Topic: Interest and Bitcoin - Impossible? - page 7. (Read 6579 times)
I think its wrong assumption. You are trying to put interest to deflactionary currency. To me loans should be just like this: borrow 1btc, repay 1btc no need to complicate things and you will have back 1btc that is more valuable than before. Person who borrowed and spent 1btc have to work more to get back 1btc because its value is higher meantime. and i dont know if borrowing 1btc and getting back 0.999 wont be still profitable if prices dropped even more.
From what I understand (correct me if I am wrong), it is impossible to have usury (interest or compound interest) with bitcoin. From my understanding, they are mutually exclusive OR usury would destroy bitcoin. Please let me explain.
Time and amounts are too important as I'm more interested in the long term consequences, so I'll just pull numbers out of my butt --- I promise they'll smell like roses!
Suppose that I have 1,000,000 BTC and begin lending it out at 10% compound interest per year, compounded monthly.
Further suppose that I am able to lend out the entire amount 100% of the time. (Just like in physics, assuming ideal conditions and no friction. )
So...
A = P (1 + r/n)^nt
Let's let the number of years (t) be 30.571904 or 23.611591...
A = 1,000,000 × (1 + (0.1÷12))^(12×30.571904) = 21,000,000 (100%)
A = 1,000,000 × (1 + (0.1÷12))^(12×23.611591) = 10,500,000 (50%)
So, in about 30.5 years, I would own 100% of all BTC (or have a claim on 100%).
In about 23.6 years, I'd have over half, or a claim to over half. (Having and claiming are NOT the same.)
This seems insane to me. With the limited supply of bitcoins, i.e. less than 21 million after people lose some, it is impossible to have 21,000,000 bitcoins.
That is, compounded interest leads to an absurdity.
The implication, as I take it, is that if there is to be any kind of usury, then usury must be charged in a fiat currency that has an unlimited supply, e.g. the USD, CAD, KRW, JPY, AUD, EUR, etc. That would avoid the absurdity. i.e. Usury on BTC would have to be charged in a fiat currency, e.g. If the rate is USD $100 per BTC, then 10% is USD $10 per BTC per year, compounded. That would not create more than one claim per BTC, though it would necessitate a fiat currency to deal in for usury.
Please don't jump on me for advocating a fiat currency - that is NOT my intent and I am NOT advocating either a fiat currency or usury. I merely mean to point out the absurdity of usury with BTC.
My guess is that the money-junkies at the banks would want to charge interest if they dealt with BTC at all, and I am guessing that they would prefer to intentionally attempt to break the system so that they could return to their current system of simply printing money out of thin air.
Am I correct in my assumptions and analysis there?
Is it absurd to charge interest? (I take it that interest creates money out of thin air rather than through mining BTC.)
Thanks in advance for any input.
Time and amounts are too important as I'm more interested in the long term consequences, so I'll just pull numbers out of my butt --- I promise they'll smell like roses!
Suppose that I have 1,000,000 BTC and begin lending it out at 10% compound interest per year, compounded monthly.
Further suppose that I am able to lend out the entire amount 100% of the time. (Just like in physics, assuming ideal conditions and no friction.
)So...
A = P (1 + r/n)^nt
Let's let the number of years (t) be 30.571904 or 23.611591...
A = 1,000,000 × (1 + (0.1÷12))^(12×30.571904) = 21,000,000 (100%)
A = 1,000,000 × (1 + (0.1÷12))^(12×23.611591) = 10,500,000 (50%)
So, in about 30.5 years, I would own 100% of all BTC (or have a claim on 100%).
In about 23.6 years, I'd have over half, or a claim to over half. (Having and claiming are NOT the same.)
This seems insane to me. With the limited supply of bitcoins, i.e. less than 21 million after people lose some, it is impossible to have 21,000,000 bitcoins.
That is, compounded interest leads to an absurdity.
The implication, as I take it, is that if there is to be any kind of usury, then usury must be charged in a fiat currency that has an unlimited supply, e.g. the USD, CAD, KRW, JPY, AUD, EUR, etc. That would avoid the absurdity. i.e. Usury on BTC would have to be charged in a fiat currency, e.g. If the rate is USD $100 per BTC, then 10% is USD $10 per BTC per year, compounded. That would not create more than one claim per BTC, though it would necessitate a fiat currency to deal in for usury.
Please don't jump on me for advocating a fiat currency - that is NOT my intent and I am NOT advocating either a fiat currency or usury. I merely mean to point out the absurdity of usury with BTC.
My guess is that the money-junkies at the banks would want to charge interest if they dealt with BTC at all, and I am guessing that they would prefer to intentionally attempt to break the system so that they could return to their current system of simply printing money out of thin air.
Am I correct in my assumptions and analysis there?
Is it absurd to charge interest? (I take it that interest creates money out of thin air rather than through mining BTC.)
Thanks in advance for any input.
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