Bitcoin Forum

What is the collateral behind Bitcoin?Like in case of Fixed deposits Money deposited acts as a collateral.In case of a car loan Car acts as a collateral.Likewise what is collateral behind Bitcoin? BTCBTC

There is no collateral against bitcoin because people has agreed to it that bitcoin well have a value and the value for bitcoin will depend on the demand for it. As we all know that bitcoin literally had a rare acceptance on establishments. Most common use of bitcoin is holding it and waiting for the market price to goes higher and selling it when one can profit already.

Bitcoin is decentralized so there's no collateral or any exchange in need just to have it.

Bitcoin isn't a loan to have a collateral. To understand it easily, you buy bitcoin with the use of your money and you get bitcoin only. Well that can be the easiest explanation that I can give or someone can give more enlightening explanation.

there seems to be no guarantee for bitcoin like borrowing money in a bank that should require collateral, bitcoin does not like it just requires mutual trust

A collateral is something pledged as security for repayment of a loan. Simply saying, bitcoin is not a loan. You don't loan a bitcoin, paying it month per month. You get bitcoin equal to the value of your money. Straight up just buying and it's done.

As mentioned, bitcoin is a decentralised technology, no one person or group control it.

We need to consider and remind ourselves of this and that it is not like FIAT currencies,
the only backing it has is from its miners and users and as long as we all believe in its
technology it will continue.

There is no guarantee of everything in life. Bitcoin is a currency. The preferred value is increased.

There is basic difference  between Bank deposits / loans vs Bitcoin or crypto currency.
When you deposit your money in a Bank the Bank is giving you a receipt guaranteeing to pay back after a certain period of time the  principal amount plus the interest as applicable for that period.  In some countries where the Banks are run by the governments; the receipt of the Bank is equivalent to the receipt issued by the Government so fully secured.  In case of private banks it depends on the worth and goodwill of the Bank accepting deposit.

When car loan is given ; car is hypothecated to the lender Bank and in case of default the Bank can take the possession of the car and sell it; so it is collateral.

But in case of bitcoin the value / price is not being fixed by anyone because it is decentralized, virtual currency, not run by any agency.  There is no centralized controlling authority over it.  The base price can be the cost of mining plus miners remuneration.  
But the speculation, demand and supply are the major reasons behind the volatility of it's price.  Price  of one bitcoin at one time may be 5k dollars while on the other time it may be $15k.  If one  buys one bitcoin at any price as mentioned above; it depends upon his luck, expertise, knowledge that whether he will get back his investment or not?  He may get 15k for the amount invested 5k and may have to be satisfied with 5k against the purchase price of 15k.

Money people use to buy it with, mining equipment etc.
Nobody gets  bitcoin for free.

someone can not guarantee the goods like in a traditional bank, if we want to borrow bitcoin with landing system like in poloniex we have to have bitcoin to bet in the market itself.

Bitcoin is not a loan in order for it to have any collateral. You buy Bitcoin voluntarily and understanding that the price could fluctuate at any second. Bitcoin is not backed by gold, money, or any item that is of value. So if you lose your Bitcoins, there's nothing you can do about it nor you'll receive something for it has no collateral at all.

words like "collateral" is for banking section specially for the loan department and cryptocurrency is lot more different than this all. here you can have a confirmation receipt about your investment. Here prices can change any moment not like the bank culture where the government fix a rate so it is better if we don't mix this things.

Are you seriously asking this question or just having fun?? Bitcoin is a decentralized currency without any controlling authority unlike Banks. Who would keep the collateral? There is no authority who is controlling the circulation of bitcoin!!

However, there are three intangible collaratels available for bitcoin,

1. Public trust
2. Hope
3. Technology

Bitcoin is pretty much based on these three pillars. You can take these as collaterals as well if you really need to factor in. But quantification of these collaratels is not available!

Bitcoin is neither issued by government/bank like fiat nor it is a form of credit to us so there is no need of collateral at all.
Bitcoin hold value based on people's trust over it and supply/demand of bitcoin drives the price. With growing demand and limited supply of bitcoin price is moving upwards if we look at long term charts.

Many experts that's why suggest to only invest what you can loss in bitcoin because it can be worthless in future which is quite unlikely scenario but its better not to take risk with all of your money.

I have no idea about bitcoin collateral because as decentralized digital currency, the bitcoin holder's is anonymous they can buy bitcoin without any information from the buyer in the online exhange so how can give requirements people use bitcoin anonymously. My answer not collateral.

Actually BTC is fully decentralized system based on this I think BTC have no collateral system. Though it’s a cryptocurrency so this loans are not available because no one control this system but in case of fiat currency you can.

In addition to this, bitcoin is only backed by a few lines of code. There's no real collateral. Bitcoin's price is determined by demand and supply and nothing else, just like Gold and other things that aren't made up from thin air.

