Both sides of balance sheet is expanded. Read this article it explains more correctly than the posters here
http://www.cnbc.com/id/100497710
Aah... Thought so.
Many people have misunderstood the leveraging bit.
Topic: Loans in BTC - page 4. (Read 6507 times)
Both sides of balance sheet is expanded. Read this article it explains more correctly than the posters here
http://www.cnbc.com/id/100497710
Aah... Thought so.
Many people have misunderstood the leveraging bit.
From an accounting point of view, if they create 1000 loans for every 100 deposit, what is the liability corresponding to the loan of 1000 (which appears on the asset side)?
Both sides of balance sheet is expanded. Read this article it explains more correctly than the posters here
http://www.cnbc.com/id/100497710
Incorrect.
If that were true we wouldn't have such an extreme increase in the money supply, national debt, and inflation. The way the Fed and banks in the US works is this:
Person A deposits 100. The bank then creates on book 900 to use for loans and credit=1000 Bam, money created out of thin air.
The banks do this for every deposit that is made, and new money is created "on book" for the additional 9/10s of the fractional reserve rule. This is what results in the highly compounding increase in the money supply. In reality, the actual physical money supply that exists couldn't even pay off the interest on the outstanding national debt.
If that were true we wouldn't have such an extreme increase in the money supply, national debt, and inflation. The way the Fed and banks in the US works is this:
Person A deposits 100. The bank then creates on book 900 to use for loans and credit=1000 Bam, money created out of thin air.
The banks do this for every deposit that is made, and new money is created "on book" for the additional 9/10s of the fractional reserve rule. This is what results in the highly compounding increase in the money supply. In reality, the actual physical money supply that exists couldn't even pay off the interest on the outstanding national debt.
From an accounting point of view, if they create 1000 loans for every 100 deposit, what is the liability corresponding to the loan of 1000 (which appears on the asset side)?
Incorrect.
If that were true we wouldn't have such an extreme increase in the money supply, national debt, and inflation. The way the Fed and banks in the US works is this:
Person A deposits 100. The bank then creates on book 900 to use for loans and credit=1000 Bam, money created out of thin air.
The banks do this for every deposit that is made, and new money is created "on book" for the additional 9/10s of the fractional reserve rule. This is what results in the highly compounding increase in the money supply. In reality, the actual physical money supply that exists couldn't even pay off the interest on the outstanding national debt.
If that were true we wouldn't have such an extreme increase in the money supply, national debt, and inflation. The way the Fed and banks in the US works is this:
Person A deposits 100. The bank then creates on book 900 to use for loans and credit=1000 Bam, money created out of thin air.
The banks do this for every deposit that is made, and new money is created "on book" for the additional 9/10s of the fractional reserve rule. This is what results in the highly compounding increase in the money supply. In reality, the actual physical money supply that exists couldn't even pay off the interest on the outstanding national debt.
From an accounting point of view, if they create 1000 loans for every 100 deposit, what is the liability corresponding to the loan of 1000 (which appears on the asset side)?
There is no reason why fractional reserve banking could not be done with bitcoins. After all, it existed when the U.S. was on the Gold Standard.
It can't be done with bitcoin, because you cannot produce more bitcoins like you can dollar bills...And when the banks have to fufill the loan, they will have to send actual bitcoins to fund the loan....Person A deposits 100 BTC. The bank A loans 90 BTC to person B.
Person B deposits 90 BTC. The bank B loans 81 BTC to person C.
Person C deposits 81 BTC. The bank C loans 72 BTC to person D.
Person D deposits 72 BTC. ...
Total apparent number of bitcoins in the system: 1000
That's classic fractional reserve banking and it works with dollars, bitcoins, gold, or seashells.
Incorrect.
If that were true we wouldn't have such an extreme increase in the money supply, national debt, and inflation. The way the Fed and banks in the US works is this:
Person A deposits 100. The bank then creates on book 900 to use for loans and credit=1000 Bam, money created out of thin air.
The banks do this for every deposit that is made, and new money is created "on book" for the additional 9/10s of the fractional reserve rule. This is what results in the highly compounding increase in the money supply. In reality, the actual physical money supply that exists couldn't even pay off the interest on the outstanding national debt.
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
I lend btc on there . I have made a few loans and have been burned once. You can choose to borrow with btc pegged to US dollar or not. As a lender you determine if you want to lend to a pegged loan or not. Reputation loans are a quick turnaround. Some borrowers will do multiple rep builders. After 1-3 loans with a quick payback seem to be the safest for later loans.
Reading what happened in the past in the loan section of the forum, I would never risk a loan with my precious bitcoins.
The probability to be scammed is high and the revenues are too little, I'll stay away from that business.
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
I lend btc on there . I have made a few loans and have been burned once. You can choose to borrow with btc pegged to US dollar or not. As a lender you determine if you want to lend to a pegged loan or not. Reputation loans are a quick turnaround. Some borrowers will do multiple rep builders. After 1-3 loans with a quick payback seem to be the safest for later loans.
Reading what happened in the past in the loan section of the forum, I would never risk a loan with my precious bitcoins.
The probability to be scammed is high and the revenues are too little, I'll stay away from that business.
I think loans in BTC is very risky 
people can just get the BTC and run away
expect you know them in real life
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
I lend btc on there . I have made a few loans and have been burned once. You can choose to borrow with btc pegged to US dollar or not. As a lender you determine if you want to lend to a pegged loan or not. Reputation loans are a quick turnaround. Some borrowers will do multiple rep builders. After 1-3 loans with a quick payback seem to be the safest for later loans.
