I was wondering what everybody's thoughts were on issuing debt based on cryptocurrency. Debt is an extremely important factor for economies to grow. In a simple example, very few people would actually be able to purchase a house without debt. If you can't purchase large cost items like cars and houses, to name a few, the economy will literally collapse. Not to mention that transportation would become a very big problem. There's more examples to be made for starting businesses and many more but I won't discuss that in my original post.
Cryptocurrency is not inherently a debt instrument and cannot simply be "printed" or issued past its limit. I know a lot of people here feel that banks should die and banks are evil, but realistically I don't see how an economy can survive without debt instruments and issuers. If Bitcoin does replace all currency, does this mean that banks will collapse, or issue their own cryptocurrency to 'lend coins' to people who would like to make a big purchase and pay it off over time? Would it even be possible to pay interest back on a large scale if a coin has a finite supply? If there is 21 million Bitcoin in debt lent out and circulating, how could there possibly be a way to collect more than that by the bank. Would multiple cryptocurrencies solve a problem like that, or would it mean that the debt just gets pushed off onto some other coin and then also onto another infinitely?
I love Bitcoin and all this technology, however I have not theorized a way in which it can completely rework debt instruments and the institutions that supply them. IE: Banks.
Would love to have a discussion going on this topic. I have pretty limited economic logic!
I agree with you that banks are not really evil because these central organizations are the ones behind why the economy of each country is still intact. Without banks, many countries would collapse because majority relies on the debts.
Debts aren’t necessarily bad. It just depends on how the debtor manages and allocate the money he borrowed from the banks. There are good debts and bad debts. The bad debts are those that does not bring income and are just spent over expensive and non-essential things or projects. On the other hand, good debts are those that generate income and are spent over important things, projects, and programs so that the citizens can benefit.
In crypto world, I think there’s already existing some sort of process like those of banks where they could borrow certain crypto. I’ve read a thread in marketplace perhaps where the users here can borrow any as long as their account has reputable history such as good no negative tags, much better if it has trust, and is already at high rank (been in crypto world for a long time). In addition, the user must post in the thread how much he wants to borrow, the span of time he can repay, and of course a collateral so that it’s guaranteed to be paid by the borrower.
