Topic: Decentralized Lending Protocol / Network - page 5. (Read 8686 times)

And is this .... good?


Perhaps. And perhaps that was the same thing said about paper money at first.

http://en.wikipedia.org/wiki/History_of_the_United_States_dollar#mediaviewer/File:Continental_$50_note_1778.jpg

I understand your point but I disagree, and thats fine. I see a different future for bitcoin and cryptocurrencies, regardless of whether satoshi envisioned BTC to replace fiat or not. I doubt the folks that came up with IOU's for gold back in............ whenever.... never thought "Hey, in 500  + years, this piece of paper will have value simply because we all agree it should."

from the mighty wikipedia: "Present-day Federal Reserve Notes are not backed by convertibility to any specific commodity, but only by the legal requirement that they are issued against collateral."

Indeed, the "revenue" version is:
http://maclanewilkison.com/decentralized-crowdlending-2/

I haven't seen a share distribution yet

Here I'm confused with what you mean by "link some businesses together in a completely open manner". I understand DACs - the DALP is sort of a DAC, but there's no revenue associated with it - it just exists alongside the BCT network to provide lending service to the BTC network.

So, I assume you mean mitigate risk as in mitigate the risk associated with being a lender. So perhaps by businesses, you mean the people on the borrowing side of the equation? So, borrowers could pool together somehow to present to the DALP a loan application that involves multiple parties? Yes! This is fantastic!



I'm lost.

Okay, I think your thought chain may have forked from my original thought chain, or I'm losing something somewhere... but it could be me. I'm running on fumes here. I should really sleep. But sleep when you're dead, right?


Okay, here I think your presenting your conceptualization to the full.. and I get it... yeah! Use the DALP as a means for a business to essentially run its finances. In this case, the borrowers are branches of the company (the ones doing the jobs), and they submit (what I've been calling) a loan request  to the network. The Top of the company are here the lenders, and they can allocate the funds to the branches appropriately. And then the branches can report their success simply by "paying off the loan".


Hrm, might need to elaborate more.


Whether or not we ended up talking about the same thing, some great things happened just there.

The largest and most common misconception of the bitcoin community as well as newbies and others looking into bitcoins is that Bitcoins is an actual currency with the expectation to replace cash as we know it. This is not what this currency was for. Bitcoin is a digital currency meant to provide a better way to transact cash itself. Not to replace it. But intelligent people know if you really understand currency trading and banking operations in addition with money transfer companies and policies, Bitcoins has the ability to make the Big Banks ( not the currencies themselves) but the BIG Banks to go bankrupt.

All Banks do not create money, Money is created by one central bank only and is based on something. Gold, imaginary gold, how many fish are in the sea, whatever they base it on. It also only has a certain  amount that can be created. the more they create the less value their currency is worth.  The need a high value currency to trade it with other countries to buy and sell goods and services.

Why can bitcoin bankrupt Big Banks, 3 reasons: Bitcoin has the ability to destroy the Foreign Exchange market where the banks make 4 Trillion dollars daily trading currencies for a profit, as well as destroying the need for those hugely profitable contract options they sell, and lastly Bitcoin has the ability to destroy the need for ATM and Debit cards with a visa , mastercard logo on them. Loosing Debit cards is a HUGE hit to banks, Most banks make millions of dollars a month from the ATM fees when you use an ATM that is not your own banks ATM, not to mention the fees they charge the account holders, insufficient funds fees, low balance fees, overdraft fees. Why deal with these fees when bitcoins can accomplish the same goal and incurs tiny amounts of fees, 2 to 5 cents usually.

So Bitcoin was not created to replace cash, and never will, but it has the ability to destroy big banks who make their profit from the foreign exchange market and account holder debit card fees. It will not destroy all banks you local no name bank who is not a market mover will survive, but Bank of America, JP MOrgan, Barclays and other market moving banks like these will be bankrupt within a year of true adoption of bitcoins and their value of sending money anywhere in the world virtually for free.

Yes, this is exactly the idea. People will know what Jane's idea is because it will be displayed in the Lend tab of the lendwallet. Because the lendwallet uses the same blockchain idea, all loans that exist on the loanchain can be displayed in the lend tab - obviously, the lendwallet will only display those loans that are still accepting funds.

