Topic: Issuing loans in Bitcoin, how we could do it (Read 1341 times)
Ultimately you would issue a loan with Bitcoin in the same way you would issue many other loans, except you would probably peg it against the USD value of bitcoin. Many people all around the world borrow in USD, but they can suffer badly if the exchange rate goes the wrong way - many loans made in Turkey face this problem for example. Ultimately it is the lenders who will have to judge whether it is possible to do this and if the returns are worth the risks. They will expect a large amount of collateral due to the volatility of cryptocurrency and it is unlikely that many borrowers will consider it to be a good deal. They might also only offer it to high net worth individuals and those with an impeccable credit report.
How to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
People can do same thing like what banks do. They can create a contract of agreement between the lender and the borrower just to make sure that everything will be okay until the end. A normal lender has its own power even if he is just an ordinary person and not a bank. There are many things to think of, people borrows money when they really are in need. When loaning with bitcoin, I think it is better if you would loan the amount in USD but in the form of bitcoin for if the value increases, the amount of money borrowed will also increase.
Contract is the most value, however, for loans with collateral, I think it's hard to measure how much is the value of collateral if the collateral is a property, as anytime bitcoin will pump or dump, that would give the borrower an option whether to pay the loan or not and just let the collateral be foreclose.
How to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
People can do same thing like what banks do. They can create a contract of agreement between the lender and the borrower just to make sure that everything will be okay until the end. A normal lender has its own power even if he is just an ordinary person and not a bank. There are many things to think of, people borrows money when they really are in need. When loaning with bitcoin, I think it is better if you would loan the amount in USD but in the form of bitcoin for if the value increases, the amount of money borrowed will also increase.
This can be an interesting one after the implementation of the whole process. I am thinking it's afterward situations. It can be expanded with zero-sum and non-zero-sum theory. That means it can be a win-win situation for both just because of increasing the price of Bitcoin. Because the supply is limited, so the price of it can be increased anytime. Sometimes this win will work for the lender and sometimes it will work for borrower.
I will not advise anyone to issue loan in bitcoin. I don't think it will be possible for someone to come out with good profit at the end of the payment. Bitcoin is a decentralized currency which it will be hard for such loan to be granted to anyhow person in the country.
Many people go to bank to collect loan to improve their businesses and also Carter's for their family too. Collecting loan from bank, depend the amount of money collected that will determine the interest you will be paying every month to the bank,to balance up within a year. Many people find it difficult to balance up within a year because of the interest attache to it, is too high for me, that is making them not to meet up with their interest that caused them to lose their properties and other valuable things.
I don't think, it will be easy for someone to issue loans in bitcoin and expect that person to meet up with the payment .when the price is going down how would that person meet up with the loan unless interest will not go to be involve in such loan because if intereste involved no way the person can meet up the way other people use to Meet up with bank loan in the country.
Many people go to bank to collect loan to improve their businesses and also Carter's for their family too. Collecting loan from bank, depend the amount of money collected that will determine the interest you will be paying every month to the bank,to balance up within a year. Many people find it difficult to balance up within a year because of the interest attache to it, is too high for me, that is making them not to meet up with their interest that caused them to lose their properties and other valuable things.
I don't think, it will be easy for someone to issue loans in bitcoin and expect that person to meet up with the payment .when the price is going down how would that person meet up with the loan unless interest will not go to be involve in such loan because if intereste involved no way the person can meet up the way other people use to Meet up with bank loan in the country.
I started to think about it. How a bank and folks could issue loans to people?
Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
Its just like lending someone cash no different. You either get it back or you don't then you have to legally deal with it. Bitcoin is no different. I dont think banks will get into lending bitcoin because lime you said they would have to have 100% coverage meaning they cant just loan bitcoin magically...but they can lend their own coin
If that is the case, it will be difficult for those who borrow bitcoin in countries that have not legalized bitcoin. Lending and borrowing conventional cash money has been accepted by everyone and every country has prepared related regulations. But bitcoin is a little different because not all countries recognize it. How?
I started to think about it. How a bank and folks could issue loans to people?
Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
Its just like lending someone cash no different. You either get it back or you don't then you have to legally deal with it. Bitcoin is no different. I dont think banks will get into lending bitcoin because lime you said they would have to have 100% coverage meaning they cant just loan bitcoin magically...but they can lend their own coin
I think it’s going to be difficult to issue and make loans using bitcoin. Cryptocurrency price varies depending on what season it is, hence making it risky to loan and borrow because of its volatility. If ever someone borrowed btc and its price increased after he’ll have to pay more than he borrowed.
