If I loaned you 1 bitcoin today, how could i expect you to repay if value rises?

[CtrlAltBernanke420]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

[Beliathon]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

Debt is slavery, if you give me a dollar, don't ever expect it back. There's a reason bitcoin transactions are one-way, just like cash.

If I'm so poor that I need to borrow money to meet my needs, my society has FAILED at both equality and solidarity.

http://strikedebt.org/

Did I mention fuck capitalism?

Because fuck capitalism.

[11inches]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

Debt is slavery, if you give me a dollar, don't ever expect it back. There's a reason bitcoin transactions are one-way, just like cash.

If I'm so poor that I need to borrow money to meet my needs, my society has FAILED at both equality and solidarity.

http://strikedebt.org/

Did I mention fuck capitalism?

Because fuck capitalism.

lol jesus christ I can't believe people like you exist

[Beliathon]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

Debt is slavery, if you give me a dollar, don't ever expect it back. There's a reason bitcoin transactions are one-way, just like cash.

If I'm so poor that I need to borrow money to meet my needs, my society has FAILED at both equality and solidarity.

http://strikedebt.org/

Did I mention fuck capitalism?

Because fuck capitalism.

lol jesus christ I can't believe people like you exist

That's what religious folk have been saying about atheists for a long, loooong time. Every day there are less religo-bots and more free-thinking, reasoned human beings.

Your time will come soon too, capitalist.

[jonald_fyookball]

whats wrong with capitalism?

[justusranvier]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

You wouldn't expect repayment. You'd have to charge a ludicrous interest rate for that loan to have a positive risk-adjusted net present value, an interest rate nobody could afford or would ever want to pay.

Long term BTC-denominated loans are nonsense.

Even short term loans have extremely limited use cases.

[amspir]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

That's not really a loan, it is short selling.   If the price of bitcoin rises, the person making the loan of the commodity needs the borrower to come up with collateral or money to cover the short position, or they need to buy a bitcoin as collateral to cover themselves.  If the loan is unsecured, then you probably just lost a bitcoin.

[Beliathon]

whats wrong with capitalism?

If you have to ask this question, congratulations you live an extremely privileged life, pretty much in a bubble from the awfulness of the rest of the world. Typical westerner.

whats wrong with capitalism?

The better question is where can we find capitalism? All I see is corporatism.

Right, we just need to get back to the "good old days" of capitalism.

When was that exactly, when women were property? The slavery era? Capitalism is a horror show, and it's only getting worse until it's dead.

http://www.youtube.com/watch?v=hpAMbpQ8J7g

http://www.ted.com/talks/john_hunter_on_the_world_peace_game

[keithers]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

To avoid that hassle, if you loaned something as small as 1btc, the term of the repayment would just need to be quickly to avoid much variance

[Beliathon]

Right, we just need to get back to the "good old days" of capitalism.

Bitcoin, with the monetary freedom it provides, is a giant leap in the right direction.

On that point, we agree. Cryptocurrency is an incredibly powerful technology for liberation.

[Twilight_Sparkle]

Right, we just need to get back to the "good old days" of capitalism.

When was that exactly, when women were property? The slavery era? Capitalism is a horror show, and it's only getting worse until it's dead.

So these things did not exist before "capitalism"*? Please, "capitalism" has only existed for 200 or so years. sexism and slavery has existed for as long as humans have existed. You fail logic.

*We never had a true capitalist society yet.

[doof]

This is why I can't believe people put money into that stupid site coin lenders.

1.  Bitcoin goes up 10x, good luck getting your money back.
2.  Bitcoin goes down 10x,  the punter will pay you back and profit.

[Rannasha]

If you use the loaned BTC for an investment that is denominated in BTC and is not exposed to BTC/fiat exchange rate, then it should be possible to loan and repay Bitcoin. Opportunities like this aren't easy to find right now, but they may become more available when BTC adoption grows.

If you do use the loaned BTC for matters that are exposed to the exchange rate, it is possible to cover the risk of a large increase in exchange rate by buying BTC call options. If you loan a BTC now for $560 and buy a call option with a strike price of $700 that expires just before your loan is due, then the maximum exchange rate risk is $140 plus the premium paid for the option.

Using derivatives such as options or futures it is possible to hedge against exchange rate risks, at a cost of course.

[irrational]

Debt is slavery, if you give me a dollar, don't ever expect it back. There's a reason bitcoin transactions are one-way, just like cash.

If I'm so poor that I need to borrow money to meet my needs, my society has FAILED at both equality and solidarity.

http://strikedebt.org/

Did I mention fuck capitalism?

Because fuck capitalism.

You've fallen off the deep end! Don't get me wrong, I think consumer debt is horrible, but not all debt is the worst. Judging by your response I'd say it's probably safe to say that you do not own real estate, if you did you'd probably have first hand experience in at least one situation where debt can be at least a neutral force in someone's life.

