http://en.wikipedia.org/wiki/Time_value_of_money
Topic: Why do people charge Interest for loans? (Read 1139 times)
Bitcoins sitting in a wallet make no interest.
Lending to others allows you to earn interest on your coins.
Lenders figure out what works for them so that their balance goes up as they let other people use their coins.
Lending to others allows you to earn interest on your coins.
Lenders figure out what works for them so that their balance goes up as they let other people use their coins.
NOT TRUE.
In fact, 100 bitcoins of holdings from 'the beginning', has earn you one heck of an interest rate. Saving coins seems to be better than lending coins without the added risks. (Might not always be true though). Satoshi could sign the int and end it all.
Great point.
Is it legit to charge interest in bitcoin? Doesn't it lead to fractional reserve banking?
Interest is another way of saying Entropy.
Fractional Reserve banking in of itself is not bad. People running it, might make it seem bad. Without FR banking, banks would have to charge you to hold your money, they wouldn't pay you interest. (lol, not like they really pay you interest anyways).
Plus they got a little out of hand with their leverage amounts for FR Banking.
Is it legit to charge interest in bitcoin? Doesn't it lead to fractional reserve banking?
Bitcoins sitting in a wallet make no interest.
Lending to others allows you to earn interest on your coins.
Lenders figure out what works for them so that their balance goes up as they let other people use their coins.
Lending to others allows you to earn interest on your coins.
Lenders figure out what works for them so that their balance goes up as they let other people use their coins.
NOT TRUE.
In fact, 100 bitcoins of holdings from 'the beginning', has earn you one heck of an interest rate. Saving coins seems to be better than lending coins without the added risks. (Might not always be true though). Satoshi could sign the int and end it all.
When you lend money, the interest you charge covers the "cost of doing business." (
Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
If someone is willing to pay 1000% interest they have a practical 0% chance of repaying.Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
Shit, guys, this is really turning into a productive brainstorming session! Okay, so now we know why people charge interest for loans, and why ultra-high-risk loan requests are turned down. Maybe next, we can figure out why people eat. To poop?
I can take this one. Shall I create a new topic? Or, is pooping and loans similar enough?
When you lend money, the interest you charge covers the "cost of doing business." (
Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
If someone is willing to pay 1000% interest they have a practical 0% chance of repaying.Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
Shit, guys, this is really turning into a productive brainstorming session! Okay, so now we know why people charge interest for loans, and why ultra-high-risk loan requests are turned down. Maybe next, we can figure out why people eat. To poop?
When you lend money, the interest you charge covers the "cost of doing business." (
Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
If someone is willing to pay 1000% interest they have a practical 0% chance of repaying. Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
When you lend money, the interest you charge covers the "cost of doing business." (
Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
Which includes the probability those that you lend to will default.
Let's just say that 9 out 10 loans from those who have under 30 posts default.
If you loan 0.01 BTC to those 10 people, you would have to loaned 0.1 BTC.
You theorize you will lose .09 BTC when you loan to this group.
100% Interest = .02 (.08 loss)
500% Interest = .05 (.05 loss)
1000% Interest = .10 (break even)
You would have to >1000% for this group to be profitable
Lending is risky business. Got burned for a total of 5 figures IRL. Never again.
Why did I capitalize the I in Interest?
Is it proper?
Is it proper?
People charge interest to earn interest. Got it. Thanks for the new thread to share your epiphany.
Black holes are created because opposite threads don't get created.
You're welcome. x 2
People charge interest to earn interest. Got it. Thanks for the new thread to share your epiphany.
Bitcoins sitting in a wallet make no interest.
Lending to others allows you to earn interest on your coins.
Lenders figure out what works for them so that their balance goes up as they let other people use their coins.
Lending to others allows you to earn interest on your coins.
Lenders figure out what works for them so that their balance goes up as they let other people use their coins.
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