And why are you comparing a car loan to bitcoin? Makes absolutely no sense. Bitcoin is a currency, and you buy it just like buying any goods/services. Do they necessarily have collateral?

I think bitcoin can not make guarantees to borrow money in the bank, because Bitcoin is virtual money, my hope in the future can someday be for collateral.

There's no collateral behind bitcoin investment and trading since bitcoin is cryptocurrency or virtual currency and used blockchain technology so that there was no definitely collateral that bitcoin imposed. However eventhough bitcoin have no indemnity there are still backing with you in terms of your time spending on crypto world. And also your efforts and hardworks given from bitcoin are still the collateral.

Yeah I agree, bitcoin is not loan that needs collateral, only bank are find collateral before you making a loan. Banking loan are so hard to apply cause there are so many documents they needs and the collateral are need much higher value than your loan and the payment they require is monthly but in bitcoin you never need collateral to start to invest.

   There is no collateral in bitcoin. It was created as digital currency that has no value at the start. But when people start to have interest on it and make it an investment it slowly rise and become valuable until now. The demand makes bitcoin valuable and through the help of blockchain technology bitcoin continue to flow with anonymity to all people who used it with out any collateral.

I think bitcoin is not that strong enough to be used as a collateral. It depends on the person's faith on bitcoin if he accept it as a collateral.Its our faith that guarantees it.

Bitcoin doesn't require any collateral against its investment. As it is an industry where money is invested in favor of the value likewise share market. And again, BTC is generally used for making transactions using a decentralized network, thus it doesn't require collateral. In case you think about taking loans from crypto market, they have their own policies rather collateral.

Think of bitcoin like sort of a digital, better version of gold.

Does gold have any "collateral" per se behind it that gives it intrinsic value? No. However, it's still considered to be a great store of value and hedge against fiat inflation. This is because the supply of gold is decentralized, it can't be manipulated by entities or organisations, and there is a demand for gold as a store of value.

That's how bitcoin derives its value from, in my opinion, and it's the same as gold. Bitcoin isn't representative money - it doesn't have a backing per se, but its supply is limited and hard coded, unlike fiat, making it a good store of value in the long run.

Zero. None. The system does not have collateral - https://en.wikipedia.org/wiki/Collateral_(finance) (https://en.wikipedia.org/wiki/Collateral_(finance)) - because it isn't based on debt.

The Monetary System Visually Explained
- https://youtu.be/aXiNZWJKnVI

The parallel world we are living in is a debt based kleptocracy - https://en.wikipedia.org/wiki/Kleptocracy

...

However, if I had to give you a (bad) one word answer I would say 'Math'.

There is no second party, and there is no second party when you have bitcoins. You buy bitcoin from someone for intance, after that there is no special guarantee given by someone who sells bitcoin to you and make sure bitcoin you have is safe, bitcoin you have will be profitable. In crypto currency you buy bitcoin, then you who have full rights in watching you will get profit or you will get loss.

Decentralized system is Bitcoin's main characteristics that's why it does not have any collateral. One buys bitcoin at his own risks hoping to get benefited when the price goes up.

By 'collateral' I assume you mean 'underlying asset value', and Bitcoin is interesting in that the asset value is virtual, and based on the solution of a complex mathematical calculation. This proof of work requirement prevents indiscrimate creation of Bitcoins, and is in sharp contrast to fiat currencies which have no underlying asset values and no limits on their creation, and are essentially worthless as a result. The asset value of Bitcoin is based on scarcity and demand, and is comparable to gold and silver. Another interesting class of virtual assets is Internet domain names.

Bitcoin is a disperse technology. No one control this system. You only buy bitcoin through use of your own currency. We have to consider this, this is not fiat currencies.

There is no collateral in bitcoin as a decentralized technology. You can not consider as a loan you can get bitcoin as much you pay for this. You have fully trustworthy when you want invest on it .I think you would be never disappointed on just one thing i can suggest not to fear just go for it

nexo is offering a facility where loan seekers can get loans by keeping by their coins as collateral, this would allow the coin holder to keep their coins as well as get a loan. once the loan is paid the coin will be returned and the coin holder can sell off their coin at the market price.

Collateral is property or other assets that a borrower offers a lender to secure a loan. Bitcoin is not like loan. Moreover it is decentralized in nature. So there is no collateral in bitcoin.

There is no particular collateral behind bitcoin because it is all about strategy in my opinion. Fiat currency needs collateral because it is well established but people buy and sell bitcoin only to make some money till now.

I think Bitcoin is not like bank related traditional transaction process. It has its own systematic way of business. There are many easiest way to know about bitcoin I guess. You can try on of these.

No person or group controls Bitcoin because Bitcoin is a decentralized virtual currency. There is no collateral to Bitcoin. Bitcoin's value can increase or decrease depending on the demand.

