Bitcoins interest rates possible?

[peach]

The increasing intrinsic value in a deflationary currency should take care of anything and more inflation does to safeguard fiat currencies.

[1714784094]

1714784094

[relative]

Is it evil to rent a house?
Is it evil to rent a car?
...
Is it evil to rent a sum of money?

Is it evil to rent a sum of money?  In my opinion, absolutely!  Because interest to be paid on your loan, in simplistic terms, doesn't exist.  You must pay back the original principal + interest.  The interest portion doesn't exist and cannot be created out of thin air.

so profit doesn't exist either, eh?

jeez...a bunch of economic illiterates trying to run a currency.

work for  a car company. take out a loan from them to buy a car from them. earn part of their profits for your work in the future and pay back the loan with interest

everything "existed" and nothing is created out of thin air. as simple as this is, the real world works the same there are just more intermediary steps.


if bitcoin will ever be widely accepted, there automatically will banking, there will even be fractional reserve banking, there will be interest.

Never said profit doesn't exist.  Profit is just an increase in value.  You can create profit by adding value to something either by effort, time, resources or demand.

Lending money for money creates nothing of value.  Money is simply a medium of exchange.  Adding interest to money is a sure way for someone to get it all in the end, much like we'll have soon in the reality of this world.  Explain to me how can every country be in debt?  The only way for someone to get out of debt is to put someone else in even more debt.  The game is rigged and we are all losers when interest comes in play.  Interest is an insatiable monster that will eventually swallow everything, including the lender.

Lending money is also a great way to create slaves...Usury, was once punishable by death.  That's when they use to understand what it caused.  Now, most don't give a f*ck as long as they make something for nothing, much like the speculators.  Good luck with that.

put aside your ideology and try to think for a moment.

you didnt say profit doesnt exist, but you imply that by saying the interest portion of a loan doesnt exist.
profit requires running a business, running a business requires capital, like machines. the guy who provides machines ( = the money to buy them) doesnt like to take that risk for free. his compensation is interest and is payed from the business' profit.

nothing is out of thin air, and nothing of this is evil.

The only way for someone to get out of debt is to put someone else in even more debt.

nonsense.

[Bastet]

The only way for someone to get out of debt is to put someone else in even more debt.

nonsense.

I don't have anything against bitcoins per se.  They can be, and probably will be, a form of money.  That doesn't mean that banks won't lend you money or that interest will go away or fractional reserves won't work.  These games will be our undoing and are separate problems we'll have to deal with.  Personally, I chose to remain debt free at all times, can't stand interest, or bankers for that matter, and I don't want to get caught in that evil downward spiral.  I don't owe anyone jack sh*t and love it that way.

It's the way the game is played I don't like.  http://www.youtube.com/watch?v=SUkwntLNTOU#t=12m38s  Watch the whole video, it's quite interesting.

[hugolp]

The only way for someone to get out of debt is to put someone else in even more debt.

nonsense.

I don't have anything against bitcoins per se.  They can be, and probably will be, a form of money.  That doesn't mean that banks won't lend you money or that interest will go away or fractional reserves won't work.  These games will be our undoing and are separate problems we'll have to deal with.  Personally, I chose to remain debt free at all times, can't stand interest, or bankers for that matter, and I don't want to get caught in that evil downward spiral.  I don't owe anyone jack sh*t and love it that way.

Just to be clear, nobody is saying that debt is always good, nobody is defending the present monetary system, comparing the present levels of debt and specially the way it comes about to slavery is quite accurate. Nobody is disagreeing with you there. I personally try to stay away from debt as much as I can as well.

The problem is that some justifications you are giving are objectively wrong, false. That is what the people here is trying to point out.

[relative]

Just to be clear, nobody is saying that debt is always good, nobody is defending the present monetary system, comparing the present levels of debt and specially the way it comes about to slavery is quite accurate. Nobody is disagreeing with you there. I personally try to stay away from debt as much as I can as well.

The problem is that some justifications you are giving are objectively wrong, false. That is what the people here is trying to point out.

