Bitcoin Forum

If a decentralized system of money is implemented, lending capacity would be vastly reduced and slow the growth of the economy.

a good question, well, I think without banks, this will deal with special institutions like banks))

if you have lost hope now with bitcoin, i also hold some bitcoin and i still keep it
because I'm sure this year the price will go up, whatever makes me sure .. but I'm sure bitcoin will go up

Why would the lending capacity be reduced though? The only thing that changes is the way the money is supplied but not how or why.

No, there are many platforms that circles around cryptocurrency so yoy cant say that decentralized system will reduce or slow down the growth of the conomy. There are many lending platforms that investors can use even with high risk on their investments but it will gain high profit in return, which means economy is not affected on the decentralization of currency.

This is only the question of a good system (good algorythm) that spreads risk of lenders. I'm sure a lot of people will be happy to lend their bitcoin to strangers (see this forum had a lending section) and it worked with or without collateral (I haven't checked the lending section recently). So it's already working, but if there would be an app or something that can handle this, it would be better. Also the best would be not only to do p2p lending (1 person lends to 1 borrower) but to spread the risk like 100 person lends to 100 borrowers and you have just reduced the risk of having a non-paying loan to 1% if one of the borrowers fail to repay the loan.

The way things are evolving, I don't think there is going to be any one source of money. A centralized, fiat based currency would always be present, even if Bitcoin is successful.
That said, Bitcoin provides you the option to remove the intermediary (bank). This is not always exercised, as we have seen people leaving money with exchanges. So bitcoin could also be deposited in a bank-equivalent which could pay you interest, and then use these bitcoins for its lending business.

When people say that cryptocurrencies will replace banks, they are talking about the aspects of storage and transfer of money. Banks will still lend money, whether it is fiat or crypto.

Who would even borrowed it, because of risk of having to return it at a rate x5, x10, x100 ...

Obviously, the concept of loan repayment guarantees should change.
The base account of a person in the crypt world is the sum of various assets in the form of tokens. Monetization of human behavior in society, the creation of ranks of trust, algorithms to support a positive balance of consumption, monitoring the level of coexistence in society.
In China, such a model of constructing addictions is already being implemented in society. .

P2P loans are becoming more convenient and you don't have to provide any personal details and only provide acceptable collateral. It's probably the most decentralized version of loaning that we'll get.

I think the main purpose of the bank existence is to keep our money safe and then they will focus on lending therefore if the banks will gone there are many businesses today that engage in lending, loans, and financing so no problem about lending but the problem is who will do the safekeeping of our huge money? I think we should bury it in the ground.  ;D

Doesn't everyone know that? It would again give birth to landlord system where people with more money would abuse their power towards people who are in need of money. Banks must be present in this world, lending individuals wouldn't result favorably. If banks vanish, the economies will soon after perish, because of greed which has already been filled in people's minds. Decentralized economies would bring chaos to the economy, as immaturity still pertains.

I think in the future where cryptocurrency is dominating, banks will have no choice but to start adapting it. We already have Ripple which is manage by group of banks in the world. So there will still banks who will lend us money or maybe cryptocurrencies in the future. If they will never learn to adapt innovation, they will never last in the industry.

In China, such a model of constructing addictions is already being implemented in society. .
I hadn't considered viewing China from this perspective: using algorithms, tokenization, and monetization to control the ebb and flow of society. Interesting!

that's not necessarily true. the decentralization of money makes localization and decentralization of lending practices possible. indeed, would-be borrowers still need liquidity and would-be lenders still want interest payments. there's no reason that banks/lenders and credit lines can't exist in the context of BTC. it's just that the current monopolies held by the financial powerhouses can be dismantled because crypto-based alternatives can compete with them.

there are several cryptocurrency projects that are building platforms for P2P cryptocurrency lending. one example is SALT (Secure Automated Lending Technology). it let's you use cryptocurrencies as collateral to obtain cash loans:

When the world is ready to accept decentralized token then there will be solution to this problem, for now there are already few crypto and platform that offered lending, like FastInvest token, with some adjustments and regulation or maybe algorithm, I don't see this as a problem in the future

If you have lost hope now with bitcoin, also hold some bitcoins and keep them because I believe this year's price will go up, whatever makes you sure .. but I'm sure that bitcoin will go up.

Dude.... Maybe you can try to ask your own family or friends,
Maybe they will lend you money, that you may use in bitcoin...
Atleast you can talk and make better deal on the payment method

Without? Why do you think there will be no more banks?
Look at the current crypto environment.

Bitcoin was supposed to help you on becoming your own bank, the result....?
Hundred and hundred of online wallets who are basicaly...banks!!!! Banks that have overall control of your money.
No, banks won't go away, in the worst case they will just change name.



I'm almost willing to bet that in 2 years time they will go bankrupt.
It happen to all projects that thought submitting some papers is enough to make the guy repay its debt.
BtcJam was the clear example on how many things can go wrong.

LE
Just checked the "project" you provided. An ICO? Common man....



