Bitcoin Loans: How to Get Fiat Without Selling or Giving Up Custody

If you've spent some time in the Bitcoin space, you would have come across the mantra many Bitcoiners swear by: "Never sell your bitcoin."

But, life happens. What if you need cash for life’s big moments—a new car, a home, paying taxes, a vacation or even a business venture—without parting with your precious sats? Enter bitcoin-backed loans, a way to unlock fiat liquidity while keeping your bitcoin stack intact.

This blog explores how to borrow against your bitcoin, why non-custodial platforms like Firefish are game-changers, and what you need to know before diving in.

Bitcoiners don’t sell. Here's why

Bitcoin is more than just an asset; it’s a philosophy. As outlined in Bitcoin: The Ultimate Collateral by Martin Connor, Bitcoin’s finite supply of 21 million, decentralized nature, and censorship resistance make it the ultimate store of value. Selling it for fiat—currency that loses value due to inflation—is like trading gold for paper.

Rich people don’t sell their assets; they leverage them. As the book notes, billionaires like Elon Musk use their Tesla stock as collateral for loans to avoid selling and triggering taxes. Bitcoiners can do the same, using their BTC to secure loans and live off the proceeds while their stack continues to appreciate.

Here's a look at Bitcoin's price history since 2009. As you see, holding long-term is a strategy rooted in conviction.

Custodial vs Non-Custodial Bitcoin lending

The 2022 crypto crashes—think Celsius, BlockFi, and Genesis—taught bitcoiners and crypto participants in general a hard lesson: custodial platforms can be a trap. These “trust-me-bro” services took user funds, mismanaged them, and left thousands with losses when they collapsed.

Custodial lending, in quite the same manner, means handing over your private keys, surrendering control, and risking everything if the platform fails.

Non-custodial lending, like Firefish, is different. Firefish uses multisig escrow to lock your Bitcoin securely without anyone else controlling it. Multisig wallets require multiple private keys to authorize transactions, eliminating single points of failure. If Firefish disappears, your Bitcoin remains safe in escrow, recoverable via the multisig contract. This setup aligns with Bitcoin’s ethos: sovereignty and trustlessness.

How Firefish works (Non-custodial, multisig escrow)

Firefish is a peer-to-peer marketplace connecting borrowers who want fiat with lenders seeking yield on their cash, all backed by bitcoin as collateral.

Here’s how it works, based on the process detailed in the book:

1. Sign up and KYC: Borrowers must comply with standard Know Your Customer regulations, submitting government ID and bank details to access the platform.

2. Request a loan: Specify your desired loan amount, currency, term (up to 24 months), and interest rate. Firefish shows you the required bitcoin collateral, typically at a 50% loan-to-value (LTV) ratio—meaning you lock up twice the loan amount in BTC.

3. Match with a lender: Your loan request appears in Firefish’s marketplace, where investors browse and select deals. Once matched, you accept the terms.

4. Lock collateral: Transfer your bitcoin to a multisig escrow wallet using a provided QR code or address. This ensures your BTC is secure and untouchable unless contract conditions (repayment, default, liquidation, cancellation, or recovery) are met.

5. Receive funds: The lender sends fiat to your bank account, and the loan activates once confirmed.

6. Repay or manage: Repay the loan at maturity (or early with lender approval) via bank transfer. If bitcoin’s price drops, you can top up collateral to maintain the LTV ratio and avoid liquidation.

Firefish’s non-custodial model means you never lose control of your bitcoin, and the multisig escrow ensures transparency and security.

Who should use Bitcoin-backed loans?

Bitcoin-backed loans are ideal for:

• Individuals: Bitcoiners who want to fund lifestyles—buying homes, cars, or covering expenses—without selling their BTC.

• Businesses: Companies like Braiins, which has earned 100% of its revenue in Bitcoin since 2010, use BTC as collateral to fund operations without selling. Startups, small businesses, and even public companies are beginning to leverage Bitcoin to avoid diluting equity or selling assets.

• Miners: Bitcoin miners, who earn BTC but pay fiat expenses (electricity, ASICs), can collateralize their holdings to cover costs without selling freshly minted coins.

• High-net-worth individuals (HNWs): Firefish Prime offers customized loans for larger deals .

Risks to know before you borrow

While Bitcoin-backed loans are powerful, they come with risks:

• Volatility: Bitcoin’s price can swing wildly. If it drops significantly, your LTV ratio may approach the 95% liquidation threshold, requiring you to top up collateral or risk losing your BTC.

• Liquidation: If you fail to repay or top up collateral, your bitcoin could be sold (Firefish liquidation) or sent to the lender’s wallet (self-liquidation).

• KYC requirements: Firefish’s compliance with KYC/AML regulations means you must provide personal information.

Start your first loan. Stay sovereign.

Ready to unlock fiat without selling your bitcoin? Sign up now and use referral code WELCOME30 for 30% off your first loan’s origination fee. Live off your bitcoin, not without it.