Did you just ignore everything everyone said to refute the bubble claim?

reeses and I have discussed this before, and if you look back a bit on this forum you'll see me proposing similar ideas. I think it's a useful proposal, but so far nobody has stepped up to implement it (reeses started on something, and I'm working occasionally on something related as part of a larger project). I'm all for it, obviously

I think this analysis is somewhat simplistic, and ignores many of the aspects that make bitcoin lending unique. First of all, in a hugely volatile market like this, short selling is common, as are arbitrage and similar deals. Borrowing to make more money from deals like this is an obvious thing to do, and if they work out, they can easily make more money than the interest rate.

Second, low interest rates in "the real world" are supported by what I've previously called (https://bitcointalk.org/index.php?topic=73599.msg816149#msg816149) an economy of scale on collections infrastructure, which none of the lenders here has anything close to. Furthermore, getting low-rate loans from a bank (or even a credit card) is contingent on many things that do not apply here. We (often) don't ask for proof of identity here, or collateral, and have very little legal proof against you if you do choose to default. This significantly lowers the barrier to entry for people seeking loans (even for nefarious purposes that wouldn't stand at all in mainstream finance), but the lowered barrier to entry also carries a higher counterparty risk with it for the lender, which needs to lead to a higher return for the incentives to work out.

Finally, possibly even larger than counterparty risk is simply exchange rate risk. Most of us need USD (or local fiat) a lot more than we need bitcoins, so their exchange rate with mainstream currencies is a crucial aspect of the value of a loan. Sure, we could lend out 100 coins now and give you almost $500 worth of coins, but if you pay us back 600 coins in 6 months and the value has dropped to $0.10, we've just lost a lot of money. The opportunity cost of me lending you 100 coins for 6 months back in June 2011 is pretty huge. We went from over $30/coin to around $2 in that period. I'm not saying that we could have predicted that $30 was the peak and sold there, but it's a major factor in risk calculations, and thus contributes significantly to interest rates.


In short, if you want to set up the whole collections and legal infrastructure that underpins "real-world" loans, giving us full legal recourse and access to cheap legal advice for pursuing defaulted loans, then interest rates can drop. If you can stabilize the bitcoin exchange rates, the interest rates will drop even more significantly. But I don't consider the current situation to be anything remotely resembling a bubble. It certainly isn't ideal that the cost of credit is so high, but it's a necessary feature of this young market. I do acknowledge that IBB gives out loans for free, but they tend to be small, and senbonzakura has higher trust standards than other lenders, thus limiting overall access to loans.

Don't assume that we're idly sitting around becoming fat cats here. Lenders make a lot of money on successful loans, but that's amortized across defaulted loans, so to apply the word "shark" to us is insulting. A few of us are working on improving the credit situation to give lenders a better picture of credit history and creditworthiness, and overall to streamline the whole bitcoin credit business. These changes don't happen overnight, though

I like your lending style

I think the fact that he's still borrowing (and not paying back) is an indication that he needs a new forum status.

You can also buy puts. If you want them to behave roughly like regular short positions, you can buy some in-the-money puts and sell them back to micrea once the price goes down (or exercise them if that's more profitable, but it probably won't be).

You would probably point it at a pool or at GPUMAX.

I'd interpret DeathAndTaxes's comments as being about a bank's legal and collections infrastructure rather than about what information they get. A big bank has entire teams whose job is to get money back from defaulters, and has existing relationships with collections agencies and lots of experience doing all that. My general attitude with loans in bitcoins is that for most smallish loans I don't even bother asking for identity: if your online reputation makes me believe that you're fairly unlikely to run with my money, then you'll get the loan; if I'm unsure enough that I'd want identity verification, I just won't offer the loan at all, simply because it's not worth my time to chase down people who default on small amounts of money.

With the quantities of money you're asking for, on the other hand, I (or other lenders) would obviously need to ask for identification. But if it ever came to collection/legal action (which seems unlikely, given your reputation), we'd have to spend a lot of time/money getting lawyers involved (for a nearly unprecedented legal action, suing someone for virtual goods!) and/or selling debt at a loss to a collections agency. I think that more than justifies an increased rate over a bank.

Anyway, that's all I wanted to add I wish you luck in getting the money and earning a lot more on top of it.

tl;dr: economies of scale on collections infrastructure allow for lower interest rates

Unfortunately it's the only one available. The fact that relays exist (because bitcoin is p2p) makes the IP addresses virtually meaningless.

I wouldn't take the questions personally. It's a lot of money, and you should expect to answer a lot more questions than the average loan to get it. Are you willing to disclose your personal finances (income, savings, etc.) to a prospective lender (in private, if you don't want to do it in public)?

I'm going to wait to see if the previous winner dies or not (he hangs out on IRC).

I applaud this effort. If you want to go more into depth on certain topics that interest me:

Category Theory: http://www.youtube.com/user/TheCatsters

Algebraic Topology and other more advanced math: http://www.youtube.com/user/njwildberger/featured

Quantum Computing: http://michaelnielsen.org/blog/quantum-computing-for-the-determined/

Computational Finance: http://www.algorithm.cs.sunysb.edu/computationalfinance/ (with lecture notes at http://www.cs.sunysb.edu/~skiena/691/lectures/)

There are probably others, but I can't think of them right now.

I've been suggesting this in their IRC channel for many months now, but they don't seem particularly interested in changing their fee structure.

Sounds terrifying

Check out this guy enjoying a pepper with just 1/6 of the scoville rating of these peanuts: http://www.youtube.com/watch?v=1tRq8ExAHzk

Dude, the world record hottest pepper is just under 1.5 million scovilles. Are these peanuts going to eat away my skin?

I acknowledged this in my post. I don't think there's any currency risk in this loan, but bitcoin lenders have more counterparty risk than your landlord would, so I'd expect you to get shafted more here than you would if you just paid the standard rent rate. Assuming rational behavior all around, that is, which might be a pretty big assumption

Sorry man, they don't fit my Bentley's style.

The site looks way spiffier now than I remember it. Good job!