Five Things Bitcoin Holders Are Buying With Borrowed BPD Instead of Selling Their StackShort version, with examples, for people who have already read the structural argument and want to see the practical one.
The structural case for Bitcoin-backed borrowing has been written about a lot. What hasn't been written about as much is what people actually do with the dollars on the other side of the trade. Here's a short list: five recurring use cases from Money Protocol vault borrowers, each with the situation, the mechanism, and the reason it beats the alternative.
The down payment without the capital gain. A holder needs $80K for a home down payment. Selling Bitcoin triggers a tax event that materially raises the effective cost of the house. Vault path: deposit BTC, mint BPD, swap to USD, wire to title. No taxable event. Position intact. Mortgage payments pay down the BPD over time the same way they would have paid down a HELOC, but without ongoing interest accruing in the background.
2. The IRS payment without the recursive trap. A holder owes a six-figure estimated tax payment. Their liquid assets are mostly Bitcoin. Selling BTC to pay the IRS generates more taxable gain, which raises the bill, which forces more selling. Vault path: borrow against the position, pay the IRS with the BPD-converted USD, repay the BPD over the next year. The IRS gets paid; the holder's tax timing strategy gets to be decided by the holder, not by the calendar.
3. The bridge for the bootstrapped founder. A founder with a personal Bitcoin position hits a working-capital quarter. The bad options: punitive convertible, credit card cash advance, sell Bitcoin into personal tax. Vault path: borrow against the position, lend personally to the company on appropriate terms, repay when the next enterprise contract closes. No covenants. No banker. No call provisions. The constraint is mechanical, not relational.
4. The life-event liquidity. Tuition, medical, wedding, family emergency. The expense is real, the timing is forced, the holder doesn't want to permanently exit the position. Vault loan, dollars deployed, repaid on a timeline the holder chooses. Compare to a brokerage margin loan: no broker-discretion call risk, collateral stays in self-custody. Compare to a HELOC: no months of paperwork, no monthly rate. Compare to selling: no exit, no tax, no buying back higher.
5. The corporate treasury working-capital position. The corporate analog of the founder case. An operating business with BTC on the balance sheet hits a quarter where AR is back-weighted. Selling realizes a corporate gain. Drawing the revolver uses bank capacity the CFO is preserving. Vault loan: a stablecoin liability secured by a Bitcoin asset, cost basis of the underlying preserved. This is the use case with the largest dollar-value benefit per transaction.
The connecting thread. Five different personas. One mechanism. The reason the same mechanism serves all five is that the borrowing relationship is between the holder and the smart contract, not between the holder and a lender deciding whether to redeploy the holder's collateral into a book of credit positions. That structural feature is what made the 2022 CeFi cycle inevitable and is also what makes a self-custodial Bitcoin-backed loan safe to use for real money.
If you're working through any version of the situations above, the borrowing flow is the place to start. Bitcoin Liquidity — Borrow BTC at 0% Interest: open a vault, post the Bitcoin as collateral, mint BPD against it, use the dollars, repay on your own schedule, recover the BTC. The same mechanism in every case. What varies is what the dollars are for.
