Are banks needed for crypto?

[shaqer]

Just started to learn about DeFi, and a question arose.

Fiats have a loan mechanism. Manufacturers use it to improve their production.

Is there something similar in crypto? How does it work then? And are such services in demand? Do manufacturers take loans in crypto?

Isn't that killing DeFi idea? Is there a future for loan mechanism in crypto?

Thanks everyone in advance for the answers.

[Tytanowy Janusz]

Here in crypto ... you simply emit new token, create its value using profits from "improved production" and collect millions from investors which act like decentralized lender here. But if you want a real loan there are already bunch of projects that solve this. The only problem is collateral. So far there is no problem to borrow crypto using other crypto as collateral but sooner or later we will see companies that will offer lending using "real word" collateral, but there is no privacy anymore and most likely no decentralization.

[palle11]

I think such systems have not survived far enough really. There are some projects that tried lending in the past but I don't know how far they went or they defrauded and took people's money. Collateral has been a big challenge for this. This is why here on the forum, such program do exist P2P but with third party escrow which could also be as a result of the campaign a collector member is promoting.

[shaqer]

Here in crypto ... you simply emit new token, create its value using profits from "improved production" and collect millions from investors which act like decentralized lender here. But if you want a real loan there are already bunch of projects that solve this. The only problem is collateral. So far there is no problem to borrow crypto using other crypto as collateral but sooner or later we will see companies that will offer lending using "real word" collateral, but there is no privacy anymore and most likely no decentralization.

Yeah ... So the main problem is tying loan to the "real world". I heard that someone is making stablecoins tied to fiat. Is this a half measure and not a solution of the problem? Couldn't this attract manufacturers who are interested in crypto but are afraid to mess with it? Pegging stablecoin to USD as example could push them to work with crypto, I think.

I think such systems have not survived far enough really. There are some projects that tried lending in the past but I don't know how far they went or they defrauded and took people's money. Collateral has been a big challenge for this. This is why here on the forum, such program do exist P2P but with third party escrow which could also be as a result of the campaign a collector member is promoting.

Can you tell me more about this P2P program? Or can you give me some links where I can learn more about it?

[moderator's note: consecutive posts merged]

[Sterbens]

The first thing you should pay attention to is the level of crypto price volatility. Not that stablecoins can be used to provide real-world loans, but whether a country can provide space to include crypto which until now is still in category 2, namely the investment group.
If we refer to the future, maybe it's not the time for us to say precisely. it is possible when the two institutions of decentralization and centralization can be combined in one financial system. Is that possible?

[agg2702]

Here in crypto ... you simply emit new token, create its value using profits from "improved production" and collect millions from investors which act like decentralized lender here. But if you want a real loan there are already bunch of projects that solve this. The only problem is collateral. So far there is no problem to borrow crypto using other crypto as collateral but sooner or later we will see companies that will offer lending using "real word" collateral, but there is no privacy anymore and most likely no decentralization.

Yeah ... So the main problem is tying loan to the "real world". I heard that someone is making stablecoins tied to fiat. Is this a half measure and not a solution of the problem? Couldn't this attract manufacturers who are interested in crypto but are afraid to mess with it? Pegging stablecoin to USD as example could push them to work with crypto, I think.

maybe it goes back to fundamentals and market capitalization and volatility in crypto.
when talking about this, it will automatically give us the answer to something definite, namely the centralized system used by banks to date and the decentralized system which is still the distinguishing feature of crypto.
logically they will not be able to be united at least for now because of the view of the two systems.

[chrisculanag]

The first thing you should pay attention to is the level of crypto price volatility. Not that stablecoins can be used to provide real-world loans, but whether a country can provide space to include crypto which until now is still in category 2, namely the investment group.

You're right about that crypto price is very different in real money and its bot easy to loan in crypto of the volatility than real world loans. About the investment group in crypto , there are some gives you a good idea some are down you instead of gives you an good advice.

If we refer to the future, maybe it's not the time for us to say precisely. it is possible when the two institutions of decentralization and centralization can be combined in one financial system. Is that possible?

I think they need more research if this two are ready too combine but i think in the future this two are possibly combining because this are important with differences for us. We just wait until they come.

[The Sceptical Chymist]

The first thing you should pay attention to is the level of crypto price volatility. Not that stablecoins can be used to provide real-world loans, but whether a country can provide space to include crypto which until now is still in category 2, namely the investment group.
If we refer to the future, maybe it's not the time for us to say precisely. it is possible when the two institutions of decentralization and centralization can be combined in one financial system. Is that possible?

I don't know about anyone else, but the above post makes very little sense (especially the bolded part).