Simply saying, there isn't any collateral offered in Bitcoin. Actually, BTC are not loaned over, it is being traded over internet Crypto-space in exchange of money. You buy bitcoin, you get its values and nothing else. And also there isn't any governing authority to control over it. So no chance of deposit. BTC though, is a hotcake in the market having so many other demanding factors.

Actually, there is no collateral when people invest with bitcoin wherein I would say people should have the right knowledge when participating in doing investment.  People should accept that there is always a risk involved in btc but that risk would be a minimal one if you acquire the skills in analyzing the market trend. The best thing to do is hold when it dip and sell when the market goes up and that will depend on your decision.

There is no collateral behind BTC, and no organization or government guarantees BTC!
The value of BTC is that people are returning to investment through other trusts! The value of Bitcoin is accumulating a little bit with the increase in the number of users.

Bitcoin is not an interest bearing loan.

Colletaral is only used when you've got someone who wants a loan, and it is filled with some sort of item with equal or more value held by the lender to liquidate in case the borrower defaults on the loan. That's what a collateral is.

Bitcoin is not based on debt. Bitcoin is a currency, and currencies don't need collateral to back it. For example, precious metals don't have collateral backing, nor do fiat currencies.

Though of course, bitcoin is much better as "money" and store of wealth compared to fiat because its supply isn't centralised.

Bitcoin doesn't have collateral. It is a decentralized currency which is used to do transactions. We cannot take a loan, either it can be used as bonds. Besides, the price very fluctuates. People need to believe it to accept it.

there is no collateral behind bitcoin, bitcoin only has credibility and excellent quality, so bitcoin can survive and uptrend in 2017.

whales, investors, and all people who support bitcoin make bitcoin survive, bitcoin is not bubble or ponzi. bitcoin is the same with other currencies, but only different shapes.

collateral-this is about physical currency, not about crypto-currency. Bitcoin is decentralized and has no collateral or collateral,it has value in itself.It is not clear why many people perceive bitcoin as a loan?

I liked your question but analogy of car vs car loan does not fit here because Bitcoin is not a physical good.

So exact question will be what makes BTC valuable. Below are the some factor.

Ease of transfer: No need to go to any third party, you are in full control of your money.
Transaction fees : They are constant for each transaction and do not depend upon how much you are sending but instead they depend upon your input/output, so it will be cheaper fpr big transaction.
Anonymous : You do not need to upload all your personal details  in internet to do an online transaction. For any other mode of online transaction you need to verify your phone number, address and so on.

What is the collateral behind your local Fiat currency? the value of it right? so it same goes with Bitcoin. For as long as it has a market capitalization then the collateral of is the value itself.

Bitcoin is a currency, and intangible. Know your facts.

I do not think that bitcoin can act as an object of pledge. In the case of investing money in the bank for deposit storage, this amount of money is not considered as a pledge. It is transferred to the bank for determining the time in operational control. The Bank has the right to use these funds to perform various banking operations and make profit. Part of this profit is then paid to the person who transferred his money to deposit storage.
Bitcoin, I think, can not be used for transfer to deposit storage in a bank or as a mortgaged property, because it is too volatile in price and banks will not be so risky.

You can only determine collateral when there's agreement exist so I believe that collateral behind bitcoin doesn't really exist. Furthermore, Bitcoin is clearly decentralized so this is your own choice to participate or not.

I do not think, Bitcoin's collateral is the trust of users and investors in a new payment method! Can be widely used in the future!

People using it, believing in it is the collateral behind Bitcoin. The day people stop believing in it will be the day, Bitcoin will lose it's value.

ThYeah it's the trust of people on Bitcoin, trust is the best collateral for sure but it's quite vurnerable also and who know once day Bitcoin will lose it and become valueless.

Engaging into cryptocurrency deals requires no collateral since this community s about trust not assurance because if you want to compared this into fiats then better use physical money.because theres nothing who can give you any collateral

So its your choice of what to use,but if collateral is what you want then expect nothing

       There is no collateral behind Bitcoin it is a digital decentralized currency, at the beginning there was no value in Bitcoin but since it was a decentralized one  (that means no intermediaries) and so the transaction was easy and low cost , and could be used world wide , it is an online mode of payment that anyone can use all over the globe without any obstacles to reach the destination and even help those who are in need without going to exchange their money in any exchanges.These benefits people accepted and there arises more demand in Bitcoin.

Bitcoin is not some kind of loan to need a collateral. You straight up trade your cash for bitcoin. Not some kind of loan that you have to pay monthly.

