Issuing loans in Bitcoin, how we could do it - page 3.

kodtycoon

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Quote from: Bagaji on June 21, 2019, 10:52:05 AM

The only way you the lender can get your loan with interest is by way given out the loan to who have equivalent collateral of the sum of loan amount you give to the person.

in this case it does not guarantee that collateral will have equal value when prices move, imagine when you give loans in bitcoin and with altcoins as collateral and when prices move differently then the value is not the same as at first, this is a risky business in this industry

fiulpro

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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.

exstasie

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Quote from: salty on June 22, 2019, 07:25:00 AM

Quote from: oseikuf44 on June 13, 2019, 03:36:07 PM

Loans issued in Bitcoins is a win win situation between the borrower and lender. If the price of Bitcoins goes up after issuing, the lender has more to pay in fiate and vice versa for the borrower.

That's exactly why I would never take a loan in bitcoin.I in the life already faced a situation when I took on credit the car in $ but not in national currency.After some time, $ began to cost 2 times more,respectively, and I had to pay 2 times more.Since the salary I received in the national currency and not in $ and the salary was at the same level.

Good point. You wouldn't want to take a loan in BTC (and spend it) if your only income is in fiat currency. That's effectively shorting Bitcoin. If the price rises, it becomes that much harder to pay off the principal.

It works fine though if your income is paid in BTC. In a world where salaries and goods/services are commonly paid for with Bitcoin, BTC-denominated loans will make more sense.

LeGaulois

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

Quote from: salty on June 22, 2019, 07:25:00 AM

I in the life already faced a situation when I took on credit the car in $ but not in national currency.After some time, $ began to cost 2 times more,respectively, and I had to pay 2 times more.Since the salary I received in the national currency and not in $ and the salary was at the same level.

Mind explaining your situation a bit? This is what I think have understood so far; you took out a loan through a foreign institution in USD, but used that to fund the car in your own country's currency? If your native fiat currency is so weak that it halves in value, why take out a loan in USD? Problems with fiat currencies that lose value play for a long time before they really tank against USD, so it can't catch you by surprise.

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. I would have assumed that a basic check of your finances would expose the risk and for that reason the loan wouldn't be granted to you. Perhaps things are different outside Europe.

That's what I also wondered, how did he get a loan in a currency other than his own? I supposed he took the loan from the car dealership, as it's been trending since. They don't do basic check correctly, sometimes not at all. Even if they did on his case they couldn't estimate a potential currency crash

1Referee

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Quote from: salty on June 22, 2019, 07:25:00 AM

I in the life already faced a situation when I took on credit the car in $ but not in national currency.After some time, $ began to cost 2 times more,respectively, and I had to pay 2 times more.Since the salary I received in the national currency and not in $ and the salary was at the same level.

Mind explaining your situation a bit? This is what I think have understood so far; you took out a loan through a foreign institution in USD, but used that to fund the car in your own country's currency? If your native fiat currency is so weak that it halves in value, why take out a loan in USD? Problems with fiat currencies that lose value play for a long time before they really tank against USD, so it can't catch you by surprise.

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. I would have assumed that a basic check of your finances would expose the risk and for that reason the loan wouldn't be granted to you. Perhaps things are different outside Europe.

salty

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Quote from: oseikuf44 on June 13, 2019, 03:36:07 PM

Loans issued in Bitcoins is a win win situation between the borrower and lender. If the price of Bitcoins goes up after issuing, the lender has more to pay in fiate and vice versa for the borrower.

That's exactly why I would never take a loan in bitcoin.I in the life already faced a situation when I took on credit the car in $ but not in national currency.After some time, $ began to cost 2 times more,respectively, and I had to pay 2 times more.Since the salary I received in the national currency and not in $ and the salary was at the same level.

o_e_l_e_o

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Quote from: stompix on June 21, 2019, 03:35:37 AM

If people would pay their debt back, there would no money printed out of thin air.

On the contrary. The money would still be printed, it would just be absorbed back in to the bank's finance books upon repayment of the loans.

If everyone paid back all their debts quickly, then banks would have very few outstanding loans, and as such, have much lower exposure to risks of defaulting whilst also be collecting very little in the way of interest. I suspect they would address this by starting to offer larger and riskier loans, which would make the problem worse rather than better.

whirlcoin

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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 think it is in the beginning Stage So I don't know how the procedure is going out and I don't really do it it previously that's why if anyone really make the loan like this in it will be definitely helpful by sharing your thoughts.

Bagaji

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The only way you the lender can get your loan with interest is by way given out the loan to who have equivalent collateral of the sum of loan amount you give to the person.

Nellayar

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Quote from: jrrsparkles on June 14, 2019, 01:10:42 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.

Just same as the fiat money loan,give loan only after collecting valid collateral like documents of house,if the borrower didn't pay you back the lend amount then you can seize the home as per the agreement you made earlier but it is possible only if government makes crypto as legal form of asset or money or there will be no actions can be taken if the borrower refuse the pay back the money.

