Issuing loans in Bitcoin, how we could do it - page 2.

RealMalatesta

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Quote from: justdimin on July 04, 2019, 03:36:23 AM

There was a company that did something about loans with collateral and it was literally automatic. I know people are not really fans of doing it since they could literally just sell whatever they have if they were so much in need of money instead of give it as collateral but as a service for people who are looking for it that was a start.

You would for example get 100 dollars loan from them in bitcoin and give them 120 dollars worth of ethereum to them, they charge you lets say 5 bucks as interest and when you pay them 105 bucks back in bitcoin they gave you 120 dollars worth of ethereum back. Now, this makes no sense since if you need money you could just sell your ethereum instead of giving it as collateral but at least it was a start and you could have used it. Kabbage literally started out this way and became one of the biggest digital lenders in the whole world.

It is easy for everyone to just sell their investment anytime they need money, but the concept of crypto loan is to give people the opportunity to still hold their cryptocurrency without using it while they still have access to what they would have pulled out of their portfolio to meet up with whatever thing they need it for.

But come to think of it, if they pull out the investment directly from their portfolio, there are some people that made their investment during the last ATH, let’s say around $19800, and probably their investment is now $11k, and they believing that one day in future, bitcoin will climb back to such amount for them to recover their full investment back, do you think they will be willing to completely lose their portfolio now, they will prefer to take loan for certain period of time, while they still give opportunity for their investment to climb.

justdimin

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There was a company that did something about loans with collateral and it was literally automatic. I know people are not really fans of doing it since they could literally just sell whatever they have if they were so much in need of money instead of give it as collateral but as a service for people who are looking for it that was a start.

You would for example get 100 dollars loan from them in bitcoin and give them 120 dollars worth of ethereum to them, they charge you lets say 5 bucks as interest and when you pay them 105 bucks back in bitcoin they gave you 120 dollars worth of ethereum back. Now, this makes no sense since if you need money you could just sell your ethereum instead of giving it as collateral but at least it was a start and you could have used it. Kabbage literally started out this way and became one of the biggest digital lenders in the whole world.

romero121

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Quote from: The Sceptical Chymist on June 27, 2019, 01:10:12 PM

LeGaulois, this is one of the things that the bitcoin world needs--a good and safe way to borrow bitcoin. From everything I've seen of the lending section on the forum, it's a nightmare to do so. I would imagine that any crypto bank would have to collect collateral for any loan being issued, which is what traditional banks do anyway unless a person's credit is solid.

The problem with loans on bitcointalk is that they're often being requested by people who have no or inadequate collateral, and a lot of them have no intention whatsoever to pay back the loan. In addition, there's the anonymity factor. A crypto bank would likely have to verify the identity of the borrower. It could work, but there would have to be major security features implemented on the part of the lender. Loans would look much different than they do currently, i.e., less anarchy, less trust, more collateral and identification verification.

Didn't Trendon Shavers try this? Not sure if he was loaning out money, but he did try to start some sort of crypto savings and loan thing. Look what happened there.

This can be sought with the gold loans from my understanding, in traditional banking we get used to gold loans where gold is given as the collateral. Here the value of the collateral gold is valued 75% and the sum of amount equal to the gold is got by the borrower. Further for this interest is being levied which need to be paid along with the borrowed amount to get back the gold. This way can cryptocurrency bank function same as the traditional banks.

As stated collateral through our forum is purely on trust and lot many have got cheated, this can't be made perfect as it is impossible to collect collateral as well as do KYC. A physical banking system is the possible way to provide loans with proper collateral. These days there were apps that are issuing loans in fiat, and here we're supposed to accept legal norms and if we didn't pay our loan within the quoted tenure with the interest they have the rights to take legal action against us. If we pay the loan properly then we can request for an increased amount. This is a limited amount service where initially what we can get as loan is just $100.

MidnightWolf

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I think that crediting users in Bitcoin is a very dangerous way to implement certain services. Today, things are already very bad with the popularization of cryptocurrency, and if due to loans in Bitcoin the same problems arise as with the banking system, then confidence in cryptocurrency will generally fall. At the same time, the whole situation can be aggravated by price instability.

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Quote from: vixcious on June 27, 2019, 06:07:29 AM

I think Bitcoin lending businesses will have their own management. Sure, they will not be able to give another person their country and only provide National ID.
they can only lend to those who can pay interest and they can control their whereabouts.

If there was full support of government for cryptocurrency, I would have seen it as an easy thing to go into crypto loan business, at least there would have been regulation then that may bind the borrower and the lender, which will make it impossible for the borrower to default in payment, and maybe with support and regulations, we would have crypto banks that can easily manage such activities and the risk involved.

