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Topic: Zero interest Bitcoin mortgages (Read 3941 times)

member
Activity: 84
Merit: 10
Side-stepping the matrix | Bit by bit
July 01, 2011, 02:02:01 AM
#53
Came across this from digitalcoin.info. It's just a one page pdf file, but there's already someone out there that's looking at interest/debt-free digital mortgages and it might give you some useful info to incorporate into your own idea.

http://digitalcoin.info/Digital_Coin_Mortgages.pdf

It's a pretty quiet forum, but you may also want to check out the following to see if there's any useful information to fuel your research there.

http://digitalcoin.earthsociety.org/forum/index.php/board,11.0.html

Interesting that someone else has come up with a similar concept, I think we might see a fundamental change in the economy in the next 10-20 years...could this be the end of banks?

Found an introductory video that goes in a little more detail as to how Credit Coin would work...

http://www.digitalcoin.info/Digital_Coin_Introduction.html
full member
Activity: 168
Merit: 100
Everyone Is A Bank
July 01, 2011, 01:46:17 AM
#52
Came across this from digitalcoin.info. It's just a one page pdf file, but there's already someone out there that's looking at interest/debt-free digital mortgages and it might give you some useful info to incorporate into your own idea.

http://digitalcoin.info/Digital_Coin_Mortgages.pdf

It's a pretty quiet forum, but you may also want to check out the following to see if there's any useful information to fuel your research there.

http://digitalcoin.earthsociety.org/forum/index.php/board,11.0.html

Interesting that someone else has come up with a similar concept, I think we might see a fundamental change in the economy in the next 10-20 years...could this be the end of banks?
member
Activity: 84
Merit: 10
Side-stepping the matrix | Bit by bit
July 01, 2011, 01:37:34 AM
#51
Came across this from digitalcoin.info. It's just a one page pdf file, but there's already someone out there that's looking at interest/debt-free digital mortgages and it might give you some useful info to incorporate into your own idea.

http://digitalcoin.info/Digital_Coin_Mortgages.pdf

It's a pretty quiet forum, but you may also want to check out the following to see if there's any useful information to fuel your research there.

http://digitalcoin.earthsociety.org/forum/index.php/board,11.0.html
newbie
Activity: 32
Merit: 0
June 30, 2011, 03:42:58 PM
#50
hold on let me see if I follow. You want to start a company then lends bit coins. This company will lend (lets say  100BTC), to someone, using the blocks that are created from the transaction of sending the BTC to the person and the person repaying, give them to the lender so he can decrypt them and bag the 50 BTC or what ever it is?
sr. member
Activity: 672
Merit: 252
Until the end
June 30, 2011, 06:23:04 AM
#49
 I have a grasp now on what your idea is.  I was getting hung up on the whole 'right to process' thing.  The problem is, as a small player (tiny really), I wouldn't really benefit from getting the right to solve a block, since it would take me so long to solve it. 

 What you are missing is that small guys like me are probably members of mining pools.  So we get frequent smaller payouts, and over time, things average out.  With my hashrate and difficulty, the average time to solve a single block for me is over six months.  So, as a lender, it would not benefit me at all.  I would have to drop out of the mining pool and process that block until it's done.  It may take more or less time, the six months is an average.  The end result for me would be the same amount of Bitcoins mined whether I lent money or not.

 So, the problem as I see it is you have to come up with a way to motivate people to lend the money in the first place, something other than Bitcoins.  I think the mining right is a good start, but it needs to be quantified.  You should try and focus on how the mining right thing would work and how it can be transferred.  Maybe call them Lendcoins and mine them separately?  I have no idea how that would work, It's too early in the morning for me...

 
member
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June 30, 2011, 12:02:07 AM
#48
Saturn, maybe this will help.

What you want is to say, "hey, you lent me money so I'm going to let you mine my transaction!"