What if the person who loans and person who give the loan are came from different countries? I think it is also immeasurable to get the documents in order to be a collateral to the loan. I am also thinking about the payments. For example, I loan 10 bitcoins when its price is 10K dollars but I pay 10 bitcoins when the price is 3K dollars. I think it should provide some rules when we loan through bitcoin.

joshy23

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Quote from: Vinaa77 on June 20, 2019, 06:24:22 PM

Quote from: damberg on June 17, 2019, 04:17:01 AM

One of the easiest thing is to write a contract between the Bitcoin borrower and lender. If it meets standards of their jurisdiction, the contract will be legally enforceable (raising chances for collateral liquidation if borrower defaults).

maybe that can be done by countries that have received crypto currency as the applicable currency but for countries that still prohibit savings and loan crypto currency transactions with bitcoin, of course it will not be possible

Still a difference between how the country will cater the entire crypto currency, with countries who embraced this market this particular practices will be able to be comply by enforce ruling inside the countries jurisdictions while out from this it will be hard to implement and hard to established any possible
rule outside the given premises.

mitchr4

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Quote from: damberg on June 17, 2019, 04:17:01 AM

One of the easiest thing is to write a contract between the Bitcoin borrower and lender. If it meets standards of their jurisdiction, the contract will be legally enforceable (raising chances for collateral liquidation if borrower defaults).

Such a contract will be very difficult for the borrowers to accept it even if it's me, let alone the borrower has offered the collateral. If he defaults to pay the loan the lender can still take the collateral with no punishment for the borrower. More clearly if there is already a collateral then there is no legal contract.

zergenyt09

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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.

The way you just described, it' seems dumb. How old are you, 6? If you are an adult you wouldn't be saying that banks are creating money magically. When you take loans from banks, they are giving you the money from their own wallet and expecting you to pay it back within a giving time and also pay the interest. So the money is not being created magically and digits poured into your account balance. Even when you want to deposit money into your account, do you go there and tell them to create money magically? It's the money you give to them that is being kept and recorded for you.

Vinaa77

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Quote from: damberg on June 17, 2019, 04:17:01 AM

One of the easiest thing is to write a contract between the Bitcoin borrower and lender. If it meets standards of their jurisdiction, the contract will be legally enforceable (raising chances for collateral liquidation if borrower defaults).

maybe that can be done by countries that have received crypto currency as the applicable currency but for countries that still prohibit savings and loan crypto currency transactions with bitcoin, of course it will not be possible

stompix

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Quote from: o_e_l_e_o on June 14, 2019, 10:01:25 AM

Quote from: stompix on June 14, 2019, 07:13:22 AM

And let's say after the bank has created this free 100$ out of thin air, I decide with that 100$ to come back and pay my debt in full. What happens to the money?
The bank erases your debt, takes back the money and everything is just as before you asked for a loan.

This is true, but not everyone pays off their debt. In the US, for example, consumer debt is now over $4 trillion, and increasing. Include mortgages in that figure, and household debt is over $13 trillion, and increasing.

People often get angry about government's printing new money to pay their debts or increase spending or whatever. The stats suggest governments only account for about 3% of the new money entering circulation. The other 97% comes from banks making loans.

Wait a minute....
If people would pay their debt back, there would no money printed out of thin air.

So the real ones to blame for this are not actually the backs but the people who take the money and don't pay them back? Grin

You realize this is a pretty strange thing to say, especially in this topic where we already labeled banks as the evil of the universe:P

Quote from: erikoy on June 17, 2019, 05:18:24 AM

It could be simplified if it will be done locally like bitcoin being partnered with a banks. As of now there are banks that has already accepted and integrated cryptocurrency and one of it that I know is the unionbank and is also been here in the Philippines. I never thought of this to happen but the unionbank has already stated that they are partnering the satoshi group.

Putting online two ATMs that convert fiat to bitcoin does not mean the bank is accepting bitcoin deposits or has "integrated" cryptocurrency.Also, who the hell is this "satoshi group" ?

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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.

Well in theory, banks just play with people's deposits, one person's deposit is another person's loan. Btw, commercial banks cannot print money, only central banks/Federal reserves can.
When an average Joe wants to lend bitcoins, he can sure lend, but it all comes down to how he wants to lend his money, the terms he lays down etc etc

What people usually would tend to do is get the borrower's personal details, verify it and then lend money. Also all borrow requests aren't fulfilled by the bank, so an average Joe isn't obligated to accept all his requests.

mazdafunsun

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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 am just wondering here. Lets assume that there is this 3rd person in addition to the guy who gives out the loans and the guy who takes it. All this guys have bitcoin addresses. So the 3rd guy is the one who is saying that this guy ( who is taking the loan) is stand up guy and will repay you, i vouch for him. THen all these 3 parties are tied together with smart contract and here you go you have a smart contract.

Naida_BR

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Quote from: automaticmoney on June 19, 2019, 10:52:58 AM

crypto currency and loans very difficult subject to handle even though we have escrow based transaction yet it is get back payments on time in this decentralized world is difficult

Indeed. The only assurance that the guy borrows the money can give is to provide some valuable assets to the guy that borrows him the money.
In that case he will be obliged to send the money back.

automaticmoney

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crypto currency and loans very difficult subject to handle even though we have escrow based transaction yet it is get back payments on time in this decentralized world is difficult

FanEagle

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I think the best case scenario would be making it a paper work like the banks do it with their regular loans but also having the governmental back for it as well. Like when I give you bitcoin and expect you to pay it back and than you do not than I have no power of claiming that loan from you.

However, let's say a bank gives you a loan and you refuse to pay it than they come to your door with cops to take away your stuff for a lot cheaper than they worth and sell your items to pay your loan for them. Which means if we can get that type of support for our crytpo loans from the government like giving the lenders cops to go get that money like mafia (which banks are actually mobs) than we can actually issue loans without any problems since it would be easy to reclaim it back.

Topic: Issuing loans in Bitcoin, how we could do it - page 3. (Read 1329 times)