Topic: Is it possible to use bitcoin as a medium for collateral? - page 2. (Read 417 times)
I feel this is not possible,Bitcoin is an investment currency with capacity to increase in value or decrease as the case may be, using it in value is not possible because of it volatile nature and unstable nature, for it to be use as a collateral, there must be a detailed agreement to have a peg which cna help determine the stake.
Is this possible with the help of stablecoin such as GUSD, USDT and smart contract?
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
Not possible now but most probably in the future as in the present times, bitcoin is a mean if investment only, as it doesn’t mean that bitcoin has not made any progress, in this passed decade bitcoin has made tremendous progress and from having millions of haters to millions of investors, bitcoin has travelled a long journey but still it is decentralised in most parts of the world and because of which it is now only use as a investment method but definitely in future it could be use as a collateral. Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
Is this possible with the help of stablecoin such as GUSD, USDT and smart contract?
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
This is the basis of how a smart contract works. So theoretically speaking, I think its possible but the one thing I was skeptical about when reading your post was why would people accept BTC as collateral? Especially, when the BTC could be dropping at any moment.
I think that it is possible or if to be more exact this will be possible with time, at the moment I don't think that there is such a possibility but would like to have it and I am sure that it will be great
Of course!
Anything that has value can be used as collateral. That's the definition!
All the rules of how the collateral is used should be clearly stated in a contract and consider using an escrow account to house that collateral while the contract is in execution.
Anything that has value can be used as collateral. That's the definition!
All the rules of how the collateral is used should be clearly stated in a contract and consider using an escrow account to house that collateral while the contract is in execution.
this has been done before already, just using bitcoin.
many have
its kind of the bases of ETF.. btc funds are locked up and then people play with the ownership colateral(shares) to initially give fiat to the ETF and then on receipt of the share ownership sell the shares to others
its also been controversy of some doing it but not doing it right. by pretending to have BTC to scam others into giving them fiat.
(craig wright)
to do it properly. is to have coins in an address and to sign a FRESH message that truly proves you own the coin. then honourably people will trust you and its not a CWscam
many have
its kind of the bases of ETF.. btc funds are locked up and then people play with the ownership colateral(shares) to initially give fiat to the ETF and then on receipt of the share ownership sell the shares to others
its also been controversy of some doing it but not doing it right. by pretending to have BTC to scam others into giving them fiat.
(craig wright)
to do it properly. is to have coins in an address and to sign a FRESH message that truly proves you own the coin. then honourably people will trust you and its not a CWscam
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
This model is pretty similar to a smart contract-based platform called SALT ("Secure Automated Lending Technology"). It's the same idea except I think there's a centralized money transmitter rather than using stablecoins.
It's definitely possible. It's probably really easy to do with the platform the stablecoin is built on, i.e. USDT for BTC and GUSD for ETH.
It definitely would be a tricky one to get someone or a group of people to accept the bitcoin as medium of collateral considering how volatile and unstable the currency is..
Right now merchants and stores only accept bitcoins through a payment processor which converts to cash as the risk involved in holding the bitcoin is much and could lead to a loss if the price falls..
Bitcoin as a medium of collateral possibly could be feasible amongst cryptocurrency enthusisat and investors who could actually view it as a form of trade and will be able to handle the untold risk involved(as they are aware they could be in line for huge profits or losses)
Right now merchants and stores only accept bitcoins through a payment processor which converts to cash as the risk involved in holding the bitcoin is much and could lead to a loss if the price falls..
Bitcoin as a medium of collateral possibly could be feasible amongst cryptocurrency enthusisat and investors who could actually view it as a form of trade and will be able to handle the untold risk involved(as they are aware they could be in line for huge profits or losses)
Is this possible with the help of stablecoin such as GUSD, USDT and smart contract?
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
It can be done but I hope that the price of Bitcoin would be stable if it will be used that way. Since now, we couldn't even have a solution for that.
Perhaps this is why this system was created
Bitcoins can most certainly be used for colleteral. Stablecoins were specifically designed with that intent.
Stablecoins certainly are meant to help in this respect, in my opinion.
Is this possible with the help of stablecoin such as GUSD, USDT and smart contract?
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
Say, such a thing can be devised when someone owning bitcoin wants to borrow fiat currency from others:
1. a smart contract is created for both parties, one end needs to deposit bitcoin into the contract and the other end is required to deposit stablecoin into it. An interest should be negotiated beforehand.
2. only when required assets have been put into the contract by both parties does the contract become active.
3. the borrower of stablecoin then can exchange stablecoin to fiat currency and use it.
4. A deadline is set in the contract that if borrower cannot send back stablecoin into the contract before deadline, the other party obtains the bitcoin.
5. If stablecoin with interest is given back before deadline, both parties get their money back and this process is finished completely.
this is some premature thinking of mine, I am not sure it is technically feasible now.
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