However, the fallacy here is that when you talk about bitcoin getting money from it, you can't talk about just one transaction, you have to talk about the block. The block doesn't contain just one transaction though, it contains ALL the recent transactions that occurred on the network. So, let's say 1000 loans are originated, ALL of those transactions will go into the current block. This is the record that everyone has so that we can all make sure that transactions are valid, and that the money you say you have actually does belong to you.

So then you might ask, why is it called mining bitcoins? really it should be called mining blocks, because what your computer is actually doing is calculating a checksum for the block.

However, any given block can have more than one checksum(this gets into matrix math, which I'm a bit rusty on and don't feel like brushing up. You probably don't care and won't need to in order to understand anyway. Just think of it as saying there is more than one solution to a problem)

We don't want just ANY checksum, though. We want a checksum that is lower than some target number. However, The lower the number is the less likely it is that you will generate a winning checksum(when people talk about difficulty, this is what they are referring to).

example: let's make this sweet and simple. Let's say the target is 0234
Block 1. - generate checksum - OK I got 1330, but we're tossing this result because its bigger than 0234
block 1. - generate checksum - OK I got 2804 but that is also bigger
block 1. - generate checksum - OK I got 0123 - yay  I win!


So what happens when you win? something UNHEARD of happens! essentially, a NEW one way transaction is added to the block that adds 50btc to the generator's bitcoin wallet. The network, however, is reducing the number of bitcoins generated per winning block(every 4 years) and increases the difficulty (I forget how often) to keep the number of bitcoins under 21 million(inflation is bad mmkay?)

now, a pool is just a group of people who decide to share the risk of not discovering a block checksum under the target by dividing the 50btc when a block IS discovered. You can solo mine if you want, but there is no guarantee that you will EVER win a block.

Well, I don't know how good this explanation is, but I tried! XD
member
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Side-stepping the matrix | Bit by bit
June 29, 2011, 11:49:29 PM
#47
Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

But it wouldn't be possoble for the lender to set the difficuly. In fact, by adding to his pool, surely, he'd be increasing the difficulty.

Why wouldn't it be possible?  All it would require is a change to the client software.

From my understanding of how bitcoin works, it's built into the system that no one person has the authority (or ability?) to change the block solving difficulty. It would have to be a peer to peer agreement, and why would the bitcoin community want to devalue the currency just so that a lender/miner could give out easy loans (and we've all seen where that leads).

Otherwise, we're essentially looking at ways to devalue the currency by making it more easily available - a bit like Bernanke cranking the printing presses to create more dollars and then throwing them out of a helicopter for all and sundry to scramble over, even though he's effectively decreased its purchasing power.

At present, it's built into the system that as more people leave bitcoin mining, block processing difficult decreases, enticing people to back get in for a relatively easy coin-generating ride and keep the system going. However, the more people join, the more the difficulty increases, making it harder to acquire coins as easily, and thus keeping it a deflationary, rather than inflationary currency.

This is why anyone who bought/mined/acquired btc last year, while it was under $1, are now sitting on a tidy profit (assuming they didn't sell). Surely, getting 100% mining fees from the borrower would be enough incentive for a lender. Why would he then also try to reduce the difficulty in order to make it even easier for himself. Sounds a lot like old-world (20th/21st century) banker greed, there.
full member
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Everyone Is A Bank
June 29, 2011, 11:17:34 PM
#46
Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

But it wouldn't be possoble for the lender to set the difficuly. In fact, by adding to his pool, surely, he'd be increasing the difficulty.

Why wouldn't it be possible?  All it would require is a change to the client software.
member
Activity: 84
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Side-stepping the matrix | Bit by bit
June 29, 2011, 11:04:12 PM
#45
Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

But it wouldn't be possoble for the lender to set the difficuly. In fact, by adding to his pool, surely, he'd be increasing the difficulty.
member
Activity: 84
Merit: 10
Side-stepping the matrix | Bit by bit
June 29, 2011, 10:52:41 PM
#44
Hmm... I don't get the right to "process the transaction" bit. Isn't anyone allowed to mine, whetehr they have the means to do it solo or via a pool?


