Are banks needed for crypto? - page 6.

Ucy

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Quote from: shaqer on October 03, 2021, 08:06:35 AM

Just started to learn about DeFi, and a question arose.

Fiats have a loan mechanism. Manufacturers use it to improve their production.

Is there something similar in crypto? How does it work then? And are such services in demand? Do manufacturers take loans in crypto?

Isn't that killing DeFi idea? Is there a future for loan mechanism in crypto?

Thanks everyone in advance for the answers.

We could have a mechanism that is more suitable for True Cryptos due to their decentralized nature, and we could have a Crypto-friendly ways that ensure that loans are use for good things that will be profitable/useful for society and people.
In my opinion, using loans for autonomous DeFi to fund companies that are dependent on the system may not be a good idea idea. That will be a serious mistake especially if the right things are not put in place first.
I think a True DeFi should be based on economy activities that are independent of the system and are according to Bitcoin/Blockchain ideals if it wants to remain truely decentralized and sustainable

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Quote from: paxmao on October 04, 2021, 04:48:10 AM

I opened a thread to discuss the problem not that long ago. What I got from it is that you would likely need some short of intermediary to make it work, call it a bank or a rating agency and certainly a legal system that can enforce contracts outside the blockchain. Crypto in that sense is not that powerful, but the good nes is that you can build a system on top that works as good or perhaps better than current banking systems.

I disagree, that could be done inside blockchain as well and it could be done using third party apps instead of banks. You could do loans, stock markets and many other things in crypto, and you would only need a technological help and not a law related or bank related help. Think of paypal but for crypto, people could all put their money in an app, and they can move money around between accounts without paying transaction fee, that app would be just helping people move money around.

This is how you get rid of banks. However, Banks are so powerful that no matter how strong bitcoin gets or no matter how much it is adopted in our regular world, banks will always stay powerful, bitcoin can't take that power away from them. We are talking about trillions of dollars worth power just in USA and combined makes up for tens of trillions of dollars around the world, bitcoin itself is barely one trillion dollars on a good day.

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Quote from: shaqer on October 03, 2021, 08:06:35 AM

Just started to learn about DeFi, and a question arose.

Fiats have a loan mechanism. Manufacturers use it to improve their production.

Is there something similar in crypto? How does it work then? And are such services in demand? Do manufacturers take loans in crypto?

Isn't that killing DeFi idea? Is there a future for loan mechanism in crypto?

Thanks everyone in advance for the answers.

If you are pertaining about loans then there are services out there who do offer such thing but you know that volatility is something that cant really be stopped which means neither you do pay more or less
on the said interest for the loan that you had attained.

Although this isnt talking about institutions or something but rather people who do ran off their own personal money.Banks are irrelevant on this market and thats why crypto
did exist on the first place.

We dont need banks which are heavily centralized it does work for other purpose which we had been using through ages.

agg2702

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Quote from: cheezcarls on October 04, 2021, 08:27:24 AM

In my opinion, I could say that we don’t need banks if a lot of vendor or merchants are accepting cryptocurrencies as the main medium of exchange than fiat. Imagine if a country implementing USDT as their main currency than the traditional fiat for buying goods and services, paying bills, education, transportation, etc., banks would potentially cease to exist. Again this is just my own opinion regarding the scenario.

this is what makes them incompatible with each other, and when bitcoin becomes legal and becomes one of the legal payments in one country, the bank automatically has a competitor who is arguably better than them.
and consciously or not with bitcoin which is one of the legal means of payment, people have many options, of course most of them will choose bitcoin with banks even though they cannot eliminate the existence of banks and fiat but indirectly and slowly they are eliminated by that matter

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Banks are essential part of a the cryptocurrency network. In one way or the other cryptocurrencies have connection with the fiat. We can go into complete decentralisation or into some form of anonymity. The cryptocurrency network is at its very beginning time period of market widening. So, we can see more new ways and innovative platforms to reach the common people. This will happen to some extent, and beyond that only banks can provide the service to the common people.

shaqer

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Quote from: imstillthebest on October 04, 2021, 07:01:59 AM

you mean banks ? because banks are the one that issued the loans but not all loan money for that same purpose .

