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Comment by Pfhreak | Hacker News Reader

There's "really no point" in cashing out returns of 1000%?

If I had put 100k in, my coins would be worth 1M. Even if my taxes were 30%, I'd be walking away with 730k. That's an astronomical gain.

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Sure, but you can borrow 730k and still hold on to the asset, why not do it?

Because if your coins go down to $100k, you're going to get margin called on your borrow. Given the volatility of crypto, you wouldnt want to borrow more than 10% of your funds.

Yes, you have to be carefully not to get margin-called, from what I've seen most people that have over 10M+$, tend to borrow up to 25-30% of their collateral's value (for example[1], this person borrowed 82M$ using 228M$ worth of collateral).

1: https://defiexplore.com/cdp/9167

There is no way to be "careful not to get margin-called", since crypto markets are heavily manipulated in order to force margin calls. Trading on margin on crypto markets is a fool's game.

Notice that borrowing != trading on margin, you can certainly buy back into the asset, but you can also do lots of other things with the money. You can be careful with your borrowing, like the example I gave, in that case, Bitcoin would need to drop by 50% before that person get's liquidated and even if that happens, they still have the 82M$ in cash.

>> You can be careful with your borrowing, like the example I gave, in that case, Bitcoin would need to drop by 50% before that person get's liquidated and even if that happens, they still have the 82M$ in cash.

Not quite...now you still owe capital gains tax on the forced liquidation price (minus cost basis)! So perhaps a large part of your $82M draw goes into taxes.

You're making me think that maybe I shouldn't have sold puts on DOGE, levered myself up 20x, and wait for it to go to the moon. There's no way I can lose!

At least in a bull market, it seems safe to assume that an asset like BTC or ETH will not suddenly decrease by over 50%.

It is definitely not safe to assume anything in the incredibly corrupt and manipulated cryptocurrency markets.

Because you might lose that 730K, since you’re still exposed to a very volatile market.

The 730k is already in bank account, you'd only lose the collateral in case of liquidation, but that doesn't matter because your alternative was to sell it altogether.

You can’t use the 730k then but you are now accruing interest on it, so what’s the point in having it?

So I have 730k in bank account, but instead of using it, I borrow 730k and spend that money (how do you even decide "which" money you are spending anyways, it's all money) and pay interest on the loan? Why would I do that?

Not sure I understand what you mean, you only have 1 730k which you've borrowed. Interest rates are a drop in the bucket (~4%) compared to ~25-40% tax rates and that's ignoring asset appreciation (BTC averages ~300% YoY). If you use something like makerdao, you won't even have to pay a single cent of the debt back as long as you borrow conservatively and don't need your collateral back.

This assumes BTC goes up every year tho

If you think that asset is going to go down, you'd rather just sell it than borrow against it, no?

Because there will be an annual interest rate to borrow and there is always margin call risk given the vol of crypto

A fine is a tax for doing bad.

A tax is a fine for doing well.

A tax is a subscription fee for the privileges of citizenship. There are many millions of people who would happily become "subscribers" in return for becoming US citizens.

Failing/refusing to pay a subscription fee does not, generally, result in you getting thrown in a cage with rapists and murderers.

> Failing/refusing to pay a subscription fee does not, generally, result in you getting thrown in a cage with rapists and murderers.

If you fail to pay the subscription fee for your gym, but break in to use the equipment anyway, it might.

To take the analogy a step further, a gym subscription is optional. Paying taxes is not.

> To take the analogy a step further, a gym subscription is optional. Paying taxes is not.

You're pushing the analogy too far. You're not an autarky, there's plenty of stuff you have to pay for that isn't optional (e.g. food, shelter, etc.).

Sometimes local mobs force you to pay them protection money. If you don't pay, they will take your property or even commit violence against you, exactly like the state. If you do pay, they will provide valuable services to you such as making sure you don't get robbed. Do you feel it would be reasonable to call this a "subscription fee"?

Hmm,i wonder why i as a non immigrant don't qualify for this citizenship even after paying all taxes, including FICA

Do you use roads, sidewalks and other public infrastructure? If so you should pay into the system.

Do you earn your money from that system?

Salary taxation usually means you are earning your dollars by being part of a functioning society.

There are billions of people who would happily become "subscribers" to a US job market, even if the offer required that 50% of their income was ritually burned for no benefit to the “subscriber”.

Now capital gains are perhaps a different argument…

A tax is (a tax for doing bad) for doing well?

You may have a tautology to clean up there, bud.

If you try to apply the Peano Axioms on pithy aphorisms, you're gonna have a bad time.

At the expense of the pot calling the kettle black, this comment epitomizes behavior that I don't like to see on HN: the condescending and incorrect use of technical jargon in an internet argument that adds no new insight. In what way whatsoever are the natural numbers relevant to the post, let alone parent comment?

Please rethink signal-boosting off-topic comments in the future.

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