Topic: Loans in BTC - page 3. (Read 6507 times)

Quote from: 100000000sat on August 12, 2014, 08:32:43 AM

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

The penalty for not paying a debt is not jail. Loans are a civil matter, not criminal. As long as you did not willfully deceive the lender when you took out the loan (for example by forging income documents) then you will have zero chance of jail if you don't pay a loan.

This was a metaphor. You can always make someone's life unbearable even without throwing them into a prison cell. Wink

Razick

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Quote from: 100000000sat on August 12, 2014, 08:32:43 AM

Quote from: tee-rex on August 13, 2014, 05:50:42 AM

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

That's true, but then again if your only assets are Bitcoins, then 1) you probably can't get a large loan to begin with and 2) what's the point? Are you going to sell everything you own for Bitcoin and know that you can never buy a house or a car because of your outstanding debt?

Fray

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Quote from: 100000000sat on August 12, 2014, 08:32:43 AM

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

The penalty for not paying a debt is not jail. Loans are a civil matter, not criminal. As long as you did not willfully deceive the lender when you took out the loan (for example by forging income documents) then you will have zero chance of jail if you don't pay a loan.

Asianconnect

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Asianconnect

Say BTC does become the currency that people rely on. How would a loan system work? I would imagine people would still need to take out loans for large purchases, such as cars and houses.

Without a credit system how does something like that play out? Would credit cards in BTC exist, and you still received a credit score that allowed you to take out money for a house? The fluctuation of the BTC price definitely makes it difficult for that model to work.

I am all about Bitcoins, but I can't seem to wrap my head around this part of society that exists, and is still required with our current mentality.

Not sure if this is the right location for this, but I figured this would be a good place to start.

This is very interesting question to discuss now that I've read this thread I also wonder how will it works in the future.

tee-rex

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Quote from: 100000000sat on August 12, 2014, 08:32:43 AM

Quote from: 100000000sat on August 12, 2014, 08:32:43 AM

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

Mobius

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Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

100000000sat

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Quote from: michaelwang33 on August 05, 2014, 10:15:20 PM

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

Mobius

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Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

This is very true because it is impossible to force someone to repay a loan using bitcoin. The closest thing you can do to forcefully recover your loaned bitcoin would be to get a judgment on the borrower (if you know his real identity) and have the courts seize his fiat assets and convert that fiat back into btc.

I think this is a very big problem that will prevent the BTC lending economy from ever taking off. The fact that a lender essentially cannot force a borrower to repay his debt when he has the ability to do so will prevent the lender from wanting to lend in the first place and will cause interest rates to be higher then other potential sources of credit.

kutaka

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Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

I cannot really agree with that.

Bitcoin is as good for loans as fiat. All you need is borrower identity and legal agreement.

michaelwang33

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Quote from: polynesia on August 04, 2014, 01:11:30 PM

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

This is very true because it is impossible to force someone to repay a loan using bitcoin. The closest thing you can do to forcefully recover your loaned bitcoin would be to get a judgment on the borrower (if you know his real identity) and have the courts seize his fiat assets and convert that fiat back into btc.

Razick

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Quote from: Razick on August 04, 2014, 12:42:54 PM

Quote from: Razick on August 04, 2014, 12:42:54 PM

Say BTC does become the currency that people rely on. How would a loan system work? I would imagine people would still need to take out loans for large purchases, such as cars and houses.

Without a credit system how does something like that play out? Would credit cards in BTC exist, and you still received a credit score that allowed you to take out money for a house? The fluctuation of the BTC price definitely makes it difficult for that model to work.

I am all about Bitcoins, but I can't seem to wrap my head around this part of society that exists, and is still required with our current mentality.

Not sure if this is the right location for this, but I figured this would be a good place to start.

It is literally no different than cash with regards to loans. Sure theoretically someone could run off with Bitcoin... but, the same could be said for cash loans. It's all about credit scores. Someone with a $25,000 credit could refuse to repay, but over time they've proven that unlikely. The same will go for Bitcoin. No one is going to loan you 10,000 BTC anonymously, but if you stake your credit or collateral on it, they may.

Would a default on a bilateral BTC loan mess up a person's credit score?
If not, then a person with a good credit score might also refuse to pay...

I don't know how credit scores work, so it may or may not work that way right now, although I think it does as long as it's done right, but presumably in the future it will for sure assuming Bitcoin becomes more mainstream.

Keep in mind that there is also civil liability involved. As long as a person's real identity is tied to a loan, and the loan is large enough to be worth it, they could be taken to court if they refuse to pay. Even if they refuse to pay or declare bankruptcy I'm pretty sure either one of those actions would (severely) harm their credit score.

polynesia

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Say BTC does become the currency that people rely on. How would a loan system work? I would imagine people would still need to take out loans for large purchases, such as cars and houses.

Without a credit system how does something like that play out? Would credit cards in BTC exist, and you still received a credit score that allowed you to take out money for a house? The fluctuation of the BTC price definitely makes it difficult for that model to work.

I am all about Bitcoins, but I can't seem to wrap my head around this part of society that exists, and is still required with our current mentality.

Not sure if this is the right location for this, but I figured this would be a good place to start.

It is literally no different than cash with regards to loans. Sure theoretically someone could run off with Bitcoin... but, the same could be said for cash loans. It's all about credit scores. Someone with a $25,000 credit could refuse to repay, but over time they've proven that unlikely. The same will go for Bitcoin. No one is going to loan you 10,000 BTC anonymously, but if you stake your credit or collateral on it, they may.

Would a default on a bilateral BTC loan mess up a person's credit score?
If not, then a person with a good credit score might also refuse to pay...

Razick

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