Yes, but I mean this particular banking option as a way to improve production without considering everything else.

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Quote from: shaqer on October 03, 2021, 08:06:35 AM

Just started to learn about DeFi, and a question arose.

Fiats have a loan mechanism. Manufacturers use it to improve their production.

Is there something similar in crypto? How does it work then? And are such services in demand? Do manufacturers take loans in crypto?

Isn't that killing DeFi idea? Is there a future for loan mechanism in crypto?

Thanks everyone in advance for the answers.

The mainstream economy is based on debt. The crypto economy is based on people's network without any third party controlling it. So ideally we don't need banks for a crypto ecosystem. But since crypto is not a mainstream economy, we need an integration layer so that crypto can function with the mainstream economy. That's where we need banks and exchange services.

Defi is a very new type of concept and it doesn't function like banks. In bank, you can get a loan without collateral but that's not possible in defi. I don't see Defi taking over as a mainstream loan mechanism.

Kodok Bencot

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I think banks don't need cryptocurrencies but need blockchain technology to see every transaction in banks, currently there are too many problems in banks, especially transparency from banks so transactions from state officials are never known, so banks are more anonymous than cryptocurrencies.

cheezcarls

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In my opinion, I could say that we don’t need banks if a lot of vendor or merchants are accepting cryptocurrencies as the main medium of exchange than fiat. Imagine if a country implementing USDT as their main currency than the traditional fiat for buying goods and services, paying bills, education, transportation, etc., banks would potentially cease to exist. Again this is just my own opinion regarding the scenario.

Kakmakr

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The Fiat system is built on "loans" and "Bonds" that are offered by the Banking system to exploit people and to keep them in debt for most of their lives. Crypto currencies on it's own (the technology) does not make provision for these services, because it is not centralized and it is also more geared towards being a currency. Wink

Some people have created "loan" services on forums like this, where they use reputable escrow services... but it is not very popular, because most people succeed to exploit it.

Bitcoin does not replace "loan" mechanisms like Banks and Shark loans, because it was meant to be an alternative currency. Wink

imstillthebest

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Quote

Is there something similar in crypto? How does it work then? And are such services in demand? Do manufacturers take loans in crypto?

yes crypto has a simillarity on how things work with fiat because cryptos are also a currency .
its indemand , there are lots of crypto loaning platforms and yes a manufacturer can take loan in crypto to make thier business grow more or if they having a problem in financial .

Quote

Fiats have a loan mechanism. Manufacturers use it to improve their production

you mean banks ? because banks are the one that issued the loans but not all loan money for that same purpose .

paxmao

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I opened a thread to discuss the problem not that long ago. What I got from it is that you would likely need some short of intermediary to make it work, call it a bank or a rating agency and certainly a legal system that can enforce contracts outside the blockchain. Crypto in that sense is not that powerful, but the good nes is that you can build a system on top that works as good or perhaps better than current banking systems.

https://bitcointalksearch.org/topic/m.57814452

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Quote from: shaqer on October 03, 2021, 12:33:59 PM

Yeah ... So the main problem is tying loan to the "real world".

This is the real world. Get a grip on buddy. Grin

The moment you stop differentiating real world vs crypto world, things will get better for you to understand. Loans are still going to happen in fiat. This is an early stage to comment conclusively though. DeFi does not solve every problem, just like bitcoin is not the answer to every problem.

Quote

I heard that someone is making stablecoins tied to fiat. Is this a half measure and not a solution of the problem? Couldn't this attract manufacturers who are interested in crypto but are afraid to mess with it? Pegging stablecoin to USD as example could push them to work with crypto, I think.

There are stablecoins pegged to USD. But I dont think this idea is what crypto users like in the majority. They are useful as intermediary for dollar cost averaging while trading but beyond that I find no extra use.

Moreover, if there would start lending in terms of crypto, the already existing P2P systems are going to work fine. But here you need to pledge another form of asset as collateral to get the loan. In fiat economy you also need some sort of security for the bank to protect against a default too.

