Zero interest Bitcoin mortgages

[raresaturn]

Hi, I have been thinking about peer to peer mortgages for some time, and trying to come up with ways that people could borrow money from each other instead of banks.  Then last week I heard about Bitcoin and I found the answer.  Basically it breaks down like this:

* everyone would have a credit rating, lending money gets you good credit, as does re-paying money.  Defaulting on payments gets you bad credit.  So eveyone is able to decide for themselves if they want to lend depending on the rating of the borrower.

* The Borrower's loan is split up into many segments eg. for a $500,000 loan there would be 5000 people loaning the borrower $100 each.

* This is the clever part...instead of recieving interest, the lender recieives a mining right to process the loan transaction.  The right expires within a given timeframe, so if he doesn't (or can't) process it before it expires then he can sell the right to someone who can.   If the right expires then it just goes into the general pool to get processed.
So every month that the loan is outstanding, the lender gets a new right to process that month's portion of the transaction repayment.

This is potentially far more valuable to the lender than a few percent of interest would be, and effectively the borrower gets an interest free loan.

Does this make sense?  I hope I have understood Bitcoin correctly.  If anyone finds this useful feel free to post it to the main board as I don't have access there yet.

Cheers.

[Agozyen]

Who is hosting the mining hardware and how do you get paid?  I am assuming the 'btcbroker' gets a cut too.  Sounds interesting but needs to be fleshed out a bit more.

[8oobman]

I'm interested in this.

[themike5000]

This sounds interesting, but years down the timeline.  Very tough to peg the price of a house to a currency with so much volatility.  We often see swings of over 10% in this market daily.  That might be ok if you deal with small things, but that is HUGE when it comes to a house.  In a few years, if BC prices have stabilized a bit, and it ends up getting "pegged" to products (like houses and cars) then you see even less volatility.  Chicken or the egg?

[Agozyen]

Maybe instead of mortgages we can start out on something smaller, like stuff under $1000.  Maybe this concept could be used to fund new miners ore (LOL) something.

[assbowser]

Love this idea, especially that of a reputation system to weed out unreliable loanees. A website that would facilitate these loans could be quite useful in my opinion. Just my two cents.

[Hakim1986]

This sounds like a good plan!

[raresaturn]

Cool, thanks for your support guys!  Obviously it needs a bit of fleshing out..

[Ellen Alemany]

I think it would make more sense to take interest rate.

Nothing prevents you from reducing your interest rate by some part by mining but why would I as a lender give money to people for free? (Which is what you do when you do not charge appropriate interest rate)

[abednego]

I agree that this is years down the line.  Early adoption will involve easily moved products in exchange for Bitcoins; the medium for this exchange being the Internet.  Buying/selling a house would require both parties to live in relative proximity to agree upon the transaction, involving inspections, due diligence, agent and closing attorney fees.  It's a great vision... but honestly I'd rather keep my money in Bitcoins instead of real estate for another few months at least! 

[hashcoin]

have you heard of ripple?
http://en.wikipedia.org/wiki/Ripple_monetary_system

[Vaxum]

This seems like a good idea.

[Moxed]

that would be creazy man

[muscles]

Hey internet, want to help me buy some land?

[raresaturn]

I think it would make more sense to take interest rate.

Nothing prevents you from reducing your interest rate by some part by mining but why would I as a lender give money to people for free? (Which is what you do when you do not charge appropriate interest rate)

The mining rights would be worth more and besides, the whole point is to undercut the banks.  who would take out a bitcoin loan if it were not cheaper than the bank rate?

[raresaturn]

I think it would make more sense to take interest rate.

Nothing prevents you from reducing your interest rate by some part by mining but why would I as a lender give money to people for free? (Which is what you do when you do not charge appropriate interest rate)

The mining rights would be worth more and besides, the whole point is to undercut the banks.  who would take out a bitcoin loan if it were not cheaper than the bank rate?

Why would a person take a risk of losing everything he lends out and not being able to profit from it or even cover the cost of defaults? Over time his investment would disappear entirely due to defaulting loans. They might as well give the money to charity.

what do you mean not be able to profit from it?  Did you miss point 3 in my original post?  Currently mining yeilds what, 5 Bitcoins?  This is worth roughly $70.  So for an investment of $100 you would get a return of $70 per month.  Is that not a good enough profit for you? 

[Agozyen]

I think the confusion comes from the title 'Zero interest Bitcoin Mortgages'.

Also, if I invest $100 and get $170 in Bitcoins back, where do they come from?  In other words, who generates them? 

[raresaturn]

I think the confusion comes from the title 'Zero interest Bitcoin Mortgages'.

Also, if I invest $100 and get $170 in Bitcoins back, where do they come from?  In other words, who generates them? 

They are mined.  Just like regular bitcoins, except in this case only one person is allowed to mine them (but he can sell that right)

[nonameo]

hmm.... I remember something called prosper.com. I don't know if it's still around. Is that what you were thinking of?

[raresaturn]

what do you mean not be able to profit from it?  Did you miss point 3 in my original post?  Currently mining yeilds what, 5 Bitcoins?  This is worth roughly $70.  So for an investment of $100 you would get a return of $70 per month.  Is that not a good enough profit for you? 

Did the money go to the previous home owner to buy their home or to mining hardware? The same money can't go to both at the same time unless you are counterfeiting.

What are you talking about?  it's quite simple:  Person A lends coins to person B ($100 worth).  Person B makes monthly repayments back to person A (principal only, no interest)  As a reward for lending the coins, person A gets the right to process (mine) the transaction, which of course results in new coins being created.  There is no counterfieting here.