Hrm, yes, it could be a web based thing - but I imagined it as an application similar to having a bitcoin wallet running on your computer - but indeed, a web interface would be a logical phase 2 after the core is built.

But yeah, like anything decentralized, it will need people participating in full node support (blockchain storage and hashing) in order to maintain the network, and this would be rewarded with some amount of BTC, as described.

Indeed - how would the system work with an interest free loan? The short of it is that, similar to the standard BTC network, some fee would be added to cover the efforts of the miners. Or, no fee - and the loan has the same problem as an fee-free transaction in the future BTC network when there are no new coins to mine.

An interest free loan could come about in two manners - 1) the borrower requests an interest free loan, or 2) the lender decides to fund a loan interest free.

In option 1, the workflow is no different than described in the OP - the loan (and all of its associated transactions) would suffer the same consequences as a BTC that doesn't have a fee. Maybe additionally there is a stipulation that interest free loans aren't insured by the DAR (because they are not contributing)

In option 2, Bill see's Jane's loan and goes "damn I want this to happen" and clicks a button to fund the loan entirely without interest. To keep things simple, this action supersedes any previous by ins to the loan. If the loan was 50% funded and Bill decided to stretch his philanthropy muscle, all the people in the 50% get washed out.


Okay, jdbtracker - thanks for entertaining this idea with some structure. Okay, so now we're at the point where the hardest part is figuring out if everyone's on the same page talking about the same thing....


Okay, the interface I can draw out or mock up with some crude powerpoints or one of those online animation doohickies or just pen and paper this thing and snap a pic. Any preference?

I don't understand what this refers to. I imagine this directory will ultimately manifest in the lendwallet as the searchable list of loans available for investment.

Okay, so in my imagining of this, the loanchain is essentially building a transaction (lets call it the Singularity, because it is one thing (the loan application) that is drawing all other things towards it (people lending into that loan) that is in suspended animation until the 100% mark is met. Once this occurs, the singularity is then activated on the BTC blockchain. So the loanchain itself does not send Bitcoins... but of course this is obvious and I might just be explaining things to here myself talk (or type). I apologize! But the building of that transaction needed a name, so we now have it.


Okay, this is more or less the loan application, correct?


So this would be just a way for any end user to see how many loans are in existence, how much is in the DAR, etc.


This would more or less be an equivalent of being able to search a blockchain. I say for now, we keep it simple. Longest chain of on time payments, number of loans repaid, total amount ever borrowed, total amount currently borrowed.



^^^ honestly, I think all of these things would be in the lendwallet, right? But yeah, an API indeed.


Back to the usury comment real quick - I dunno if it was because I didn't explicitly state it, but in this system, the borrower sets the interest rate. Granted, a borrower is more likely to get a loan if they offer 30%, but there's nothing stopping them from asking for a 2% loan.


All right... I will work on what I can ( some mock up of the interface, I guess... or a more detailed workflow).

In the meantime, I'll put up the original PDF. This filetea service is volatile, so this link will only be active as long as my browser window posting it is open.
 
https://filetea.me/t1sWbpemht3RCCB9ylFYPqRxw

checksum: C537CA3491E3E69036A4CA7E2ABFC25442B5CE48

Well, in an ideal world usury would not exist.

Given increased usage from increased population growth leading to increases in velocity of coins and increases in productivity from the private sector in a closed box system the currency should gradually increase in value based on those factors. This is based in a system of scarcity. Why the scarcity? I don't know, people are greedy. It shouldn't be this way but, it is unfortunately.

Would not the idea of lending be moreso, I have more money than I need right now let me essentially help some other people out. I guess in the long run I would like to see what your proposal is with no usury? What about an interest free loan? Is not usury a symptom of an inflationary system? What would happen with your system?

I guess what I'm saying is what about in an ideal world where usury doesn't exist (I'm thinking very long term here). Doesn't that throw the dividend and risk mitigation out the window? What if someone wanted an interest free loan? How does the math work there in your example? I'm not saying right off the bat. This is a great stab at a modern way to lend money using bitcoin architecture. I'm just saying if it ever got to a point of an interest free loan. What would happen? Right now I see that people would need incentive but, maybe down the road the incentive is my bitcoins will buy more 5 years from now tied up with someone else paying me them back than it would in my pocket right now collecting dust due to productivity gains in producing consumer goods. Or maybe the person is simply generous as you see with a lot of the tipping that goes on in the community.