If in future, banks start allowing cryptocurrency lending, this can be a big opportunity for them and a big competition for the existing p2p lenders, because after all, nobody trusts loan sharks and their interest rates.

davis196

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Peer-to-peer lending is a thing in the crypto industry.Some p2p lending platforms disappeared,like BTCJam.
You just send 120% worth of altcoins,that have a relatively stable price as a collateral and you get 100% worth of BTC as a loan.There's a lending category on this forum.
Big crypto companies like Nexo are offering such services and promising a pretty good 12% interest rate,AFAIK.I have never used their services and I don't recommend anyone to borrow a crypto loan,unless he knows what he's doing.
Crypto lending seems pointless to me,because of the volatile prices of almost all cryptocurrencies.

STT

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Banks aren't required for anything is a fair argument, do they assist at times is probably a better line. No bank setup or even helped with BTC in its originating years that I ever heard of. It was people and this is a good rule for the entire economy, people are strength and wealth in any nation far more then the largest apparent entities like banks or governments. Actual assets, products, innovation and the greatest growth comes from the smallest entities in an economy which is plain people, sole traders and very small companies of people. How can that be is also simple because there are millions of the very smallest traders, producers, users of BTC are ultimately what is going to decide if BTC grows. Banks are just a sideshow, they appear because its already an established trade and they want a cut of that revenue.

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Quote from: ?? on ??

Quote from: palle11 on October 03, 2021, 09:52:36 AM

I think such systems have not survived far enough really. There are some projects that tried lending in the past but I don't know how far they went or they defrauded and took people's money. Collateral has been a big challenge for this. This is why here on the forum, such program do exist P2P but with third party escrow which could also be as a result of the campaign a collector member is promoting.

Can you tell me more about this P2P program? Or can you give me some links where I can learn more about it?

P2P means you make a deal with someone, whether it is a transaction, sharing data, or else. In crypto, there is P2P trading which means, you and another person buy and sell crypto. You can find it on Binance as the famous P2P exchange and you can meet your local or non-local seller who buys and sell crypto.

The banks can be a bridge between crypto and fiat and they can use that for their benefit. For example, they can use a rate price for sending and receiving the money.

I know the loan is available on exchanges, but you can take a loan from someone here, but you need to have collateral before you get the money. You need to pay the money plus the interest.

Wexnident

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I don't take loans, ask for sig if I ever do.

Quote from: shaqer on October 03, 2021, 08:06:35 AM

Isn't that killing DeFi idea? Is there a future for loan mechanism in crypto?

Loaning was never something that was solely limited to banks though. Crypto was just being your own bank, it never said anything about removing the concept of what banks are, you just become one yourself imo. Plus, there's a lot of centralized exchanges out there that have the lending system, just that you need collateral to go with it. I dunno if it's actually in demand, but I don't think it would actually disappear, it's always been a part of the financial system after all, as long as transactions exists, loaning would definitely be there imo.

Darker45

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There are already existing loan mechanisms in crypto. It has been around for quite some time. I remember during the height of ICO, I encountered projects which are offering crypto lending services. I haven't heard of them since, though. But there are several DeFi platforms which offer lending services right now. And I guess the demand is quite high. As a matter of fact, Binance has also been offering lending services for quite a while already.

Loan has been a basic financial service, so I think it won't simply go away even if crypto replaces fiat.

Victorycoin

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Banks usually make a profit through customer transactions and other services but this applies to fiat currency banks will not be needed once cryptocurrency is introduced but then the economic institution called bank may be completely wiped out. The central bank has an eye on any transaction there is no interference from anyone for crypto for these reasons central banks have banned cryptocurrencies the crypto market is more profitable for crypto than banks.

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Not only do cryptocurrencies reduce the need for banks, but so do CBDCs. However, a while ago I heard Christine Lagarde talking about involving banks in the digital Euro issue, meaning that they are going to try to keep the banking industry afloat no matter what, which is nonsense. It's like trying to keep video stores afloat with the advent of the Internet.

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