I think that there is no any collateral behind BTC. This is due to the fact that people just believe in its value and don't doubt it. i do the same, i think it is the best one

transparent, decentralized with excellent blockchain technology, so there is no grammatical term for crypto currency like bitcoin.
judtru is one of the reasons why bitcoin is very liked and very in demand by many people around the world

There is no collateral for bitcoin because bitcoin is a decentralized and volatile and investors purchase bitcoins and hold till price not move upward and take profit. for bitcoin movement need demand and supply and whenever this happen then bitcoin will be exist in the crypto market.

Why do you guys keep trotting out rehashed versions of the misinformation that has been posted dozens of times in this thread.

Here is the Oxford dictionary definition of collateral

It is little wonder that you don't get any merits for your posts.

Bitcoin is not about debt that actually must use assurance. It's about investment or sell and buy where you first must put your money to start the trading that no nedd assurance.

What you are meaning by collateral doesn't go with bitcoin actually because bitcoin is not like fiat currency. Bitcoin is decentralized and virtual currency. Nothing is collateral behind bitcoin. It itself is it's collateral.

bitcoin as ordinary money, I think it can only be issued on credit. but the concept of collateral can not be. or a Deposit in the currency bitcoin, but the issuance of money at the current rate

We know BTC is decentralised so it has no collateral in it. Moreover, BTC is not a loan so there is no collateral system. We buy BTC knowing the fact that it’s price can fluctuate anytime. It is not like fiat thats why it has no system like that.

Bitcoin does not have any collateral. Collateral are generally given while providing loans for the security of the service. Bitcoin is based on decentralized system. And so, Bitcoin is neither a loan, nor it needs collateral for its security.

Crypto is now being used as a collateral to obtain loans. One of them that is offering this is Nexo. By pledging the assets of the holders, rather than selling them, crypto holders can obtain immediate money and keep the upside of future value appreciation of their crypto currencies and tokens.

There is no collateral behind Bitcoin because it is a decentralized digital currency which was bought spending your wealth but there is nothing anymore and the only thing you posses is Bitcoin and the profit you might gain by spending it in the future is it increases in price and if didn't that is you problem too but there is no collateral   

there is no collateral for bitcoin, because when buying bitcoin you only need to have money and not need other conditions, such as when borrowing money at a bank.

All I know btc is a crypto currency for investment and also used as a payment system. BTC is not like fiat currency that you may able to apply for a loan and has a collateral requirement. It does not work for btc in the current situation and we still don't know in the future what will happen next.

its a method of payment that cant be inflated and has no central authority whats not to love i believe in the future of btc and blockchain technology

no, anonymous bitcoin is just a matter of trust.
there is no guarantee to be able to have bitcoin you only need to buy it as long as you have money.

Nothing collateral can be expect behind a Bitcoin investment or a purchase because unlike a bank load or a property investment the only thing you will have after a Bitcoin investment is some curencies for the amount you used to bought and also there will be no once to guarantee  you safety except you which is unlike how normal centralized financial corporations work in the real world 

Because of their is no fixed value of bitcoin so, there is no collateral behind bitcoin it is totally depend of supply and demand.

There is no collateral that is why there are lot of criticism against this investment like Bill Gates and Warren Buffett in which they said that Bitcoin will not last because it has no collateral for the sake of the investors but Bitcoin already build a deep foundation of trust among the people that even it has no commodity to promote but still the people will pour their investments to this coin.

I guess there is no collateral behind bitcoin and the positive thing about it is we can do who we want it to do there is no one whom you have to give answer.

It doesn't have any collateral behind it because it's value is fiat. Projects like Tether need a collateral because it's price is pegged to 1$ value, it has to be backed by a real dollar.

No one can consider Bitcoin investment as a bank loan or any other investment action we take in the real world this is very new to the world so I don't think there are any collateral behind Bitcoin or its investments and the investor should accept the profit and the loss both in the same way according to the price variation that will happen after the investment and nothing can be expect more than that   

Collateral is a property or other assets that a borrower offers to a lender to secure a loan, but bitcoin isn't a loan. Bitcoin is also a decentralized body therefore it isn't controlled by a particular individual.

Markets are the collateral, that equilibrium between how much want to pay for a btc and how much want to earn while selling a btc.

If you visit https://bitcoinwisdom.com/ you will see the main markets in live action  ;)

https://bitcoinwisdom.com/markets/bitfinex/btcusd
https://bitcoinwisdom.com/markets/bitstamp/btcusd
https://bitcoinwisdom.com/markets/coinbase/btcusd
https://bitcoinwisdom.com/markets/bitcoinde/btceur
https://bitcoinwisdom.com/markets/quadrigacx/btccad

All those orders place a bitcoin price, and the current price * total bitcoins, makes the market capitalization (MKT CAP $111.95B)  And that number is the real collateral 111 Billions are the backup  ;D

I think for guarantees and who guarantees the development of crypto currencies does not yet exist and guarantees are our confidence and patience in investing with cryptocurrencies