Bitcoin Forum

Would companies be crazy to allow one to borrow bitcoin and settle any outstanding balances at the end of the month?

There are bitcoin debit cards already.

A bitcoin credit card would not be too much different than a fiat card. There are already companies out there that you can pay your credit card bill in bitcoins, so what would be the difference?

Of course it's possible.

As Elwar mentioned, there are already Bitcoin debit cards, and there are also bitcoin loans services (bitbond, btcjam etc). So it's just a matter of combining those two.

No thanks. Shorting XBT is a prescription for bankruptcy. Just think someone who borrowed say 2000 USD on their XBT credit card for Christmas presents in 2011 and made net payments equal to the interest.

Edit: Why not go for broke and issue a credit card denominated in LTC, XMR or some other alt-coin in a protracted bear market. I mean what could possibly go wrong the bear market will never end right?

it will start in places like local credit unions where the local town population can get 'credit'/loan cards based in bitcoin, simply because its easier to get courts and debt collection agents involved locally and to prove human identity of the person wishing to get 'credit'.. to ensure people dont just abuse the service and leg it with the funds.

but an international based service where faking ID over the internet happens every day (yes it happens on BTCJAM), i do not feel that such a service will work.. not right now atleast

It most certainly is possible.

A debit card is understandable because you only spend what you have and nothing else. However, with a Bitcoin credit card how would collection agencies collect debts?

Very much possible and already in existence.
I haven't used them personally, but check out of the cards called XAPO.

In the same way it's organised on bitcoin lending sites, such as bitbond? According to their website the debt collectors are engaged when necessary. Bitcoin may not be an 'official' currency, but you're still bound by the contract to regulate your debt.

Credit has never been an alien phenomenon and it could certainly be done with Bitcoin however as we've seen with exchanges, people who blatantly abuse this kind of system and try to pretend they have more Bitcoin than they actually have etc. will be spotted easily in this kind of market.

I remember some sort of chinese exchange getting set up at one point awhile back and it had somehow gained several hundred in BTC trade volume in just a few days, of course, everyone knew that was a load of crap so they avoided it, you can expect that kind of thing to happen with credit cards.

Fractional reserve lending is very unconvincing when what people are lending out has a fixed supply, that's why all the bankers use paper now and abandoned precious metals.

You made some good points, perhaps it's dangerous to offer credit within a fixed money supply based economy.

As said above the issue who is going to wear the risk of shorting BTC.

...no one.

theres already many bitcoin credit cards like xapo, bitplastic, etc

Yes very possible. Convert btc to cash and credit to card, all-in-one.

Some of them has very high feed and they are debit cards. You fill them with bitcoins and use the card.

I believe we will see some service offering credit cards working totally with bitcoin in 2015.

 :D smh, those are debit cards not credit cards.

Yes, it is possible.
It is only a matter of time before traditional banking products are extended to bitcoin as well.

Certainly possible BUT all the same rules would apply as with normal credit cards.

Any lender putting up serious coin will want to see credit score and proof of identity.

A risk is that the borrower is, likely, paid in fiat and, hence, his ability to repay the loan may diminish over time through no fault of his own. Someone who borrows 100 BTC, for example, might be able to make 2 BTC monthly payments today but if BTC rises to $10k per coin forget about it.

It would be possible.  The question remains:

1) Who will fund it?  
2) Hardcore unsecured/uninsured debt
3) People will default due to no regulation/free market.
4) There is too much risk on the company doing it.  There would need to be regulations in order for it to move forward.


Like.  Say I go on BTCJam and fuck over the people I am suppose to pay back?  What happens?   Nothing.


Right?

Yes, but if I not wrong, some bitcoin credit card already exist. Anyway, I think that a credit card which have a public key that seems the "IBAN" and the private key in the magnetic band is a good idea to produce it :)

this is no different then how fiat based credit cards work today. The only difference would be how the bill is paid

Like credit cards, credit score will be important for all borrowers.
I guess the credit limit would have to be monitored closely, maybe with every billing cycle, because of bitcoin's volatility.

Why would you want a credit card when you can just use a Xapo debit card?
One of the ideas of btc is to take leverage out of day to day transactions

Let me think hard. If a company or financial institution decides to issue bitcoin credit card, that entity will be entirely responsible in case there is a default in payment. If too many creditors ended up not paying, the company will go bankrupt. It will not have any impact at all towards bitcoin. Similar like money lending business

this is true for all credit card companies. They need to appropriately manage their risk in giving out loans (via their credit cards).

How so?

Bitcoin won't lose anything because of some 3rd party services, as long as you can still use it its original form.

It will have to be banks, doing all the usual due diligence.

Its possible, but the issue would be trusting a central authority to settle the balances. Chargebacks are essential so the decentralised way in which Bitcoin works cant be used. In this state there is no advantage of Bitcoin credit card over any normal credit card.

Im sorry, I just don't see how this is possible.

A bank, just issues credit on their internal balance sheet.  Banks lend more than they have, its called fractional reserve banking.

In fait world, say a bank issues 5 x $1000 credit cards.  They don't keep $5000 in a safe to underwrite those cards.

If a "BTC bank" issued 5 x 1btc credit cards, then they would need to keep 5btc just incase all users spent those btc.

You can't give away more Bitcoin than you have.  Thats the point.

There's a few popular exchanges that provide this already...haven't used an exchange in a while so I'm not sure which ones nor can I recommend any however this wouldn't be hard to find out.

Yes, new of this is Therocktradnig which is able to provide for a credit card which is connected to your personal account. But I advice to be careful because no one exchange is very safe and everyone of this could close one day..

When gold was the currency there were loans. Even fractional reserve loans.

Lender has 1 oz of gold. He issues a certificate to 10 different people in the amount of 1 oz of gold. People use those certificates as if they are money. At some point someone can claim their 1 oz of gold but they count on not many people doing so.

Bitcoin company issues a Bitcoin credit card, they have 1 BTC and offer 1 BTC worth of credit to 10 different people. The person uses his Bitcoin credit card wherever that credit card is accepted. The merchant then gets a "credit" for however many bitcoins were spent on their merchant account (just a value in the database). The merchant can withdraw their bitcoins or use their own Bitcoin credit card to make further purchases.

They rely on not everyone wanting to take their bitcoins out at once. Otherwise they are screwed, that is why a bank run was always such a big deal to banks...in Mary Poppins they gave a glimpse of what would happen if people wanted their money from the bank all at once.

When it comes to credit limits and whether people pay the bitcoins back, they would be subject to the same credit rating as other credit cards. If you're late, your credit score goes down.

It most certainly is possible but, unlikely CC companies would ever add this feature.

One of the problems with this scenario is that it is way easier and way less expensive to take delivery of Bitcoin than to take delivery of an equivalent amount of gold.

Edit: As Trendon Shavers and Mark Karpeles found out.

It will be possible when people dont see $$$ while they are looking at BTCBTCBTC