Who will lend money without banks?

[apex944]

Decentralized or not, the economy is the same. There are already a bunch of lending platforms out there. With banks or without, there is always room for capitalism.

[figmentofmyass]

there are several cryptocurrency projects that are building platforms for P2P cryptocurrency lending. one example is SALT (Secure Automated Lending Technology). it let's you use cryptocurrencies as collateral to obtain cash loans:

SALT loans are live!

We have issued initial loans to a small group of members and we expect to have originated over $10m in loans by the end of this year. Our platform will continue to be rolled out in stages to ensure quality and security as we scale to meet the extraordinary demand for loans. We are excited to extend the application process to all of our community and expect to have between $50m and $75m in active loans by the end of January 2018. We are working as quickly as possible to safely and responsibly expand the rollout to serve the needs of each and every member.

I'm almost willing to bet that in 2 years time they will go bankrupt.
It happen to all projects that thought submitting some papers is enough to make the guy repay its debt.
BtcJam was the clear example on how many things can go wrong.

LE
Just checked the "project" you provided. An ICO? Common man....

what's your point? i said that the nature of lending is not changing, just the top-down monopoly on credit providers. if anything, you're literally arguing my point:

Hundred and hundred of online wallets who are basicaly...banks!!!! Banks that have overall control of your money.
No, banks won't go away, in the worst case they will just change name.

anyway, SALT was just an example of a potential credit lending model. the decentralized nature of cryptocurrency expands the potential liquidity pool for lending because it lowers the barriers to entry for lenders and could make micro-loans more viable.

and are you so sure that smart contracts can't be leveraged to mitigate counterparty risk in P2P loans? comparing BtcJam to the smart contract technology of today and tomorrow is laughable. why can't multi-sig contracts be used to secure collateral? why can't smart contracts be used to detect loan defaults and automatically liquidate collateral? outside of the context of fiat money, all of this seems possible to me.

i don't think SALT is viable from a regulatory standpoint, but i think a similar (but P2P) infrastructure could be viable if you entirely remove fiat money from the model.

[Siopao]

There are microfinance lending who can do it. Nowadays they are making it big in the industry as it offers lower interest rate. On the other hand, if the banking industry sees that cryptocurrency will dominate the financing industry for sure they will make waybto adapt and integrate it to their transaction that is for longer stability of their industry in the market.

[MakersONE]

Banks will not be lost anywhere. Regardless of the prospects of the cryptocurrency, banks will stay with us forever. What prevents them from giving you money in the form of bitcoin or ethereum? 

[darkangel11]

If a decentralized system of money is implemented, lending capacity would be vastly reduced and slow the growth of the economy.

Implemented doesn't mean it that banks or fiat money will disappear. If you believe that the governments will stop issuing their own money you're a dreamer. Right now cryptocurrencies aren't used by even 1% of the global market. Even if this goes up to 10%, which I really doubt will ever happen, cryptocurrencies will be worth so much that we'll all be rich beyond comprehension. This means that even if your theory is fine and the lending capacity gets reduced, you'll also have a much lower demand for it because there will be a large number of rich people who became rich on the rise of cryptocurrencies. It will all stay in balance.

[ccie38216]

I bought my house on credit with a loan.
How the hell would I have been able to provide a collateral for it?

As with traditional mortgages today, the house becomes the collateral and if you fail to make payment they foreclose and kick your ass out and take the house. Quite a simple process actually

[Tyrantt]

The only thing cryptoc can/will replace banks for is keeping your money. Tho as the concept of bank and banking will, probably, never be replaced, some aspects just might (storing your money). Also if the things go the way they are now, bitcoin will remain an investment asset and banks would deal with them as well. 

[jseverson]

You seem to be assuming that once crypto takes off, fiat will die. I find that highly, highly unlikely. That would require near-perfect infrastructure for every single corner of each and every country. You need to be able to spend your money anywhere and everywhere after all, and a power outage or service interruption should not paralyze towns or cities. Fiat still does a few things better than crypto, which is why it's going to stay.

Either way, if we assume that banks will be killed off, the closest thing to them at the moment are exchanges. You park your money with them and cede control. They have certain rules that you need to follow for you to be able to move your coins. I could see them being able to hand out loans.

[trk]

Bad news, but you sound right
But perhaps we dont really need a bank anymore, we just need some innovation to let us lend and borrow money from others with guarantee
I dont know that yet, but nothing is impossible in crypto, it might come this year

[stompix]

what's your point? i said that the nature of lending is not changing, just the top-down monopoly on credit providers. if anything, you're literally arguing my point:

No, I said that it will not change. Nor will the p2p lending ever take off.
Especially with a centralized token, that's hilarious!!!!

anyway, SALT was just an example of a potential credit lending model. the decentralized nature of cryptocurrency expands the potential liquidity pool for lending because it lowers the barriers to entry for lenders and could make micro-loans more viable.

and are you so sure that smart contracts can't be leveraged to mitigate counterparty risk in P2P loans? comparing BtcJam to the smart contract technology of today and tomorrow is laughable. why can't multi-sig contracts be used to secure collateral? why can't smart contracts be used to detect loan defaults and automatically liquidate collateral? outside of the context of fiat money, all of this seems possible to me.

i don't think SALT is viable from a regulatory standpoint, but i think a similar (but P2P) infrastructure could be viable if you entirely remove fiat money from the model.

We're not talking about collateral here, that is plain stupid.An economy where loans are offered only on collateral would end up in the stone age in a decade.
The only way collateral work is in small p2p lending.
Not car finances, not mortgages and not business investments.
And microloans are percentage wise so insignificant it's really not worth talking about.

Nope, it's simply impossible.
Once somebody doesn't pay a loan there must be a way to make that somebody pay.
Now, I can't pay the loan anymore or I don't want to pay the loans.
How are you going to force me to pay it up?
You know how lengthy and how costly is the legal process going to be? And at this point smart contracts carry 0 value as all the process has to take place in a real world court, who is going to pay all the fees?

And about that "secured" collateral.
My secured collateral is a house let's say.
It burns down.
Where is your collateral?
How you liquidate it? (pun)

I bought my house on credit with a loan.
How the hell would I have been able to provide a collateral for it?

As with traditional mortgages today, the house becomes the collateral and if you fail to make payment they foreclose and kick your ass out and take the house. Quite a simple process actually

Really?
So how will those smart contracts work on that house?
And I mean from the legal point?

Also, you're forgetting something. Let's say everything works, the lenders get the house back...then what?
You're (you as multiple lenders) going to sell it to get back the money?
Enjoy one hell of a lengthy process , especially with multiple lenders and especially with little sums invested by a number of persons.
Here in some countries in Europe we have some pretty tricky laws about personal bankruptcy.
If the guy decided to payback more than 3/4 of the debt the rest of you won't be able to get seize the house as the value of the debt is too small compared to the debt.

Sorry but this whole p2p lending are just wet dreams.

[glaciercapital]

Bad news, but you sound right
But perhaps we dont really need a bank anymore, we just need some innovation to let us lend and borrow money from others with guarantee
I dont know that yet, but nothing is impossible in crypto, it might come this year

I believe new platforms will form that will focus on these areas. At the end of the day investors always seek returns. And those returns will drive people to lend. Crypto will make the whole mortgage market far more efficient.

[A1exander]

If a decentralized system of money is implemented, lending capacity would be vastly reduced and slow the growth of the economy.

There will be no 'decentralized system'. Bitcoin is no more 'decentralized' than gold and silver (actually much less, because there are just a few mining enterprises and exchanges). Banks adopted paper money before, soon they will adopt crypto. Nothing will change.