Taking loans to buy cryptocurrency is not a good idea

  • Investors are found taking credits to invest in cryptos
  • Vitalik Buterin explained why taking credits to invest is a bad option
  • In 2017 also personal loans were misused to invest in Bitcoins that resulted in investors to fall into debts

According to Vitalik Buterin, the co-founder of Ethereum, getting personal loans to purchase digital assets is a bad idea. Buterin mentioned that paying back the loan with interest amount before gaining sufficient return is tough. Indeed, several investors in the digital asset market are taking dangerous risks to get in the space.

What risks are the crypto investors taking and why?

The co-founder of Ethereum, who dropped out of university to focus on crypto full-time, has recently shared, via a tweet, an observation from the space. Since September this year, Bitcoin’s price (BTC) has been observed gaining near double its value. With Bitcoin’s rally, the investors in the space have gone insane and are seeing new reasons to cheer for the most famous crypto token. Indeed, few of the investors in the space are taking loans to get into cryptos. However, such investors are not aware that they will end up in deeper financial trouble.

Why is it not worth taking loans to buy digital assets?

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Buterin explained that if any investor gets a loan to purchase cryptocurrencies and earn, they will end up having deeper financial troubles. Investors taking loans to invest in cryptos can go into debts, as the digital currencies only appreciate in value over the years. However, the investors will have to pay back their loans plus the interest before gaining sufficient returns. In the mid of this year, a flight attendant based in the United Arab Emirates went to jail for massive debts, as he was unable to pay back the loan of $1,00,000 with the Emirates Islamic Bank. However, thinking of investing in someone else’s fund is a bad option.

In 2017 personal loans were misused to invest in Bitcoins

Back in 2017, the personal loans were misused when the price of Bitcoin reached all-time high levels. As investors took out loans to invest in Bitcoins, the price jumped up. Indeed, afterward, investors started to transfer a portion of their funds in stocks. Also, several investors went into credit debts or out of mortgages. However, in the recent rally, it was observed that more of the poured funds were from the institutional investors. This will also help the virtual assets mature. The rise of cryptos would not help retail investors, as the next bursts or the bearish move will not be enough to cover the debts.

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Ahtesham Anishttp://www.thecoinrepublic.com
Ahtesham Anis is a Computer Science undergrad student currently based out of India. Coming from the business background and his keen interest in Cryptocurrency and Blockchain technology is what Ahtesham brings to the table. He is always an eager learner when it comes to exploring the new technologies and topics in the crypto world.

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