Bitcoin Forum

Long-term loans in BTC are possible? Because of defation.

Loans are currently a little problematic. As thevalue of the currency rises over time.

This was highlighted when we were chasing stevenbuck for money he'd pretty much defrauded some users, many many months ago.

It was about 10,000btc, and worth about 200usd at the time, but only a few month later that value rocketed as the value of bitcoins relative to usd rose.

That could be a nasty poverty trap.

Some people are used to thinking they should borrow whenever it's available and it will be easier to repay later, this isn't even true with inflatobux because of the interest rate usually charged, but with coins you really need a good reason to borrow imo. The safest thing to borrow for would probably be mining since your income will be denominated in coins. Not saying that's perfectly safe or anything, just that you'll get positive exposure to the bitcoin price and not just the downside of owing them.

Or, some people who assume high deflation can even make you repay a little bit less than you borrowed (still not less enough to deprive them of their calculated profit) - the same way they make you repay more than you borrowed now. It's pretty mind twisting.

How is it better than keeping coins in the wallet and not lending them?

Any money system has 0 interest rate bound. Cash brings you 0%, it's always better to have 0% than negative interest.

By the way that's one of  the reasons Keynesians hate deflationary currencies.

When you get paid your wages in Bitcoin there will be no reason why you can't borrow in Bitcoins  :)

But generally borrowing in a different currency to what you have a reliable income in is a bad idea. Well, unless the actual aim is currency speculation.

Sure, it just will be something accounted for.  Just like inflation is accounted for now by people loaning the money.

It still can be profitable to take a loan.  Plus, deflation only happens by the bitcoin economy expanding.

I use borrowbitcoin . net  for my cryptocurrency needs they allow you to get a bitcoin loan with a deposit and you can deposit multiple different cryptocurrencys and once you pay back your loan you will get your deposit back!

There are so many websites out there which provide loans in btc or accept btc to provide loans, and I have used a few websites. Just google it, don't worry they are reliable and they will process transactions fast and smoothly. I think taking loans in terms of btc can sometimes be really profitable or sometimes really a big loss because you are dealing with a currency which is highly volatile, no fixed prices.

I don't think going through the economic hassle of borrowing money is worth it, especially if I need to cash it in dollars before spending it. If I need to buy btc for investing it online or trading it when in need, yes I might consider that, hell I would even recommend that to others but I don't think I would ever borrow btc which I need to pay back as btc because its volatile and also, complicated for borrowing.

Loans in BTC creates new good vibes for the people.. :D

long term loans are usually sent with the value in $usd not btc. that way the major price fluctuations of the bitcoin wont really affect the lender.
and the lender will always come out with profit in the end.

Sure it's possible!

The greatest risk to BTC lending isn't currency risk, it's repayment risk. It's easy for someone to "take the money and run" since there are no reversals of transactions and no credit bureau to ostracize the defaulting borrower in the eyes of all future lenders.

Deflation is an interesting consequence though. But it only hurts the borrower, and that penalty is something I'm OK with. Borrowing shouldn't really benefit the borrower as much as it benefits the lender.

I am still waiting for a service that is serious enough that it makes me consider doing some serious loans beyond some microloans here and there, but i just can't trust BTCJam, not even if the borrower is credit with A+ levels, I need more. Apparently tons of A+ people defaulted and just nothing happens, you just lose the money thats all.

Applying for a Bitcoin loan is pretty much the same as applying for a loan in a bank.  You have to have an online account and then the procedure are just the same.

I think for now lending your bitcoin is a good move.  The interest rate in lending your bitcoin and making it an investment is high.

What? You go on here and try to convince some extremely sceptical people that you're good for it and have to put up collateral. There's no automated process and it'll probably all turn to shit anyway. You'd have to be dumb to ask for a loan or provide one. I don't get that section of this website at all.

And if bitcoin price increases by 10% in your loan running time, it basically means you have to pay an additional 10% interest.

Unless you peg you loan in USD instead of btc ofcourse, which would probably be the smart thing.

If your peg your loan to USD, it really isn't a BTC loan, is it?
I would say a BTC loan over a long term isn't a wise idea.

That's not gonna stop people trying. I wonder how many successful ones there've been where all parties came out smiling. Probably not too many.

there is a Long-term loans section here so I think its really possible but I think for long term loans there should be a lock-in rate agreement to protect the lender from sudden fall of BTC rate.