Another thing, its much more complex to have a crypto bank as it would definitely need some personal information, hence users need to provide for security reasons of the lender. If you would compare this concept to banks, this is certainly much of a hassle because it’s just going to be digital transaction unlike in banks where it requires physical appearance of the borrower. There should also be a contract stating the terms and conditions if the borrower wasn’t able to pay the amount and its interest on time.
The idea is nice, but risky. I honestly don’t know how we can pull this off. Maybe if concrete policies were be given, it can happen. Hoping to hear more opinions about this matter. Will read the new replies to this thread.
Another thing, its much more complex to have a crypto bank as it would definitely need some personal information, hence users need to provide for security reasons of the lender. If you would compare this concept to banks, this is certainly much of a hassle because it’s just going to be digital transaction unlike in banks where it requires physical appearance of the borrower. There should also be a contract stating the terms and conditions if the borrower wasn’t able to pay the amount and its interest on time.
The idea is nice, but risky. I honestly don’t know how we can pull this off. Maybe if concrete policies were be given, it can happen. Hoping to hear more opinions about this matter. Will read the new replies to this thread.
It is possible to make a loan for bitcoin but not in the banks because bitcoin is still not accepted by the government and banks do not also have the assurance that they can get protected by it if ever they needed the money because we know the value of bitcoin and that is very volatile. So, banks may not going to accept it unless government wanted to make it happen.
Thats really a nice question. While i don't really have any ideal on how such thing can be pulled off. But i will wait for others input then fter i go through their comments and reason how possible it is to acheive each of the stated points.
In terms of lending money in Bitcoin, it is partly due to the lender itself because the borrower wants to repay you in what currency you want them to pay if you want people to compensate you in Bitcoin. that would be pretty hard in my opinion, but the fact that you want that person to pay in currency is simple because Bitcoin is an accepted virtual currency that can be exchanged for cash and use a natural way
I started to think about it. How a bank and folks could issue loans to people?
Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
The only option for that is p2p lending because bitcoin is decentralized so I think there is no way to have a great system for that. p2p lending is the best option, we have a lending section here in forum, so I think that will be enough just provide some collateral or just simply having a trusted account profile will be enough. Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
There is a project I saw on this forum they issue loan in cryptocurrency, including bitcoin, I have not lay hand on it again to read their whitepaper so I see how they intend to factor dumping, so their loan won't be in trouble. Banks should be about to issue loan to customers in the future, the price of bitcoin will just be increasing as more and more persons size the privilege.
I believe that there is already a bitcoin lending service going on in this group with the likes of Darkstar giving loans to people with and sometimes wihout collateral, i believe that the same method could be used by banks to give loans in cryptos to their customers.
There is a project I saw on this forum they issue loan in cryptocurrency, including bitcoin, I have not lay hand on it again to read their whitepaper so I see how they intend to factor dumping, so their loan won't be in trouble. Banks should be about to issue loan to customers in the future, the price of bitcoin will just be increasing as more and more persons size the privilege.
I believe that there is already a bitcoin lending service going on in this group with the likes of Darkstar giving loans to people with and sometimes wihout collateral, i believe that the same method could be used by banks to give loans in cryptos to their customers. Bitcoin on credit is a complicated system. This is one of the main reasons why it has not yet been implemented. The second reason for the instability of the cryptocurrency market. I think that Bitcoin was created not for loans, but for full payment of services. Because the main chip bitkonka like most cryptocurrencies is anonymity.
Since, bitcoin is to serve as currency, it would have actually served for this purpose also, but that can only be when the volatility of bitcoin has reduced because the volatility makes it a little bit difficult to be able to cope with the loan repayment, Imagine that someone had bought bitcoin or borrowed it at $10000, if the person was to repay back now, the person will be paying more of bitcoin to the creditor which will favor the creditor the more when the price finally rebound and even if the price does not rebound, the creditor must have still gotten his own crypto value back.I would not really ever advise anyone to actually go for bitcoin loan or any cryptocurrency loan because of its volatility, but if we are to look at the interest rate being charged, it is by far better that borrowing money from the bank which will attract a huge interest rate, but we cannot have our cake and eat it all.
