Bitcoin Forum

I want to gauge the level of desire for such a service. If both Lenders and borrowers have a collateral Assurance they can count on, this should make the Bit lending space more dynamic.
What are your thoughts? As a loan Provider what structure of Insurance would please you?

I have finished sketching out the mechanics of how I want to set up and run such a service.

I personally think that Bitcointalk accounts are good as Collaterals , Let's say you wanna get a 0.3 BTC loan it's a little bit expensive , well you give a Senior Member (Just estimated price , not sure how much they cost) as Collateral and you get your loan .
That's all I can think of as something good for insurance . wanna see what the others things :p

So now you will provide collateral and what collateral do you need to provide collateral?

What exactly are you proposing? You will give the collateral to the lender, he sends the coins to the borrower and you don't get anything in return at that stage?

If everything goes well the borrower pays back the loan plus interest to the lender and you get the collateral back plus a fee? How would you protect yourself? Scammers could take advantage of you. Because of this the risk wouldn't be statistical like an ensuring company.

Regarding your question stable alt coins would be an obvious collateral too.

So this will give people a loan to use as collateral to take out another loan, what would be the point of this? The only result is a higher total interest for those taking out a loan.

Who watches the watchmen?  Its a good question. Actually I want to play offense, I give the borrower a valuable 'commodity' that will be continuously beneficial. They let go of the 'commodity' during the duration of the loan. Taking it a step further imagine if the Lender would actually want to enjoy the benefits of the 'commodity' before being paid back.

I see the absurdity of interest on top of interest. My intention is not to be Lazy by taking the easy route of charging interest. actually its the lender that I really want to attract. Seeing that many loans are tiny and short of duration's, the question is -Can we have a collateral that the lender enjoys while they await payback? a cup of coffee perhaps?

All good questions. First I would seek to build the borrowers collateral , a quick example is making her/him do a Gig like a signature campaign, this way I will have gotten some value.

Protecting myself, I look at it in terms of offering a basic need service say food , Job opportunity etc--- that the borrower would prefer not to spoil.
Also see my other responses for more thoughts.

I am sorry to inform you but your idea will most probably not work and you will eventually lose BTC that way.

This idea is BullShit

I don't. To people who are looking to receive a loan, this is an easy way for them to get rid of their account if they're looking to sell it. For example somebody could buy a senior member account, then ask for a loan which is higher than the amount they bought it for. They then would be able to receive the loan as the account going as collateral. They can easily default and walk away with a "profit". This collateral opens up to scammers so easily. As for the account on hand, it might receive negative trust and it may take a lengthy period of time for it to sell.

Maybe trading accounts can have issues but the scenario you mention is not one of them. The bold part is the problem here, not the fact an account is used as collateral. For a loan to be secure the collateral must be worth more than the loaned amount plus interests, normally at least 110%. If in doubt how much the collateral is worth then the lowest price should be considered. Also the collateral must be very easy to sell. When an account is used it should be taken for a low price so it's very easy to sell at that price. Measures must be taken against hacked accounts, such as demanding a signed message, and loans must be public so one can know an account used as collateral doesn't have other pending obligations.

The scenario you describe can happen and be a problem with any collateral at all if it's worth less than the loaned amount: "Just buy some DOGE, ask for a loan worth more than what you paid for the DOGE and walk away".