Over the past year, the Bitcoin Renaissance has brought significant attention to BTCfi, or "Bitcoin DeFi" applications. Despite the hype, very few of these applications have delivered on their promises or managed to retain a meaningful number of "actual" users.
The Leading Lending Platform: Liquidium
To put things into perspective, the leading lending platform for Bitcoin assets, Liquidium, allows users to borrow against their Runes, Ordinals, and BRC-20 assets. Borrowers pay an interest rate to lenders in exchange for their Bitcoin, similar to any other loan. The security of the loans is ensured by overcollateralizing them with Bitcoin assets.
The Current Landscape of Bitcoin DeFi
How big is Bitcoin DeFi right now? Liquidium has executed over 75,000 loans in about 12 months, totaling more than $360 million in loan volume. Lenders have received over $6.3 million in native BTC interest. These numbers indicate the growth and potential of Bitcoin DeFi.
The Evolution of Runes
After a rocky start, Runes have emerged as the dominant asset backing Bitcoin native loans on Liquidium. Runes offer a more efficient protocol, lighter load on the Bitcoin blockchain, and an improved user experience compared to Ordinals and BRC-20s. This enhanced user experience attracts new users and simplifies the loan process.
The Impact on Bitcoin
Regardless of personal opinions, the trust real people place in the Bitcoin blockchain for decentralized loans denominated in Bitcoin is a significant development. This trend showcases Bitcoin's security guarantees and attracts new economic activities on-chain, which is bullish for Bitcoin's future.
All transactions on Liquidium are natively secured on the Bitcoin blockchain, emphasizing the platform's commitment to the core principles of Bitcoin. Supporting and encouraging projects that align with these principles is crucial for the growth of Bitcoin DeFi.
Opinions expressed in this article are those of the author and may not represent the views of BTC Inc or Bitcoin Magazine.
Frequently Asked Questions
Is it a good retirement strategy to buy gold?
Although gold investment may not seem appealing at first glance due to the high average global gold consumption, it's worth considering.
The best form of investing is physical bullion, which is the most widely used. But there are many other options for investing in gold. It's best to thoroughly research all options before you make a decision.
If you don't want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. If you need cash flow from an investment, purchasing gold stocks is a good choice.
You can also put your money in exchange traded funds (ETFs). These funds allow you to be exposed to the price and value of gold by holding gold related securities. These ETFs often include stocks of gold miners, precious metals refiners, and commodity trading companies.
What are the benefits of a Gold IRA?
You can save money on retirement by putting your money into an Individual Retirement Account. It's not subject to tax until you withdraw it. You can decide how much money you withdraw each year. There are many types of IRAs. Some are better suited for college students. Others are intended for investors seeking higher returns. For example, Roth IRAs allow individuals to contribute after age 59 1/2 and pay taxes on any earnings at retirement. Once they start withdrawing money, however, the earnings aren’t subject to tax again. So if you're planning to retire early, this type of account may make sense.
Because you can invest money in many asset classes, a gold IRA works similarly to other IRAs. Unlike a regular IRA which requires taxes to be paid on gains as you wait to withdraw them, a IRA with gold allows you to invest in multiple asset classes. This makes gold IRA accounts excellent options for people who prefer to keep their money invested instead of spending it.
You can also enjoy automatic withdrawals, which is another benefit of owning your gold through an IRA. This means that you don't need to worry about making monthly deposits. To make sure you don't miss any payments, you can also set up direct deductions.
Finally, the gold investment is among the most reliable. Its value is stable because it's not tied with any one country. Even in times of economic turmoil, gold prices tend not to fluctuate. Therefore, gold is often considered a good investment to protect your savings against inflation.
How is gold taxed within a Roth IRA
An investment account's tax is calculated based on the current value of the account, and not on what you paid originally. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
The money can be withdrawn tax-free if it's deposited in a traditional IRA (or 401(k)). Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
Each state has its own rules regarding these accounts. In Maryland, for example, withdrawals must be made within 60 days of reaching the age of 59 1/2 in order to qualify. You can delay until April 1st in Massachusetts. New York allows you to wait until age 70 1/2. To avoid any penalties, plan your retirement savings and take your distributions as early as possible.
What's the advantage of a Gold IRA?
Many benefits come with a gold IRA. You can diversify your portfolio with this investment vehicle. You can control how much money is deposited into each account as well as when it's withdrawn.
You can also rollover funds from other retirement accounts to a gold IRA. This will allow you to transition easily if it is your decision to retire early.
The best thing about investing in gold IRAs is that you don’t need any special skills. They are readily available at most banks and brokerages. You do not need to worry about fees and penalties when you withdraw money.
However, there are still some drawbacks. The volatility of gold has been a hallmark of its history. Understanding why you want to invest in gold is essential. Are you looking for safety or growth? Do you want to use it as an insurance strategy or for long-term growth? Only after you have this information will you make an informed decision.
If you plan to keep your gold IRA indefinitely, you'll probably want to consider buying more than one ounce of gold. A single ounce isn't enough to cover all of your needs. Depending on your plans for using your gold, you may need multiple ounces.
A small amount is sufficient if you plan to sell your gold. You can even get by with less than one ounce. But, those funds will not allow you to buy anything.
How much should you have of gold in your portfolio
The amount of capital required will affect the amount you make. A small investment of $5k-10k would be a great option if you are looking to start small. As you grow, you can move into an office and rent out desks. You don't need to worry about paying rent every month. Only one month's rent is required.
You also need to consider what type of business you will run. In my case, we charge clients between $1000-2000/month, depending on what they order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
As freelance work requires you to be paid freelancers, your monthly salary won't be as high as mine. This means that you may only be paid once every six months.
Decide what kind of income do you want before you calculate how much gold is needed.
I recommend starting with $1k-$2k of gold and growing from there.
Statistics
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