Possible, but seems like it would be wise to peg it to some sort of benchmark since the swings in the price can be sort of wild over the long term..

One could always "bind" the loan with fiat counter value, but i'm guessing that would be counter productive, as we are trying to overwhelm people with crypto,
instead of faulty fiat finance system. But maybe it wouldn't be as bad to bind it to some of the other crypto currency, but in a certain range only, so that neither lender nor loan
taker gets burned with price oscillations..

I'd say it's currently a bit safer to lend BTC than it was some time ago when the price fluctuated even more.

well you receive bitcoin whne you lend, so it's not really a problem, and i would say that it's safer because selling account has become a serious business, so you've always your ass covered as a need of a collateral

It might be; but when you think long term, would you be comfortable borrowing btc?
I don't think so.

All lenders would probably require some sort of collateral.

Loans in Btc are good for people that has earnings in Btc, if not there is a problem with fluctuations on market.

Taking loan now in BTC is suicide. Laws of the market are hard - supply and demand sooner or later make the price of BTC will continue to grow. If someone does not earn in BTC let it keeps away from such ideas.

Loan in BTC can be tied to the fiat prices of Bitcoin but it would not be advantageous for the lender as the lender would want at least the original sum to be returned. Another con is deciding the exchange to use the prices, both the lender and the loanee have to decide on an exchange to use to weight the amount to be returned. When MT.Gox faced bankruptcy, prices were pushed down hence sites such as btcjam which uses prices from Mt.Gox had the loanee pay a huge sum of BTC

Maybe there should be a safe dollar rate incase if deflation and the loaning party doesnt loose out.

why not?, if you have collateral you are  in a safe box, better than a escrow for me, i just sell the collateral and i'm done

just be sure to take a very good collateral maybe somethign that has a more value than what they asking for

I agree. Probably miners are the only ones who could have earnings denominated in BTC.
Even for them, I am not sure if Bitcoin loans over a long tenor are a good idea.

The main rule in the taking or giving money with interest is that can be taken or giving in the same currency in which you have the profit from that money or the earnings from you job. Only in this way (as giver or receiver) you are protected from the rise or fall of the price of the currency which you give or take with interests. So if you want to take money for creating a business you must take the money in the currency that you will have profit from the business you will want to create or the currency in which you have your salary. 

If we go to the question of this thread for both the parties it is in common inters to be sure that who receive have profits or earnings or salary or income in bitcoin. Only in this way, it will be sure that, at least from the change of the price of bitcoin, are protected both parties.

If you give the loan, it does not depends on the price of the bitcoin. For you it does only matter if you want to exchange it back to fiat, but in this case it doesn't matter if your bitcoin is from the payback of the loan or it was alway's at your wallet.
From the borrower side, it's really a possible risk if the loan and the income is in different currency.

You can't make "lock-in rate" agreement with BTC loans.
You need to see the object first. You loan in BTC, that's mean you need to pay it back with soem interest in BTC too.

How about the BTC price goes up wildly when we take the loan?
That's why never loan in BTC,
make loan in your local currencies, not from BTC.

In fact, how about the BTC price goes down wildly when we take the loan? want we give more BTC from contracts? you know the answer.

A time comes in everyone's life when he/she is short of money, whether you are trying to buy a house or getting admission in an expensive college!! Loans are what you need at these times.. Now, if you've been using bitcoins for a while and understood it's basic concept , then you may opt for loans in btc, and repay them back in EMIs on a monthly basis! ! It's easier than you think. .Websites like btcjam.com can provide you loans in btc.

Btcjam already prove that Bitcoin and loan need work....btcjam default rate is huge

There used to be a service called coinlenders that loaned BTC to people after trying to give them a credit rating
The service collapsed and the market has primarily been in the lending section since.
BTCAssets does this to a limited extent as well with WebofTrust

Deflation? The price goes up and up recently. Also, you loan BTC and repay BTC. No issue there.

In the long term, the collateral would depreciate in value and it would be much harder to sell it, especially alt coins. I would prefer not giving out long term loans, its just too risky.

well long-term is really hard to judge. Especially when bitcoin's price change every second and it can change the whole game. People can take advantage of it to make profit I think. However I think the price gonna fixed at the current rate so maybe it is a yes. But the halving is coming so at least wait till it finishes and every stable to lend someone BTC