Circling back to the OP's question; in the case of real estate loans (and certain other long term loans), it's not uncommon for them to be priced at (+/- 1%) of inflation. For example, I have a 30 year home loan priced at 3% interest. Once you factor in inflation, is the bank really making much or anything? In fact, as the debtor I would be foolish to pre-pay such a loan. Ignoring the interest write-offs (as that's a very country and loan specific thing), the fact that the loan hovers around the inflation rate means any pre-payment carries an opportunity cost risk without a large (any?) financial benefit.

So, this really all comes back to an ROI calculation against opportunity cost. If a BTC loan's interest can be justified by having access to BTC today verses tomorrow then re-paying at (or slightly above) inflation could be justified.

Obviously a smart consumer is going to run the calculations in both fiat and BTC, so you'd want to keep the duration of such BTC loans lower... Say 12 months, as to mitigate this.

So, in short; yes, BTC loans could work (even at 26% interest), but you'd have to keep them short and probably have them be very specific purpose loans (e.g. Loans specifically for purchasing mining equipment where you could keep physical possession of the hardware as collateral). "Personal" loans where the debtor can do anything with their BTC or Multi-year loans are probably way too risky given the current inflation rate.

[mysidia]

You can't. That's a 26% per year loan. Assuming that the value of a bitcoin continues to rise quickly, getting a loan denominated in bitcoins is a bad idea.

If you borrow Bitcoins;  you should have the loan denominated in a large stable inflationary currency  that is most likely to lose value over time, or something like Gold which is in low demand and should be stable over time,  not a deflationary currency  that is likely to eventually gain value over time.

So borrow  1.0 Bitcoins today  when they are worth $557.

When it comes time to repay the loan.... repay in however many bitoins are worth $557 at the time.

If Price of a Bitcoin doubles,  then you  owe  0.5 BTC at  payment time.


You may be receivin the loan in Bitcoin  form,  but you can peg the loan value and exchange rate for repayment to whichever currency both borrower and lender  can agree to ----- or just arrange for repayment to be in the different currency,  with amount of repayment pegged when the Bitcoins are received.

[tzortz]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

Why to repay you in exchange? Repay you back in bitcoins + interest.

[S4VV4S]

If you loan 1BTC today at $560 (as I write) then when the value rises you should expect a profit.
I don't understand what is so hard?

Also, if you are expecting an interest fee then add that too.

EDIT: Your biggest concern should be if the price drops.

[FeedbackLoop]

If you use the loaned BTC for an investment that is denominated in BTC and is not exposed to BTC/fiat exchange rate, then it should be possible to loan and repay Bitcoin. Opportunities like this aren't easy to find right now, but they may become more available when BTC adoption grows.

If you do use the loaned BTC for matters that are exposed to the exchange rate, it is possible to cover the risk of a large increase in exchange rate by buying BTC call options. If you loan a BTC now for $560 and buy a call option with a strike price of $700 that expires just before your loan is due, then the maximum exchange rate risk is $140 plus the premium paid for the option.

Using derivatives such as options or futures it is possible to hedge against exchange rate risks, at a cost of course.

Exactly this!

Here's an even simpler case:  you lend to someone who takes your bitcoins and  sells them for some fiat at localbitcoins and rebuys them immediately with their own fiat of the same kind parked at an exchange. They effectively used your bitcoins to get volume in their Bitcoin business with zero exposure to any of the many fiat currencies exchange rate.

However you are exposed to the risk that the person you lent the bitcoins to is not going to do that but will instead gamble them or run away with them and later say "man! exchange rate man!" in which case he is just stealing your coins but having an excuse that may be satisfactory for other prey, friends, forum people or even family who are aware of the dealings.

[dbwilkins]

if you give me any money, don't ever expect it back haha

[franky1]

If I loaned you 1.00000000 bitcoin's today, which has a value somewhere around the arbitrary number of whatever value $600 i really supposed to represent, With a 10 year term.

If bitcoin rises in dollar value over 10 years by a multiple of 10, or the dollar devalues by a factor of 10, how could I reasonably expect repayment of the original loan of 100 million satoshi's.

1. no one will lend coins for 10 years, even a mortgage company would ensure they own your house and only allow you to live in it if you repay, before lending you any amount for a long period of years. they wont simply 'trust' that yo will repay
2. but for shortterm loans, the terms of the agreement EG 1% within a week, become binding so no matter if the dollar value spikes or dumps the initial agreement of terms still stands. its all about agreeing the repayment amount and sticking to it no matter what happens.
3. i reiterate it doesnt matter if you measure the repayment in dollars or bitcoin or facebook credits, its all about both parties agreeing to it.
4. and if you dont repay the terms. hopefully the other person owns the colateral or has enough info to see you in court to get it back