+1
the problem is really debt for consumption, as opposed to using capital for production.
and I'd include government consumption here, often enough incentivised by central banks.

[realnowhereman]

Can I suggest that the number of you who think interest is bad go and read some Bastiat.

He wrote all about this subject when the French government was discussing banning interest on capital.

You can even read it for free; I think it's available on mises.org.

[Funkypala]

Alright i decided to get some ground info on our banking system and started to watch this video which explains our system pretty well:

http://www.youtube.com/watch?v=GMPPeWYL5uk

I am a little relieved since it explains that the main problem of our time are not interest rates, but the creating of money out of nothing from debts. You might have to watch the video to understand what i mean.

And this money creation can t be done with Bitcoins.


Well now i believe in Bitcoins again. They will make the world a less corrupt place, and we can be part of this

[bcearl]

I thought about that, too. My conclusion: A bank who gives loans to people is impossible, because it cannot enforce that people pay back their debts.

Even if you know the identity, what are you gonna do? Torture him to release his passwords?

[hugolp]

Funkypala, welcome again.

I thought about that, too. My conclusion: A bank who gives loans to people is impossible, because it cannot enforce that people pay back their debts.

Even if you know the identity, what are you gonna do? Torture him to release his passwords?

There are ways to enforce contracts through private institutions. First, you have ostracism. If someone violates a contract he/she will find it hard that other people trust him/her and trade with him/her. So there is an incentive to respect contracts. Second, you have the legal system, the courts. This legal system can be a government monpolly or private. It would be a long to discuss both systems, but basically the bank can use the legal system to enforce the contract.

[bcearl]

Funkypala, welcome again.

I thought about that, too. My conclusion: A bank who gives loans to people is impossible, because it cannot enforce that people pay back their debts.

Even if you know the identity, what are you gonna do? Torture him to release his passwords?

There are ways to enforce contracts through private institutions. First, you have ostracism. If someone violates a contract he/she will find it hard that other people trust him/her and trade with him/her. So there is an incentive to respect contracts. Second, you have the legal system, the courts. This legal system can be a government monpolly or private. It would be a long to discuss both systems, but basically the bank can use the legal system to enforce the contract.

Yes, but even after a court decision a million policemen are not able to wrench the money from your hands.

[hugolp]

Yes, but even after a court decision a million policemen are not able to wrench the money from your hands.

The problem is that then you probably can not trade in that jurisdiction anymore. Obviously its not unheard for some people to not pay the debts. In Europe a lot of people, specially inmigrants, have fleed the country leaving the unpayed mortgage behind. But they can not expect to come bank ever. Some people might preffer to pay the debt than to go away from their home, family and friends.

[barrymac]

Islamic banking has an interesting take on usury. I think this reference is interesting in the context of this discussion:

http://en.wikipedia.org/wiki/Islamic_banking

"The Vatican has put forward the idea that "the principles of Islamic finance may represent a possible cure for ailing markets."[18]"

[barrymac]

I just noticed also that we already have a bitcoin bank just round the corner, that pays interest. They don't say how much though!

http://flexcoin.com/

[aral]

Someone mentioned fractional reserve banking... although it could exist with bitcoins, I don't see the same advantages.  While I need a bank to protect my $millions (I wish) and make transactions for me, I could do that myself with bitcoins.  I also don't need interest to maintain my wealth as bitcoins are inherently deflationary.  Actually my biggest concern with bitcoins is the incentive to hoard instead of spend or invest.  You might not see that as a problem but it hasn't ever been tried AFAIK so it's a leap of faith at least.

[aral]

I just noticed also that we already have a bitcoin bank just round the corner, that pays interest. They don't say how much though!

http://flexcoin.com/

Sorry but I can't take seriously a 'bank' that runs on wordpress!

[relative]

Someone mentioned fractional reserve banking... although it could exist with bitcoins, I don't see the same advantages.  While I need a bank to protect my $millions (I wish) and make transactions for me, I could do that myself with bitcoins.  I also don't need interest to maintain my wealth as bitcoins are inherently deflationary.  Actually my biggest concern with bitcoins is the incentive to hoard instead of spend or invest.  You might not see that as a problem but it hasn't ever been tried AFAIK so it's a leap of faith at least.