I think it's still risky
people can just get the BTC and run away
expect you know them in real life
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
I lend btc on there . I have made a few loans and have been burned once. You can choose to borrow with btc pegged to US dollar or not. As a lender you determine if you want to lend to a pegged loan or not. Reputation loans are a quick turnaround. Some borrowers will do multiple rep builders. After 1-3 loans with a quick payback seem to be the safest for later loans.
I think it's still risky
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
I lend btc on there . I have made a few loans and have been burned once. You can choose to borrow with btc pegged to US dollar or not. As a lender you determine if you want to lend to a pegged loan or not. Reputation loans are a quick turnaround. Some borrowers will do multiple rep builders. After 1-3 loans with a quick payback seem to be the safest for later loans.
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
I lend btc on there . I have made a few loans and have been burned once. You can choose to borrow with btc pegged to US dollar or not. As a lender you determine if you want to lend to a pegged loan or not. Reputation loans are a quick turnaround. Some borrowers will do multiple rep builders. After 1-3 loans with a quick payback seem to be the safest for later loans.
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
btc jam is very similar to sites like prosper except that prosper will hire a collection agency for you while btcjam will make you collect yourself if the borrower doesn't pay I looked into them and they are quite similar to the Prosper model. I made some money with Prosper but I am much more risk averse about my bit coin than I am about fiat currency.
Safello explores problems and possibilities with bitcoin P2P lending. https://blog.safello.com/index.php/2014/07/21/bitcoin-peer-peer-lending/
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
btc jam is very similar to sites like prosper except that prosper will hire a collection agency for you while btcjam will make you collect yourself if the borrower doesn't pay I looked into them and they are quite similar to the Prosper model. I made some money with Prosper but I am much more risk averse about my bit coin than I am about fiat currency.
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
btc jam is very similar to sites like prosper except that prosper will hire a collection agency for you while btcjam will make you collect yourself if the borrower doesn't pay 
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
Thats the most important thing in loaning BTC. What would happen if you lend $30 worth BTC and after 90 days you get not $33, but instead you get $23.
I loan you $30 in BTC.
After 90 days you pay me $31 in BTC.
Obviously the lender would have been better off holding the coins and probably made more profit if the price had gone up but I think pegging the price to USD is more attractive as I don't think anyone wants to end up in a situation where they borrow say 10 BTC and suddenly the price increases by 10x leaving the borrower stuck.
bitcoin is not the right currency for loans.
I don't know if another alt currency would work or not, but any bitcoin loans would have to take place outside the blockchain and be done by contract.
I don't want BTC to replace fiat anyway, but rather compliment it.
I don't know if another alt currency would work or not, but any bitcoin loans would have to take place outside the blockchain and be done by contract.
I don't want BTC to replace fiat anyway, but rather compliment it.
I also think that any loans in bitcoin are risky. btc is a non-reversible currency by nature. If someone does not want to return the loan, what are you going to do?
Take their collateral
Gold isn't particularly reversible either, but there was a time when all loans were denominated in gold.
WTF?
Because they want money but they don't want to give up their asset permanently, obviously? Because they want to buy something else? You know, the reason for any loan ever? Just with a limit equal to the borrowers total equity?
Moreover why would a person take A loan if he had money in his account to be reversed away in the case of non payment???
The collateral used in BTC loans is liquid (can easily be converted into BTC otherwise it would not be accepted) and the collateral is not used by the borrower - it is generally held by escrow. In essence borrowers are giving up control of cash in exchange for different cash and they need to repay the lender plus interest.
There would be no reason why the borrower couldn't simply sell the collateral then repurchase when they would be able to repay the loan instead of borrowing and paying interest
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
Thats the most important thing in loaning BTC. What would happen if you lend $30 worth BTC and after 90 days you get not $33, but instead you get $23.
BTCjam.com has been doing loans in BTC for awhile where people can do peer to peer lending. I have never tried it before, and I was just reading how someone made off with a bunch of investor money...but that is always the risk of lending...
Thing is BTCJam only does soft credit checking, it's not actually pulling regulated information to asses someone's risk when being loaned money. If BTCJam teamed up with someone like Experian who offer business services they could reduce a lot of time spent checking IDs, get a more reliable credit score and they even include debt recovery.
The downside to this is that people will bad credit will never be able to get a loan, even if they really can afford to pay it back.
Also the BTC would have to be pegged to USD to avoid problems with fluctuation.
Well if you want there is a site Btcjam loaning, but you should lend your bitcoins to people that confirmed their identify.
People give about +0.5% so if you want to make $10 in 90 days after lending you should lend someone $2000 worth of BTC.
Its $2000 BTC risk for $10 in 90 days. Thats pretty awful since there can be a guy that comes back after 90 days and says that his plan didnt work out and he lost his btc.
People give about +0.5% so if you want to make $10 in 90 days after lending you should lend someone $2000 worth of BTC.
Its $2000 BTC risk for $10 in 90 days. Thats pretty awful since there can be a guy that comes back after 90 days and says that his plan didnt work out and he lost his btc.
Loans for bitcoins wouldn't work very well, considering once something is sent, it is sent permanently. Unless bitcoin is accepted as a currency and regulated (which we don't want it regulated), then loans wouldn't really work out. At least without proper collateral.
Loans can work without collateral, but in order for BTC loans to be enforced, there must be fiat still in use that can be seized by the courts to pay the creditor in the event the borrower defaults on his loan. It is obviously not possible to seize a borrower's bitcoin assets without his private keys. You can seize all non-bitcoin assets. Not just fiat currency.
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