Zero interest Bitcoin mortgages

[raresaturn]

Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

[BitcoinBabe]

Hmm... I don't get the right to "process the transaction" bit. Isn't anyone allowed to mine, whetehr they have the means to do it solo or via a pool?

Or is what you're saying that, borrowers join a lender's mining pool for the loan but don't generate any btc for themselves? Presumably, this would mean the lender is a heavy-duty miner already but doesn't pay the borrower any share of  mined/generated btc and, instead of making payouts to his pooled borrower(s), gets 100% pooling fees from their monthly cpu/gpu efforts until the loan is paid off...?

If this is the case, I'm not sure a mortgage would be feasible. Small payday loans, maybe... Although, with the deflationary nature of btc at present, loan repayment could be possible quite qickly... or not. BTC might be a bit too volatile for such transactions at present.

[raresaturn]

Hmm... I don't get the right to "process the transaction" bit. Isn't anyone allowed to mine, whetehr they have the means to do it solo or via a pool?

Yes, currently.  But I am proposing a whole new scheme to incorporate loans.

[BitcoinBabe]

Hmm... I don't get the right to "process the transaction" bit. Isn't anyone allowed to mine, whetehr they have the means to do it solo or via a pool?

Yes, currently.  But I am proposing a whole new scheme to incorporate loans.

So, everytime a borrower goes online, he's working towards paying off his/her debt?

[BitcoinBabe]

Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

But it wouldn't be possoble for the lender to set the difficuly. In fact, by adding to his pool, surely, he'd be increasing the difficulty.

[raresaturn]

Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

But it wouldn't be possoble for the lender to set the difficuly. In fact, by adding to his pool, surely, he'd be increasing the difficulty.

Why wouldn't it be possible?  All it would require is a change to the client software.

[BitcoinBabe]

Maybe there could also be a reduced difficulty for the lender to process the block, as an added incentive.

But it wouldn't be possoble for the lender to set the difficuly. In fact, by adding to his pool, surely, he'd be increasing the difficulty.

Why wouldn't it be possible?  All it would require is a change to the client software.

From my understanding of how bitcoin works, it's built into the system that no one person has the authority (or ability?) to change the block solving difficulty. It would have to be a peer to peer agreement, and why would the bitcoin community want to devalue the currency just so that a lender/miner could give out easy loans (and we've all seen where that leads).

Otherwise, we're essentially looking at ways to devalue the currency by making it more easily available - a bit like Bernanke cranking the printing presses to create more dollars and then throwing them out of a helicopter for all and sundry to scramble over, even though he's effectively decreased its purchasing power.

At present, it's built into the system that as more people leave bitcoin mining, block processing difficult decreases, enticing people to back get in for a relatively easy coin-generating ride and keep the system going. However, the more people join, the more the difficulty increases, making it harder to acquire coins as easily, and thus keeping it a deflationary, rather than inflationary currency.

This is why anyone who bought/mined/acquired btc last year, while it was under $1, are now sitting on a tidy profit (assuming they didn't sell). Surely, getting 100% mining fees from the borrower would be enough incentive for a lender. Why would he then also try to reduce the difficulty in order to make it even easier for himself. Sounds a lot like old-world (20th/21st century) banker greed, there.

[nonameo]

Saturn, maybe this will help.

What you want is to say, "hey, you lent me money so I'm going to let you mine my transaction!"

However, the fallacy here is that when you talk about bitcoin getting money from it, you can't talk about just one transaction, you have to talk about the block. The block doesn't contain just one transaction though, it contains ALL the recent transactions that occurred on the network. So, let's say 1000 loans are originated, ALL of those transactions will go into the current block. This is the record that everyone has so that we can all make sure that transactions are valid, and that the money you say you have actually does belong to you.

So then you might ask, why is it called mining bitcoins? really it should be called mining blocks, because what your computer is actually doing is calculating a checksum for the block.

