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How to convert Bitcoin in fiat without selling: potential killer app of Discreet Log Contracts


Prepared for the incoming helicopter money of your central bank, you converted most of your fiat into Bitcoin? You made a fortune by investing into Bitcoin but don’t want to sell so you don’t pay 30% of tax or more?

But now, you have a big purchase to do. Maybe a house, a car, a business investment, or a sudden tax bill to pay and you are short of fiat? You think of selling your coins and paying your taxes, but don’t want to take the risk of sending all of it on an exchange and back to your bank account?

What if I told you, you can get the fiat, keep the coin, not answer any question about the purpose, and get some tax benefits on top of it?

** Disclaimer I am not a tax lawyer, so pay for proper professional for advice about this scheme in the jurisdiction you live in **

Making a loan with Bitcoin in collateral

A common way to avoid taxes but still having fiat when you need it is, instead of selling your asset to take a loan and put the asset in collateral. By doing so:

You keep the asset You pay very low interest rate, thanks to the central banks policy You can claim some tax benefits on the payment of your loan in some jurisdiction You can get the cash You don’t pay taxes as you did not sell anything

Doing so traditionally raise several issues:

In some jurisdiction, you need proper credit and history. If you are an expat, this is hard to get. Most loan services ask you lot’s of question about your ability to repay and the purpose of the loan. Most loan services do not take Bitcoin as collateral, nor would you trust them to get custody of it. Those services are local to specific jurisdictions Interest rate are quite expensive, might go between 10 and 20%

The closest ideal is offered by Unchained Capital. However, it does not work if you are not American and if you want a loan for other reason than developing a business. Depending on your jurisdiction and purpose of the loan, this ty...

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