I bought my house on credit with a loan.
How the hell would I have been able to provide a collateral for it?

Decentralized or not, the economy is the same. There are already a bunch of lending platforms out there. With banks or without, there is always room for capitalism.

what's your point? i said that the nature of lending is not changing, just the top-down monopoly on credit providers. if anything, you're literally arguing my point:


anyway, SALT was just an example of a potential credit lending model. the decentralized nature of cryptocurrency expands the potential liquidity pool for lending because it lowers the barriers to entry for lenders and could make micro-loans more viable.

and are you so sure that smart contracts can't be leveraged to mitigate counterparty risk in P2P loans? comparing BtcJam to the smart contract technology of today and tomorrow is laughable. why can't multi-sig contracts be used to secure collateral? why can't smart contracts be used to detect loan defaults and automatically liquidate collateral? outside of the context of fiat money, all of this seems possible to me.

i don't think SALT is viable from a regulatory standpoint, but i think a similar (but P2P) infrastructure could be viable if you entirely remove fiat money from the model.

There are microfinance lending who can do it. Nowadays they are making it big in the industry as it offers lower interest rate. On the other hand, if the banking industry sees that cryptocurrency will dominate the financing industry for sure they will make waybto adapt and integrate it to their transaction that is for longer stability of their industry in the market.

Banks will not be lost anywhere. Regardless of the prospects of the cryptocurrency, banks will stay with us forever. What prevents them from giving you money in the form of bitcoin or ethereum?  :D

Implemented doesn't mean it that banks or fiat money will disappear. If you believe that the governments will stop issuing their own money you're a dreamer. Right now cryptocurrencies aren't used by even 1% of the global market. Even if this goes up to 10%, which I really doubt will ever happen, cryptocurrencies will be worth so much that we'll all be rich beyond comprehension. This means that even if your theory is fine and the lending capacity gets reduced, you'll also have a much lower demand for it because there will be a large number of rich people who became rich on the rise of cryptocurrencies. It will all stay in balance.

As with traditional mortgages today, the house becomes the collateral and if you fail to make payment they foreclose and kick your ass out and take the house. Quite a simple process actually :)

The only thing cryptoc can/will replace banks for is keeping your money. Tho as the concept of bank and banking will, probably, never be replaced, some aspects just might (storing your money). Also if the things go the way they are now, bitcoin will remain an investment asset and banks would deal with them as well. 

You seem to be assuming that once crypto takes off, fiat will die. I find that highly, highly unlikely. That would require near-perfect infrastructure for every single corner of each and every country. You need to be able to spend your money anywhere and everywhere after all, and a power outage or service interruption should not paralyze towns or cities. Fiat still does a few things better than crypto, which is why it's going to stay.

Either way, if we assume that banks will be killed off, the closest thing to them at the moment are exchanges. You park your money with them and cede control. They have certain rules that you need to follow for you to be able to move your coins. I could see them being able to hand out loans.

Bad news, but you sound right
But perhaps we dont really need a bank anymore, we just need some innovation to let us lend and borrow money from others with guarantee
I dont know that yet, but nothing is impossible in crypto, it might come this year :P

No, I said that it will not change. Nor will the p2p lending ever take off.
Especially with a centralized token, that's hilarious!!!!



We're not talking about collateral here, that is plain stupid.An economy where loans are offered only on collateral would end up in the stone age in a decade.
The only way collateral work is in small p2p lending.
Not car finances, not mortgages and not business investments.
And microloans are percentage wise so insignificant it's really not worth talking about.

Nope, it's simply impossible.
Once somebody doesn't pay a loan there must be a way to make that somebody pay.
Now, I can't pay the loan anymore or I don't want to pay the loans.
How are you going to force me to pay it up?
You know how lengthy and how costly is the legal process going to be? And at this point smart contracts carry 0 value as all the process has to take place in a real world court, who is going to pay all the fees?

And about that "secured" collateral.
My secured collateral is a house let's say.
It burns down.
Where is your collateral?
How you liquidate it? (pun)



Really?
So how will those smart contracts work on that house?
And I mean from the legal point?

Also, you're forgetting something. Let's say everything works, the lenders get the house back...then what?
You're (you as multiple lenders) going to sell it to get back the money?
Enjoy one hell of a lengthy process , especially with multiple lenders and especially with little sums invested by a number of persons.
Here in some countries in Europe we have some pretty tricky laws about personal bankruptcy.
If the guy decided to payback more than 3/4 of the debt the rest of you won't be able to get seize the house as the value of the debt is too small compared to the debt.

Sorry but this whole p2p lending are just wet dreams.

I believe new platforms will form that will focus on these areas. At the end of the day investors always seek returns. And those returns will drive people to lend. Crypto will make the whole mortgage market far more efficient.

There will be no 'decentralized system'. Bitcoin is no more 'decentralized' than gold and silver (actually much less, because there are just a few mining enterprises and exchanges). Banks adopted paper money before, soon they will adopt crypto. Nothing will change.