I like it though. You could call it crowdlending. I also like that the terms of the loan are up to the loanee instead of the loaner.




"Give to the one who asks you, and do not turn away from the one who wants to borrow from you."

A destination can only get clearer when you have a map.

*someone from the background shouts* THANK YOU SO MUCH, CAPT. OBVIOUS!

Oh, and the Github repo, I'll get one up. Links to come.

You've laid out most of the structure so now, we have to develop a work flow

The Interface for Lenders and Borrowers
Investment directory
Secure Blockchain to send Bitcoins for Consolidation and Distribution
Investment Contracts
System Statistics
Ratings Service
API for DAC support(for monitoring operations by investors and secure Transfer of funds)

Yes, unfortunately I also do not have any ability to code. I am happy that I just achieved the ability to control two headless linux boxes in my house using ssh! Slowly but surely, I am learning to accept The Terminal.

And yes, to clear up some of the above discussion, the idea is intended for a post-fiat world - a world in which only crypto exists.

This was included in the original PDF version. I have modified the OP to include this assumption.

re: theblacksquid, go for it! Set up a github! Cause I dunno how! I will glady contribute anything I can, but when it comes to the coding, I fall short.

re: jdbtracker - I need to revisit your response when I can give it more time (maybe later tonight - got some chores to do), but it seems what your talking about is similar to some of the other lending DACs that are out there - they create another coin system and another asset, which I believe muddies the system.

And thank you all for responding! I thought I was going crazy when no one responded to my version 1 - I may be in a manic swing, but this protocol has the ability to completely disrupt banking. There will be no need. It will also disrupt credit agencies - because a lendwallets credit history is stored in the chain.

I think this is the point where I go out for a drink and some grub and say I don't know anything about programming.

@ab8989: The entire point of the above gist in the OP is to explain how a lending system similar, and I repeat: similar, to fractional reserve banking. Also because of the reasons outlined above, fractional reserve banking would even be possible. What the OP was trying to present was a system where everyone would have, and be working with, real BTC, and not IOU's of the real thing.

Now, is there anyone who wants to help code this up? I know Python and some JavaScript.

There is only one original and real bitcoin involved and it starts out in depositors wallet. From there it moves to banks wallet and from there to lenders wallet and from lenders wallet to whatever vendor the lender wants to buy stuff.

There is no other second bitcoin involved. Both the depositor but also the bank have lost the ownership of the real and genuine bitcoin once it has been loaned out from the bank.

In addition to this one real and genuine bitcoin there is an IOU presented by the bank to the depositor as the depositors balance. That bitcoin is not real and does not exist in anywhere else than pixels on computer screen created from thin air.


These do not exist in BTC world. There is no mitigation of any risk in BTC world. Happy fractional reserve banking to everybody as they please without limits or regulations.

You are making it sound mysterious because you don't understand.

Tell me how in what you just described it would not entail ownership of a coin in two different wallets at the same time...

All these regulations, interest rate setting, and the FDIC exist to mitigate the risk of fractional reserve lending (creation of money out of thin air).

By this I mean when 2 parties hold the rights to one single note of money. Hence bank runs. How can a bank run exist. You've lent out a note to someone else to spend into the economy that was already being held by another party.

Some people want to make this whole thing of fractional reserve banking to sound more mysterious than what it is by saying that the creation of money out from thin air happens at the time when the loan is given out. Actually the creation of money from thin air happens at the time of depositing.

When the customer deposit real money to bank and bank gives out an IOU to the customer that is the moment when money is created out from thin air and it works exactly the same way in BTC as in USD banking. After this creating money from thin air at deposit time the bank now has the original and real money in their hands that they can give out to somebody wanting a loan.

The creation of money from thin air happens when a bank offers an IOU to the depositor instead of real money. An IOU that both BTC and USD  banking customers see on their computer screen as their balance. That is not real money. That is just an IOU created from thin air by the bank.

You lost me right here. How are you going to create bitcoins out of thin air without some sort of link to fiat or some sort of fraud. You can't just mine coins into existence with a stroke of a pen like they do in modern banking.

You're wrong it's a fraction of a demand deposit. But in the bitcoin world there is no fraction. You either hold the coin or not. To say fractional reserve lending is possible bitcoin is akin to having 1 bitcoin with the same identification in two different wallets at the same time. Who owns the rights to the coin. It doesn't exist.

