Bitcoins are still useful for lending.
I can lend $1000 usd anonymously anywhere in the world and get solid returns.
Bitcoins at this point in time are risky to even own. They swing wildly from day to day. I could lend 5btc and in return get 4btc back if btc raises in value. I still do get a healthy return.
Topic: Bitcoin, debt as deep as the banks couldn't have imagined. - page 3. (Read 5957 times)
you still have to pay back that 1000 bitcoins, but it's value is likely to have doubled (or trippled or.. lots more)
if you have contracts that pay specific amounts of bitcoins then you aren't exposed to the risk of a rising exchange rate. we don't have such an economy yet so borrowing (and lending) bitcoins is a risky business.
But the borrower is exposed to the risk. Seeing as how they are borrowing the money, who do you can think can afford the risk more? The borrowers will be forced to default when their debt doubles and the lenders will eventually have to have much higher interest rates, or shorter term loans, or go bankrupt.
you still have to pay back that 1000 bitcoins, but it's value is likely to have doubled (or trippled or.. lots more)
if you have contracts that pay specific amounts of bitcoins then you aren't exposed to the risk of a rising exchange rate. we don't have such an economy yet so borrowing (and lending) bitcoins is a risky business.
If you look at actual activity on the lending sub forum you will see what has developed: very short term loans at very high interest rates. That is exactly what you would expect.
Unless some legal regulation is set in place, i see this as a disastrous thing to happen with bitcoin: bitcoin banking (loans)
Hey how cool is that! We can lend money without interest! 0%!!
Really?! Assuming the value of btc will steadily grow over time, this gives the incentive and in fact interest, that companies are after.
You may lend 1000 bitcoins right now, at 0% rate. Buy something nice with it, you can pay back in a year. So currently that's worth like 7k USD, nice starter car.
In a year, if nothing bad has happened to bitcoin, you still have to pay back that 1000 bitcoins, but it's value is likely to have doubled (or trippled or.. lots more)
You have to pay back 1000 bitcoins, 14k USD in wealth now! Since there aren't gonna be more bitcoins, your ass is now pwned by company X who gave you the loan.
And ofcourse a 7k loan is really small compared to loans people get these days.
In december 2010 i got 500 btc from a friend to play with (he mined that in like a week), i messed around with them, gave them away, sold @ 1.7 USD.
I don't even want to start thinking of the situation where this was a loan, how the heck am i gonna pay back 500 btc at current value?
People will need to learn how to handle real money again i'm afraid, but before this happens it might be way too late.
Hey how cool is that! We can lend money without interest! 0%!!
Really?! Assuming the value of btc will steadily grow over time, this gives the incentive and in fact interest, that companies are after.
You may lend 1000 bitcoins right now, at 0% rate. Buy something nice with it, you can pay back in a year. So currently that's worth like 7k USD, nice starter car.
In a year, if nothing bad has happened to bitcoin, you still have to pay back that 1000 bitcoins, but it's value is likely to have doubled (or trippled or.. lots more)
You have to pay back 1000 bitcoins, 14k USD in wealth now! Since there aren't gonna be more bitcoins, your ass is now pwned by company X who gave you the loan.
And ofcourse a 7k loan is really small compared to loans people get these days.
In december 2010 i got 500 btc from a friend to play with (he mined that in like a week), i messed around with them, gave them away, sold @ 1.7 USD.
I don't even want to start thinking of the situation where this was a loan, how the heck am i gonna pay back 500 btc at current value?
People will need to learn how to handle real money again i'm afraid, but before this happens it might be way too late.
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