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12

Loans are possible in a deflationary environment. Currently bitcoins is too volatile (which has nothing to do with deflation) to make lending viable. For the purpose of answering the question I will assume that in the future volatility is either low or easily hedges. The interest in a loan comes from 4 components: Opportunity Cost. Instead of giving you ...


7

A list of Bitcoin-related financial investment services: http://en.bitcoin.it/wiki/Trade#Financial


4

Beware, making use of the following could be dangerous, risky, or even illegal: http://btcjam.com p2p loans http://polimedia.us/mpex stock exchange and options contracts https://coinbr.com an mpex broker (makes it easier to use mpex) https://icbit.se futures, mostly https://cryptostocks.com stock exchange


4

Bitcoins are like tangible cash in a sense that you can't overdraft. If you want to spend more Bitcoins than you have, you have to get more Bitcoins first. To achieve that either B has to send A some Bitcoins, or A and B have to create a transaction together (A created one input, signs it, B creates another input, signs it, and then someone needs to do some ...


3

Script is employed to encode the rules under which a Transaction Output may be spent. E.g. the most common Script requires just proof of control over an address. Thusly, scripts cannot determine circumstances beyond a single transaction. As a consequence, it appears to be infeasible to set up an enforceable credit contract with interest, because the loan ...


3

What do you mean by "loans with interest"? If you mean guaranteeing being payed back the principal plus some interest that is not possible since that depends on the external world (i.e. it is offchain). On the other hand, if you mean just creating repayment links for the agreed amounts it is just following the instructions of BIP21.


3

If you take a loan out on a currency that is not stable, you are asking for trouble. If the deflation rate was stable, one would have to take that into consideration when calculating the interest rate, similarly as one would in inflatory economy. One could also consider the concepts of Smart Property, as well as some concepts use by Islamic banking. But ...


2

Futures and options can be used to eliminate the risks associated with price volatility. If you're borrowing and worried that the price will go way up, make an agreement with someone to trade at a reasonable price at some point in the future. Lenders can do the same on their side.


2

David is right that Bitcoin in itself does not prevent the practice of fractional reserve banking. But the difference with Bitcoin is that unlike gold, you now have a digital, easily transferable, easily storable, easily secured currency. Banks would need to fight much harder for deposits now because there is alot less reason to trust a bank with your ...


2

My co-founder and I just started a Bitbond.net where we connect borrowers and lenders and offer an online wallet. Our goal is to make banks obsolete by such a service. You can borrow Bitcoins by issuing a Bitbond. Before that, we perfom a credit rating to assess the creditworthiness of the issuer. We also do an identity check so if a borrower is late on his ...


2

In Fiat Interest and Inflation cancel each other and promote borrowing and thats a healthy thing, but bitcoin economy a borrower has to fight against deflation and interest, if interest rate gets lower to zero then lenders will have no incentive in lending At a basic level, the person providing the loan hopes to receive a small return (interest) for ...


1

First of all I don't think it needs to be so binary (bitcoin or nothing). Fiat and lending will likely co-exist along with bitcoin. Additionally, what if instead of creating a business based on debt, the business owner saved his money for a few years in the deflationary currency and thereby gains the needed funds and discipline to start a business? Debt ...


1

It's absolutely possible to loan money with Bitcoin. FairShareLoans is a subreddit where money is automatically loaned out in ~20$ increments. Collecting on those loans, on the other hand, is more difficult. https://www.reddit.com/r/FairShareLoans/comments/35vc5s/the_current_loansheet/ They appear to have a non-repayment rate of about ten percent.


1

Check out http://bitcoinswithfriends.com where people can lend Bitcoins to friends they have on Facebook.


1

There is BTCJam, and I heard of at least one more company doing the same thing. However, there is a HUGE problem with BTC lending - it is very fraud prone. I exchanged emails with their support and got this interesting factoid: We have a repayment rate of 76.11% That means about a quarter of their loans don't get repaid. BTCJam does not appear to pursue ...


1

None of the above really answers your question. To understand the answer, we have to first understand the main difference between a fiat currency like USD and Bitcoin which is fixed in amount, just like gold. In fiat currencies like USD, the amount/quantity of money is unlimited, i.e. banks can create new money out of thin air. So when banks give loans, ...


1

Loans have intrest rates that "create additional value". Given the limited amount of bitcoins, couldn't we realistically run out of them? No, you wouldn't run out of Bitcoins for the simple fact that they will always be traded. Your interest payments on your loan would come out of Bitcoin trading that you did to increase your Bitcoins, even if you only did ...


1

If bankers would, by giving out loans and the interests on them, transcend the actual number of bitcoins existing, what is the difference with the current banking system? In most countries, there is also more money in circulation through banks and loans than there actually exists. And it was just so when the gold standard still existed. That's just how ...


1

Given how quickly intrest on top of intrest grows, won't the bankers get to 21 million BTC quite quickly? Sure, but is that really meaningful? Let's say that I loan you 1 BTC, with the terms that I get 10% interest per day. Before the year is out, you owe me more bitcoins that actually exist. The face value is the amount that the loan is supposed to be ...


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