There is a project I saw on this forum they issue loan in cryptocurrency, including bitcoin, I have not lay hand on it again to read their whitepaper so I see how they intend to factor dumping, so their loan won't be in trouble. Banks should be about to issue loan to customers in the future, the price of bitcoin will just be increasing as more and more persons size the privilege.
@zikzag
I disagree with almost everything you say here.
I suppose first there is a language problem, bitkonda=Bitcoin? What the anonymity has to do here? Yes, Bitcoin is pseudo-anonymous, then what? I could use potatoes as currency, it's untraceable, it doesn't mean I will lend money (potatoes) to someone I don't know. There are legal papers etc (it could be a smart contract btw), anyone mentally stable won't lend money to someone unknow in the street.
Why not? Definition of "currency": medium of exchange, unit of account, store of value. Bitcoin has these 3 functions all in one. It could be the potatoes too!
https://blockfi.com/
I disagree with almost everything you say here.
Quote
...the main chip bitkonka like most cryptocurrencies is anonymity...
I suppose first there is a language problem, bitkonda=Bitcoin? What the anonymity has to do here? Yes, Bitcoin is pseudo-anonymous, then what? I could use potatoes as currency, it's untraceable, it doesn't mean I will lend money (potatoes) to someone I don't know. There are legal papers etc (it could be a smart contract btw), anyone mentally stable won't lend money to someone unknow in the street.
Quote
I think that Bitcoin was created not for loans
Why not? Definition of "currency": medium of exchange, unit of account, store of value. Bitcoin has these 3 functions all in one. It could be the potatoes too!
Quote
...The second reason for the instability of the cryptocurrency market...
The dollar isn't stable, it changes every day.Quote
...This is one of the main reasons why it has not yet been implemented...
An example below, there are a few othershttps://blockfi.com/
Borrowing bitcoin and paying back bitcoin and borrowing bitcoin and paying with dollar are two totally different things.
For example, if you get a loan in bitcoin and you want to later pay it back by buying bitcoin when you have money the price of bitcoin may have gone up and it may have a trouble for you to buy that much bitcoin because of the price increase, or maybe it will be easier because price went down and you will get more bitcoin for the same price.
However, if it is just dollars, like you get a loan in bitcoin form but 1000 dollars and will have to pay 1100 dollars back, that would be easy and doable because people could totally pay back in dollars but in bitcoin form. So you are basically getting dollar loans but the transaction is made in bitcoin, that could be a good start for this.
For example, if you get a loan in bitcoin and you want to later pay it back by buying bitcoin when you have money the price of bitcoin may have gone up and it may have a trouble for you to buy that much bitcoin because of the price increase, or maybe it will be easier because price went down and you will get more bitcoin for the same price.
However, if it is just dollars, like you get a loan in bitcoin form but 1000 dollars and will have to pay 1100 dollars back, that would be easy and doable because people could totally pay back in dollars but in bitcoin form. So you are basically getting dollar loans but the transaction is made in bitcoin, that could be a good start for this.
As long as there's a contract it's possible to enforce the collection, and if not possible, you can take the collateral.
It's pretty the same with your example, banks loan to people with collateral, in your example, that's a mortgage loan, and will just forfeit the collateral when a borrower is unable to pay, that's kinda secured and a typical joe can also do the same thing as like I said, as long as there's a contract.
It's pretty the same with your example, banks loan to people with collateral, in your example, that's a mortgage loan, and will just forfeit the collateral when a borrower is unable to pay, that's kinda secured and a typical joe can also do the same thing as like I said, as long as there's a contract.
I started to think about it. How a bank and folks could issue loans to people?
Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
You can be given loans through bitcoin…but they don’t give you bitcoin, they give you fiat .how it works is that you will submit your coins as collateral, coins that are worth the amount you would like to collect as loan. You submit the coins and then collect fiat and after you pay back the money you borrowed, they will give you back your coins, and when paying the money you will also have to pay the interest that is on top. But what you can’t do is give loans in cryptocurrency exactly, nah you can’t do that. If you do it then what are you using as collateral? That doesn’t work. Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
But now, between folks. Let's say I'm the banker and you're the customer looking to borrow money to buy a house. I can lend you the money but how to be sure you will pay me back with full interests? With banks, the solution is easy, the bank seizes the house and you can't do something. But the average Joe hasn't the same 'power' than a bank to collect a debt.
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