Yes, currently.  But I am proposing a whole new scheme to incorporate loans.

So, everytime a borrower goes online, he's working towards paying off his/her debt?
full member
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Everyone Is A Bank
June 29, 2011, 10:48:21 PM
#43
Hmm... I don't get the right to "process the transaction" bit. Isn't anyone allowed to mine, whetehr they have the means to do it solo or via a pool?


Yes, currently.  But I am proposing a whole new scheme to incorporate loans.
member
Activity: 84
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Side-stepping the matrix | Bit by bit
June 29, 2011, 10:42:10 PM
#42
Hmm... I don't get the right to "process the transaction" bit. Isn't anyone allowed to mine, whetehr they have the means to do it solo or via a pool?

Or is what you're saying that, borrowers join a lender's mining pool for the loan but don't generate any btc for themselves? Presumably, this would mean the lender is a heavy-duty miner already but doesn't pay the borrower any share of  mined/generated btc and, instead of making payouts to his pooled borrower(s), gets 100% pooling fees from their monthly cpu/gpu efforts until the loan is paid off...?

If this is the case, I'm not sure a mortgage would be feasible. Small payday loans, maybe... Although, with the deflationary nature of btc at present, loan repayment could be possible quite qickly... or not. BTC might be a bit too volatile for such transactions at present.


full member
Activity: 168
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Everyone Is A Bank
June 29, 2011, 10:05:58 PM
#41
Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.
full member
Activity: 168
Merit: 100
Everyone Is A Bank
June 29, 2011, 07:18:21 PM
#40

 What I *think* you don't understand is that those of us that are already mining don't get anything from your proposal.  Since I am already mining, what do I get for lending you $100?  All I get is $100 less in the bank.  This is because I am already mining.  Lending the $100 does not add to my hashrate.  The borrower doesn't even have to pay anything back.  


The borrower still has to repay the loan. .the mining is just a bit of incentive on top of that.

Let me try to put it another way... when you are mining, what guarentees that you'll earn some coin?  Is it just dumb luck?  or is it something else?  Are others trying to earn those same coins, and can they undercut you?  That is what I am trying to take out of the equation.  You get to procees a block that nobody else can.

If you are already mining to your maximum capacity then you can sell your rights to THIS BLOCK to someone who is able to use it. 
full member
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Everyone Is A Bank
June 29, 2011, 07:09:22 PM
#39

All the same, this wouldn't count as zero-interest. Instead of paying interest to the lender, which makes sense, you'd be paying it to the miner instead for some strange reason, but you'd still be paying it... It seems he doesn't really understand how Bitcoin works.

The lender is the miner
sr. member
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Until the end
June 29, 2011, 05:51:27 PM
#38


Now if you offered a fee to a miner and an exclusive right to mine that transaction rather than broadcasting it to a network, that would be something at least.

That's exactly what I'm proposing.  Was I not clear on that..?

 Help me understand what you are proposing.  

 Here are 3 scenarios.  Let's assume that for each scenario, my Hashrate is 350 Mhash, the price of Bitcoins is $20, difficulty stays where it's at, free electricity and I have $100 in the bank.

 Given the above, it would take me 33 days to mine $170 worth of Bitcoin.  $170 is what you originally proposed as payback ($100 + $70).

 Scenario One - I lend you $100.  33 days later, I have $170.  

 Scenario Two - I don't lend you $100.  33 days later, I have $170 + $100.

 Scenario Three - I buy another 5770 for $100, increase my hashrate to 550 Mhash, and 33 days later I have $267.

 What I *think* you don't understand is that those of us that are already mining don't get anything from your proposal.  Since I am already mining, what do I get for lending you $100?  All I get is $100 less in the bank.  This is because I am already mining.  Lending the $100 does not add to my hashrate.  The borrower doesn't even have to pay anything back.  