Cryptocurrency is a peer to peer system, which usually does not involve personal contact before a transaction can be carried out, so I am really wondering how crypto loan activity can be easily carried out and how it can be managed if there is an issue with paying bank, if the borrower refuses to pay, I dint think authority will meddle in this as they are not authorized to engage in anything that is against the law yet, which may even land the lender in trouble if reported.

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Quote from: LeGaulois on June 13, 2019, 02:21:07 PM

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.

I really don't know about this kind of wastes are also available in the cryptocurrency field to get the loan with the cryptocurrencies but if it is giving the helpful things for the people then I also ready to try this but I need some guidance.

The Sceptical Chymist

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LeGaulois, this is one of the things that the bitcoin world needs--a good and safe way to borrow bitcoin. From everything I've seen of the lending section on the forum, it's a nightmare to do so. I would imagine that any crypto bank would have to collect collateral for any loan being issued, which is what traditional banks do anyway unless a person's credit is solid.

The problem with loans on bitcointalk is that they're often being requested by people who have no or inadequate collateral, and a lot of them have no intention whatsoever to pay back the loan. In addition, there's the anonymity factor. A crypto bank would likely have to verify the identity of the borrower. It could work, but there would have to be major security features implemented on the part of the lender. Loans would look much different than they do currently, i.e., less anarchy, less trust, more collateral and identification verification.

Didn't Trendon Shavers try this? Not sure if he was loaning out money, but he did try to start some sort of crypto savings and loan thing. Look what happened there.

LeGaulois

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Do you remember the site BTCJam? Why do you think the site failed? Because people weren't paying their due back. What lenders have been able to do? Nothing
IRL, it will be almost the same thing. you ask collateral, you will still lose money if the person doesn't repay. You can say to go injustice, you will still lose money with the cost to go in court.

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Maybe we can do it in a technological way? I mean I know people will find loopholes and so forth and that is guaranteed to be abused but if we can do some sort of "Ethereum blockchain and ICO issuing" type of deal in reverse that would be at least a right step towards it. Like you send someone funds and that person will take it and spend it on whatever they want but when the time comes the system sends your loan back to you with interest from his wallet, if he doesn't have any then when he gets any money at all in there you will get your money back automatically.

Obviously, there are millions of possibilities like not using the same wallet anymore and like that but you can find stuff like lock it on your pc and force it to receive all new coins and what not, I don't know how it could be done but that type of automatic system might be at least a right step into a good lending system.

vixcious

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I think Bitcoin lending businesses will have their own management. Sure, they will not be able to give another person their country and only provide National ID.
they can only lend to those who can pay interest and they can control their whereabouts.

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Quote from: fullhdpixel on June 27, 2019, 02:27:38 AM

Quote from: DigitalCyberius on June 24, 2019, 02:16:28 AM

Quote from: LeGaulois on June 13, 2019, 02:21:07 PM

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.

There are crypto-based lending platforms out there. Some require collateral via another crypto, so not sure how effective that is. They also require you to verify your identity, so I'm sure, but they may be able to take legal actions if necessary. We're currently creating an infographic on the subject. Some names to look into are: Celsius Network, Nuo Network, Dharma.io, Compound Finance.

Have a good day,
The Cyberius team.

Legal action? That is when you are dealing with someone within the lender’s jurisdiction, I mean maybe the same country, imagine someone in United Stated lending Bitcoin to someone is China, how would he take legal action when the person defaulted, I think there is still more to this crypto lending that I am yet to understand too.

I have never thought of going into cryptocurrency loan business or think of getting a loan through it, but I think we all have to learn more on this for better understanding, because I really can’t seems to flow along when I see issues on cryptocurrency loan.

although I have not opened the requirements that must be fulfilled to get a loan, but I am not interested in borrowing it, as you have explained, whether we will be carried away in international law, I do not understand. but it is very scary to imagine it

fullhdpixel

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Quote from: DigitalCyberius on June 24, 2019, 02:16:28 AM

Quote from: LeGaulois on June 13, 2019, 02:21:07 PM

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.

There are crypto-based lending platforms out there. Some require collateral via another crypto, so not sure how effective that is. They also require you to verify your identity, so I'm sure, but they may be able to take legal actions if necessary. We're currently creating an infographic on the subject. Some names to look into are: Celsius Network, Nuo Network, Dharma.io, Compound Finance.

Have a good day,
The Cyberius team.

Legal action? That is when you are dealing with someone within the lender’s jurisdiction, I mean maybe the same country, imagine someone in United Stated lending Bitcoin to someone is China, how would he take legal action when the person defaulted, I think there is still more to this crypto lending that I am yet to understand too.