However, any given block can have more than one checksum(this gets into matrix math, which I'm a bit rusty on and don't feel like brushing up. You probably don't care and won't need to in order to understand anyway. Just think of it as saying there is more than one solution to a problem)

We don't want just ANY checksum, though. We want a checksum that is lower than some target number. However, The lower the number is the less likely it is that you will generate a winning checksum(when people talk about difficulty, this is what they are referring to).

example: let's make this sweet and simple. Let's say the target is 0234
Block 1. - generate checksum - OK I got 1330, but we're tossing this result because its bigger than 0234
block 1. - generate checksum - OK I got 2804 but that is also bigger
block 1. - generate checksum - OK I got 0123 - yay  I win!


So what happens when you win? something UNHEARD of happens! essentially, a NEW one way transaction is added to the block that adds 50btc to the generator's bitcoin wallet. The network, however, is reducing the number of bitcoins generated per winning block(every 4 years) and increases the difficulty (I forget how often) to keep the number of bitcoins under 21 million(inflation is bad mmkay?)

now, a pool is just a group of people who decide to share the risk of not discovering a block checksum under the target by dividing the 50btc when a block IS discovered. You can solo mine if you want, but there is no guarantee that you will EVER win a block.

Well, I don't know how good this explanation is, but I tried! XD

[Agozyen]

 I have a grasp now on what your idea is.  I was getting hung up on the whole 'right to process' thing.  The problem is, as a small player (tiny really), I wouldn't really benefit from getting the right to solve a block, since it would take me so long to solve it. 

 What you are missing is that small guys like me are probably members of mining pools.  So we get frequent smaller payouts, and over time, things average out.  With my hashrate and difficulty, the average time to solve a single block for me is over six months.  So, as a lender, it would not benefit me at all.  I would have to drop out of the mining pool and process that block until it's done.  It may take more or less time, the six months is an average.  The end result for me would be the same amount of Bitcoins mined whether I lent money or not.

 So, the problem as I see it is you have to come up with a way to motivate people to lend the money in the first place, something other than Bitcoins.  I think the mining right is a good start, but it needs to be quantified.  You should try and focus on how the mining right thing would work and how it can be transferred.  Maybe call them Lendcoins and mine them separately?  I have no idea how that would work, It's too early in the morning for me...

 

[fortismilites]

hold on let me see if I follow. You want to start a company then lends bit coins. This company will lend (lets say  100BTC), to someone, using the blocks that are created from the transaction of sending the BTC to the person and the person repaying, give them to the lender so he can decrypt them and bag the 50 BTC or what ever it is?

[BitcoinBabe]

Came across this from digitalcoin.info. It's just a one page pdf file, but there's already someone out there that's looking at interest/debt-free digital mortgages and it might give you some useful info to incorporate into your own idea.

http://digitalcoin.info/Digital_Coin_Mortgages.pdf

It's a pretty quiet forum, but you may also want to check out the following to see if there's any useful information to fuel your research there.

http://digitalcoin.earthsociety.org/forum/index.php/board,11.0.html

[raresaturn]

Came across this from digitalcoin.info. It's just a one page pdf file, but there's already someone out there that's looking at interest/debt-free digital mortgages and it might give you some useful info to incorporate into your own idea.

http://digitalcoin.info/Digital_Coin_Mortgages.pdf

It's a pretty quiet forum, but you may also want to check out the following to see if there's any useful information to fuel your research there.

http://digitalcoin.earthsociety.org/forum/index.php/board,11.0.html

Interesting that someone else has come up with a similar concept, I think we might see a fundamental change in the economy in the next 10-20 years...could this be the end of banks?

[BitcoinBabe]

Came across this from digitalcoin.info. It's just a one page pdf file, but there's already someone out there that's looking at interest/debt-free digital mortgages and it might give you some useful info to incorporate into your own idea.

http://digitalcoin.info/Digital_Coin_Mortgages.pdf

It's a pretty quiet forum, but you may also want to check out the following to see if there's any useful information to fuel your research there.

http://digitalcoin.earthsociety.org/forum/index.php/board,11.0.html

Interesting that someone else has come up with a similar concept, I think we might see a fundamental change in the economy in the next 10-20 years...could this be the end of banks?

Found an introductory video that goes in a little more detail as to how Credit Coin would work...

http://www.digitalcoin.info/Digital_Coin_Introduction.html