Industry News Founder of Ethereum warns Against taking Personal Loans to purchase Crypto

Founder of Ethereum warns Against taking Personal Loans to purchase Crypto

December 15, 2020

In a cryptocurrency bull run, no matter what might be the general standing of the rest of the economy, there is a strong and building desire by many individuals to become a part of that process. A tiny minority is able to see business opportunities and development pathways that would be beneficial to a particular surging cryptocurrency. These are the crypto ecosystem members who are able to build upon the current network state, whatever it might be. They are also people who come to the forefront in the years after the bull run, no matter if it takes place in 2013, 2017, or this year. However, many more individuals want to be a part of the pure and simple financial success that comes from having invested in bitcoin or some other token before the price blew up.

That means having the tokens for sale at the moment when the price reaches its record level and thus making a fortune in fiat profits. These individuals are rarely interested in the network they are holding their tokens in or even the entire domain of cryptocurrencies. However, the founder of the ethereum network recently spoke out about this trend and offered a direct warning. While the same warning has been solid for over 10 years now, its relevance is especially prominent now, in the time when the price of bitcoin is gearing up to set new records and a sense of FOMO is spreading like wildfire.

Buterin Advice

There is no doubt that Vitalik Buterin is a world-famous name in 2020. With over a million Twitter followers and several hundred million USD in different cryptocurrency tokens, he is one of the most important voices in the crypto community. When the fact that he is the founder of the ethereum network is added to that impressive revenue, it is clear that when Buterin speaks, the crypto community listens and listens carefully.

Recently, he has spoken out on a very important topic that is currently being floated around the crypto community. That is the issue of investing in BTC or other digital currency with the singular aim of making money. Buterin showcased his views on the issue, but more precisely, on the problem of individuals, who are not affluent in any way, taking out personal loans to finance their crypto investments. Unsurprisingly, Buterin’s advice was not very supportive of this possibility.

Personal Financial Health

In a tweet, Buterin took a really direct shot at anyone who is taking out personal loans so that they can purchase one or more cryptocurrencies. He warned everyone not to consider this option and do not risk the money they do not own. As the current bull run is evolving, some believe that the question of BTC hitting new record levels is not a question of if, but when. Furthermore, they see it as something that should take place in the very near future, possibly only several months from now.

For them, a loan that includes interest will be something they can easily pay off once their cryptocurrency of choice hits an all-time record price. Others, who might have a more conservative view on the price increase, still believe that the same over the years, as they think that cryptocurrencies will gradually increase their value one way or another. Buterin was adamant about both options – in his view, people simply should not consider this as a possibility.

Personal Experience

Too often, a lot of advice in the domain of crypto investment comes with little or no personal experience. In the case of the latest advice from the founder of ethereum, the exact opposite can be witnessed. Buterin explained that seven years ago, he only had only a few thousand USD in his name. Since the establishment of ethereum and the insane success that the ETH token achieved – some at one point even believed that it would take over BTC in the now-famous flippening – Buterin is no longer struggling to get by.

Furthermore, one would be hard-pressed to find a person who is a bigger believer in crypto than the man who created ethereum. However, Buterin still said that he sold half of his BTC holding at one point so that he does not go back to a broke state if bitcoin, for whatever reason, reached zero USD value. He did not specify the amount of bitcoin he sold and at what price, but it is clear that the same number would be far higher if he waited out for 2017 or 2020. Also, the potential for the price could be even bigger in the time to come. However, Buterin had no doubts and still believes that he made the right call by cashing in on the crypto and turning it into fiat. He did not sell off all of his assets, of course, but he did sell enough to attain a fortune in fiat currencies nonetheless.

Trust and Caution

Everyone can agree that Buterin has a lot of trust in the wider cryptocurrency domain. Like esports, social media, video streaming services, and so forth, this Russian-Canadian developer is more than secure in the knowledge that cryptocurrencies are not a passing fad. But, the same is completely unrelated to personal fortunes and the ability of any individual to either secure money for themselves and their loved ones, or to squander them away. By taking out a loan, a person is already placing themselves into a disadvantaged position – basically, like with any investment, they are gambling, but now, they are gambling with the money they do not own and with a debt that will only grow over time.

The pressure of that setup can negate even valid investment opportunities. Instead, the person will constantly have a sense of loss in the long run, which technically they will be doing, besides a massive token selloff during the peak of a strong bull run. That will likely spur on bad decisions, like in any gambling process, that will further bury the same person in financial difficulties. The only way to avoid that setup is to invest just the money anyone is more than willing and prepared to lose.

Source: Coindesk