I have never thought of going into cryptocurrency loan business or think of getting a loan through it, but I think we all have to learn more on this for better understanding, because I really can’t seems to flow along when I see issues on cryptocurrency loan.

atliens99

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Its too messy for it to work and traditional banks lend out money they don't have. Bitcoin doesn't work with fractional lending since you have to actually own the btc to lend it out.

automaticmoney

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they are many projects which issue loans on bitcoin but finally they didn't survive the loaning mechanism on bitcoin so i feel blockchain based loans may nt be successfull

Theb

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This is the sad thing about loaning cryptocurrencies it's either you offer them another cryptocurrency as collateral or you have to offer something else in return. That something else I'm talking about is something you cannot just send virtually for you to have a loan, these kinds of exchange requires to be in written form to bind them legally stating that if the loanee didn't pay what he owes (+interest) the loaner will have the full ownership of what he have given them as collateral. With this where I think you need to appear physically in a bank I think it makes no sense for you to still get BTC rather than straight out Fiat currency if you still plan to convert it to fiat later on.

LeGaulois

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Quote from: fiulpro on June 22, 2019, 06:24:58 PM

The problem will be :- the changing the price of Bitcoins .
If you are giving someone 0.1 BTC and it somehow changed into millions would you still be okay ? With not taking the current amount and taking only the past amount ?

That's something that will be problematic.
Also people take money to actually buy things of Everyday life therefore they will have to convert this into normal money that would actually be problematic since you will be paying a lot more .

From a debtor point of view it is pretty problematic.

If you lend money to someone, let's say 5 BTC, you expect to receive back the 5 BTC + interests. No matter if the price jumps to $1 million, all I want is what has been written in the contract. Like if you lend 100k € you want the same in Euros no matter if the USD/EUR decreased by 10%.

What's the problem with exchanges, what will be paid more? When people really need money they are ready to accept anything.

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Quote from: o_e_l_e_o on June 24, 2019, 04:51:07 AM

Quote from: 1Referee on June 22, 2019, 04:14:54 PM

That being said, I didn't know you could take out a loan in a currency completely different to the currency you are being paid with.

If, as he says, his national currency has halved in respect to USD over a short period of time, then he certainly lives in a country with rampant inflation. It's likely that some companies will not sell products or give out loans/credit (especially for expensive products like cars) in the national currency if it is so unstable. This will be doubly true if it is a global company rather than a national one.

Let's assume he lives somewhere like Argentina. 5 years ago, the exchange rate was around 5 pesos to the dollar. Now it is around 40 pesos to the dollar. It makes sense that companies don't want to expose themselves to long term loans and risk in such a rapidly devaluing currency. What doesn't make sense is OP taking out a loan knowing that his own currency is devaluing so quickly.

Savvy Argentinians like to take out loans in pesos and save up in USD (or more and more in BTC). In fact, if they don't do it more it's only because the interest rates are ginormous and the banks won't give money so easily, but there are many ways you can use inflation in your favor with a bit of imagination.

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Quote from: 1Referee on June 22, 2019, 04:14:54 PM

That being said, I didn't know you could take out a loan in a currency completely different to the currency you are being paid with.

If, as he says, his national currency has halved in respect to USD over a short period of time, then he certainly lives in a country with rampant inflation. It's likely that some companies will not sell products or give out loans/credit (especially for expensive products like cars) in the national currency if it is so unstable. This will be doubly true if it is a global company rather than a national one.

Let's assume he lives somewhere like Argentina. 5 years ago, the exchange rate was around 5 pesos to the dollar. Now it is around 40 pesos to the dollar. It makes sense that companies don't want to expose themselves to long term loans and risk in such a rapidly devaluing currency. What doesn't make sense is OP taking out a loan knowing that his own currency is devaluing so quickly.

DigitalCyberius

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Quote from: LeGaulois on June 13, 2019, 02:21:07 PM

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.

There are crypto-based lending platforms out there. Some require collateral via another crypto, so not sure how effective that is. They also require you to verify your identity, so I'm sure, but they may be able to take legal actions if necessary. We're currently creating an infographic on the subject. Some names to look into are: Celsius Network, Nuo Network, Dharma.io, Compound Finance.

Have a good day,
The Cyberius team.

iMark

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Quote from: LeGaulois on June 13, 2019, 02:21:07 PM

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.

That's how the capitalist system works, with the conditions that you signed before you borrowed funds, you wouldn't be able to do
anything if you couldn't pay the debt. the bank would easily lend money because he didn't lose anything

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