Yes, but how do you have fractional reserve banking without being linked to fiat. I think what the OP is saying in a perfect world where fiat does not exist and there are no conversions back how do you have fractional reserve banking?

Do you even know what fractional reserve banking entails?

1) The reserve requirement is set by a central authority

2) Banks are now allowed to lend out a percentage of other peoples demand deposits based on the ratio. This is the step where we talk about creating money out of thin air.

3) The loan comes into existence as an entry on a computer by the bank. The bank then enforces the "loan".


You know what you need to watch. That parliament hearing in the UK on the financial system that was posted here a week or so ago because there are politicians more knowledgeable than you on the subject.

How are you going to create bitcoin out of thin air? How are you going to accomplish step 2 of fractional reserve banking? Tell me how how how

Saying that fractional reserve banking is not possible with bitcoin is a myth that is not based in reality. In fact fractional reserve BTC banking is exactly as much possible as in FIAT.

MtGox takes 1 btc deposit from a customer and gives an IOU to the customer. The customer sees this IOU on his computer screen every time the customer logs into MtGox website to have a look at his balance. The customer does not have an real and genuine BTC after the customer has deposited it into MtGox. It is now MtGoxes real and genuine BTC and MtGox can do whatever they want with it. MtGox lends out 0.8 of the original and real BTC and leaves 0.2 BTC into MtGox wallet. Fractional reserve banking has just happened.

MtGox does not have the full 1BTC available to cover their IOU and to pay back the depositor but that is exactly what is also true in FIAT fractional reserve banking. They also do not have the full 1 USD available to pay back the depositor but instead only a fraction of it.

However it all works in practice because there are a large number of depositors and statistically they do not all want to withdraw at once. Exactly the same  principle why the banks get away from not having the full amount of real money available in FIAT world and why it is also possible in BTC.

Actually in BTC world fractional reserve banking is EASIER than in FIAT world because in BTC world there is nobody to enforce the reserves whether they exist at all. In FIAT world there are all kinds of red tape and accounting rules and whatever that FIAT banks would love to get rid of to be able to do exactly as they want with nobody stopping them. In BTC world the banks got exactly what they want. No red tape from any government or anybody else at all.

Hmmm now this is interesting. But how do you make it easy for people in the lendchain to know what Jane's idea is with using with the money. Is it like a web based thing where you would write a business plan etc. and then apply for the loan and people would sort of shop around at different peoples ideas and say maybe I want to loan 0.2 bitcoins for a water reclamation project. That's certainly an interesting idea.

An implementation of a lending market has been described in the OpenBazaar docs here, but since the project is still in beta, along with other stuff, implementing a lending market may take a long while. I'd be willing to commit code to this project if there's already an existing Git/Github repository for this, or make one for it if there isn't already.

I love the detail, wow and I guarantee you someone is already building it, somewhere out there thinking of setting it up for revenue and others completely decentralized systems with share distribution.

You know you can mitigate risk if you link some businesses together in a completely open manner using a DAC.

If the DAC is completely open it can simply route the money through the Corporation Digitally, marking costs and revenues in Real-Time.

Setting up a good flow for the Coins is essential to fund all facets of a DAC along with labels and metrics for work being done. If this flow is visible to everyone it can be Crowd Sourced, providing revenue for 1000's of investors in Real-Time using your idea. It is quite powerful, when you completely automate it with a Transparent Structure.

I hope everyone understand that a Business is nothing more than a Dispersal of Money to Job Assignments, It is a channel by which money travels through from Customer to Businesses and Investors. To create a Business is to merely understand it's requirements, setup people or machines to carry out work, pay or maintain them to continue that work, observe it being done and provide a Product or Service that channels those Coins effectively through the Corporation; The fact we can automate it is quite impressive, but creating a Market is far more Interesting. A well organized structure can be a platform to bring people and machines together to offer services, forming spontaneous Conglomerations; bringing Consumer and provider into a integrated Directory of Purchasing, Investing and Production.

I think we may soon see Drop in corporations appearing on the web, selectable and openly available for anyone to deploy as a service; The structure is already designed for you, you just have to fill in the positions and advertise it, instant business deployment in any part of the world with a Distributed Investor Structure.