I'll assume for a moment that there will be bitcoin banks and such.

I think it is a misconception that bitcoin is inherently deflationary. it very much depends.
with bitcoin only the base money supply is constant eventually. that is less inflationary than all other fiat currencies, but it doesnt mean there is no inflation. there can be, when banks do what banks do: create money by creating credit.

see the money supply definitions M1-M3.


even if bitcoin is the currency I doubt bitcoin will be the method of payment of the end-user, more like the back-end of banks and some enthusiasts. so banks basically do what they do now, except their refinancing would be vastly different because there is no central bank, which is the most interesting part of bitcoin and a huge difference.
but besides that I don't think that much would change.

[the founder]

I just noticed also that we already have a bitcoin bank just round the corner, that pays interest. They don't say how much though!

http://flexcoin.com/

Sorry but I can't take seriously a 'bank' that runs on wordpress!

It's just a wordpress placeholder... the site goes live July 1st... and it won't be running wordpress other than it's blog section....  we're not putting the live code up until it passes the security audit...  

It's an active miner,  and is in a few pools and on it's own as well (graphics card mining across several machines)...  what it does is pay interest in the form of dividends that are earned for accounts that have a positive balance in there...

No one is going to get rich from what they get as interest,   but that combined with deflation should be helpful for most individuals.

http://flexcoin.com is the first Bitcoin Bank that pays interest ...  granted it's "funny" how it does as compared to a traditional bank, but it's the first time in history a bitcoin account pays interest..  you'll see the site change look and feel by July 1st.

[TraderTimm]

I've never understood the compulsion to enact a usury system with bitcoin.

Its like insisting a car has to have a harness for an animal to pull it. Get your heads out of the bank-washed system of 'charging for money', just for a second, eh?

[aral]

even if bitcoin is the currency I doubt bitcoin will be the method of payment of the end-user, more like the back-end of banks and some enthusiasts. so banks basically do what they do now, except their refinancing would be vastly different because there is no central bank, which is the most interesting part of bitcoin and a huge difference.
but besides that I don't think that much would change.

i see the utility in accepting 'promissory notes' and how that paper currency system has been transmuted into fiat.  i don't see why the end user would accept payment in place of bitcoin when they could just accept bitcoin, except for instant POS transactions where a provider would take a small fee.

http://flexcoin.com is the first Bitcoin Bank that pays interest ...  granted it's "funny" how it does as compared to a traditional bank, but it's the first time in history a bitcoin account pays interest..  you'll see the site change look and feel by July 1st.

Seriously though, you'd have to be nuts to deposit your hard-earned coins into an unregulated, untested, unknown 'bank', with no backing and no guarantees run from god-knows-where, just for a tiny bit of interest.   Where I am going to turn to when you steal all my money?  I'll have to tell the bitcoin forum and everyone will laugh in my face.

[relative]

even if bitcoin is the currency I doubt bitcoin will be the method of payment of the end-user, more like the back-end of banks and some enthusiasts. so banks basically do what they do now, except their refinancing would be vastly different because there is no central bank, which is the most interesting part of bitcoin and a huge difference.
but besides that I don't think that much would change.

i see the utility in accepting 'promissory notes' and how that paper currency system has been transmuted into fiat.  i don't see why the end user would accept payment in place of bitcoin when they could just accept bitcoin, except for instant POS transactions where a provider would take a small fee.

not sure I see what you mean.
bitcoin and its flooding algorithm doesnt scale well. the developers acknowledge that and talk about "leightweight" clients that trust another node for their transactions - that's a bank.
I fail to see what that has to do with promissory notes.

there are many other reasons joe schmoe would not communicate with the bitcoin network directly, but scalability alone would be enough.
your wallet/mobile phone/whatever-device you use for payments will not hold the entire transaction database of the whole world.