  A few posts ago I asked you to go through and provide an example backed up by numbers and math, you didn't.  I also asked who pays for the electricity and who's hardware does the mining.  You said you didn't care.  Well, those of us that have to pay for our own electricity do care.  Those of us that don't have mining farms do care.  I am already maxxed out on my hashrate and will always be.  

 So I'll ask this a different way.  Let's pretend I don't own a computer.  Let's say I lend you $100.  How do I get repaid?


newbie
Activity: 28
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June 29, 2011, 05:38:19 PM
#37


Now if you offered a fee to a miner and an exclusive right to mine that transaction rather than broadcasting it to a network, that would be something at least.

That's exactly what I'm proposing.  Was I not clear on that..?

You have to change the bitcoin protocol and build your own bitcoin network to do that. Then you have to create demand for your currency by offering value in exchange.


If he was just adding a transaction fee, he wouldn't have to change anything. He would just have to send it just to this one miner, whoever that was, rather than broadcast it to the network. As soon as that miner solved a block with that fee in it, he would claim the fee.

All the same, this wouldn't count as zero-interest. Instead of paying interest to the lender, which makes sense, you'd be paying it to the miner instead for some strange reason, but you'd still be paying it... It seems he doesn't really understand how Bitcoin works.
full member
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Everyone Is A Bank
June 29, 2011, 04:34:10 PM
#36


Now if you offered a fee to a miner and an exclusive right to mine that transaction rather than broadcasting it to a network, that would be something at least.

That's exactly what I'm proposing.  Was I not clear on that..?
sr. member
Activity: 672
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Until the end
June 29, 2011, 09:00:13 AM
#35


 But once again, you aren't answering the whole question.  Where. Are. The. Coins. Mined???  Who's. Hardware?  Who's. Electricity???

I. Don't. Care!


 If the individual lenders are mining the coins, why even lend $100 in the first place?  I can mine bitcoins now without having to lend $100.  

 As a lender my hashrate is vitally important.  At 350Mhash/sec will take me about 35 days to generate $170 in Bitcoins (assuming $20/BTC).  

 Concept is dead if lenders use their own hardware and electricity.

But isn't mining competitive? (correct me if I'm wrong).  The difference here is it becomes exclusive

 Dude, you're not grasping the concept of Bitcoin at all.  We all have mining hardware.  We all have the ability to mine bitcoins ALREADY.

 Why would I lend someone $100 when I can just mine them for myself?

 If I loan you $100, and then mine $170 worth of BTC on my own hardware, how does that benefit me?  I can do these things already WITHOUT having to lend you any money.  You get $100 FREE without having to pay me back.  At all.  Basically,  your concept is for people to lend money, and then use Bitcoin mining to pay themselves back with the borrower contributing absolutely nothing.  Or am I wrong?

 Why would I lend you money and then use my own hardware and electricity to pay myself back?  How do you, as the guy that just got the loan, pay me back the original $100?

  EDIT - To put it in other terms, it's like me lending you $100 to help you out, but instead of YOU getting a second job to pay ME back, I have to get the second job to get back my money while YOU contribute nothing. 

newbie
Activity: 28
Merit: 0
June 29, 2011, 07:23:30 AM
#34
As others have mentioned, the idea as it stands is unworkable because you don't understand how Bitcoin works. Miners don't need your transaction to mine Bitcoins. The only incentive that a miner has to process a particular transaction is the fee associated with it. Blocks can be created with no transactions other than the one that creates 50 BTC. You're not offering any incentive to a miner that he doesn't already have.

Now if you offered a fee to a miner and an exclusive right to mine that transaction rather than broadcasting it to a network, that would be something at least. As others have mentioned though, not many players have sufficient power to solo mine any more, so it would take them a highly variable random amount of time to actually generate the block with your transaction. And then you're not having zero-interest, you're just having a fee in place of the interest.
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