The interest to service the debt is not created at the time of the loan, but can be extracted from the money created by other loans throughout the system. Because money is constantly being created through the issuance of new loans, and then destroyed through the gradual repayment of those loans, a relative balance exists between the supply of money in the economy and the economic activity it enables.
The entire purpose of money is to facilitate exchange and stimulate economic activity. People like to harp on the evils of fiat ("bruh it's literally money created out of thin air!"), but this ignores the glaring fact that being able to create (and destroy) money through the issuance and repayment of debt (ideally for productive investment) actually carries with it many advantages in a modern, advanced economy. This is what I mean about fiat having helped create the modern world - it is inarguably fantastic for juicing the economy and encouraging productive work and investment (which are the true sources of all wealth).
You are confused as to what’s currently occurring with Bitcoin. When you borrow against Bitcoin in most cases it’s just a form of collateral like when you get a margin loan against a stock. Nobody is actually receiving the Bitcoin (in most cases) it’s just so if you default they can sell your Bitcoin and get their money back. It’s kept safely in a multi sig wallet in the case of dealing with reputable companies. As for the companies that lend out or rehypothecate your Bitcoin stay away from them.
As for lending out your Bitcoin it’s used by market makers to help them provide liquidity to markets hence why the yield on it is only 2 - 2.5% per annum for lending your Bitcoin.
You are missing the point. Bitcoin bridges to fiat. When people borrow against bitcoin the loan amount is denominated in fiat not in Bitcoin. You are borrowing 50,000 dollars against your bitcoin not 50 million Satoshis. So as fiat keeps devaluing and Bitcoin keeps appreciating the loans are easy to pay back.
Thank you for confirming that Bitcoin can never hope to replace fiat.
The opposite is true. Look at companies in the S&P 500. In aggregate they spend more money on stock buybacks than they reinvest into expanding their businesses. And the amount of people who just borrow to buy existing stocks and existing rental properties due to the fiat carry trade (your debt will shrink in real terms due to inflation). The fiat system encourages speculating on financial assets rather than productive investment.