OP, you should do a lot more research, not only into DeFi but into cryptocurrencies in general, as it seems you're very new to the space--and if that's true, then welcome!  Crypto is fascinating and very profitable if you know what you're doing.  As far as loans and banks, I don't think banks want anything to do with crypto or the loaning of it.  Why would someone want to take out a bitcoin loan, for instance?  Probably to gamble or to speculate in risky investments, and banks aren't in the business of making those kinds of loans.

In addition, there's the issue of collateral.  On this forum there's a lending section, and the last time I checked there were members constantly looking for no-collateral loans and very few members taking out loans with real collateral (altcoins are basically the only good form of collateral for crypto loans).  I don't know much about DeFi myself, but I have a feeling it's not going to be a threat to the banking system like some people say it is.  Time will tell.

[Sterbens]

If we refer to the future, maybe it's not the time for us to say precisely.

I don't know about anyone else, but the above post makes very little sense (especially the bolded part).

Please allow me to clarify the sentence that you have bolded. Thank you in advance for asking this question.

I mean, referring to the context of the OP statement regarding the future crypto lending mechanism.

Is there a future for loan mechanism in crypto?

However, looking at the situation and condition of government policies and institutions, Banks have not yet given a signal of support for crypto. In fact, we all know that whenever crypto exhibits freedom of transactions as well as individual financial freedom, the Bank considers what we have as a form of money laundering.

This so far, of course, is an illustration based on my personal point of view that it is still not right to say that there is a license for crypto lending that is legitimized by the Bank.

(I hope you correct if there is a misunderstanding of what I said above).

[Kong Hey Pakboy]

I don't think so, there are payment apps that accepts crypto and converts it into fiat so I don't think that we're going to need bank in our crypto, not to mention that their obsolete, we don't need a middle man in crypto so no worthy reason why we need them in the cryptospace.

[CaptainCrapper]

Here in crypto ... you simply emit new token, create its value using profits from "improved production" and collect millions from investors which act like decentralized lender here. But if you want a real loan there are already bunch of projects that solve this. The only problem is collateral. So far there is no problem to borrow crypto using other crypto as collateral but sooner or later we will see companies that will offer lending using "real word" collateral, but there is no privacy anymore and most likely no decentralization.

Yes, the banking system is different from the cryptosystem so no need for banking involvement. Lots of people think that this is system operate by own block chin based so no need other anything.

[Poker Player]

Not only do cryptocurrencies reduce the need for banks, but so do CBDCs. However, a while ago I heard Christine Lagarde talking about involving banks in the digital Euro issue, meaning that they are going to try to keep the banking industry afloat no matter what, which is nonsense. It's like trying to keep video stores afloat with the advent of the Internet.

[Victorycoin]

Banks usually make a profit through customer transactions and other services but this applies to fiat currency banks will not be needed once cryptocurrency is introduced but then the economic institution called bank may be completely wiped out. The central bank has an eye on any transaction there is no interference from anyone for crypto for these reasons central banks have banned cryptocurrencies the crypto market is more profitable for crypto than banks.

[Darker45]

There are already existing loan mechanisms in crypto. It has been around for quite some time. I remember during the height of ICO, I encountered projects which are offering crypto lending services. I haven't heard of them since, though. But there are several DeFi platforms which offer lending services right now. And I guess the demand is quite high. As a matter of fact, Binance has also been offering lending services for quite a while already.

Loan has been a basic financial service, so I think it won't simply go away even if crypto replaces fiat.

[Wexnident]

Isn't that killing DeFi idea? Is there a future for loan mechanism in crypto?

Loaning was never something that was solely limited to banks though. Crypto was just being your own bank, it never said anything about removing the concept of what banks are, you just become one yourself imo. Plus, there's a lot of centralized exchanges out there that have the lending system, just that you need collateral to go with it. I dunno if it's actually in demand, but I don't think it would actually disappear, it's always been a part of the financial system after all, as long as transactions exists, loaning would definitely be there imo.

[michellee]

I think such systems have not survived far enough really. There are some projects that tried lending in the past but I don't know how far they went or they defrauded and took people's money. Collateral has been a big challenge for this. This is why here on the forum, such program do exist P2P but with third party escrow which could also be as a result of the campaign a collector member is promoting.

Can you tell me more about this P2P program? Or can you give me some links where I can learn more about it?

P2P means you make a deal with someone, whether it is a transaction, sharing data, or else. In crypto, there is P2P trading which means, you and another person buy and sell crypto. You can find it on Binance as the famous P2P exchange and you can meet your local or non-local seller who buys and sell crypto.

The banks can be a bridge between crypto and fiat and they can use that for their benefit. For example, they can use a rate price for sending and receiving the money.

I know the loan is available on exchanges, but you can take a loan from someone here, but you need to have collateral before you get the money. You need to pay the money plus the interest.

[STT]

Banks aren't required for anything is a fair argument, do they assist at times is probably a better line.   No bank setup or even helped with BTC in its originating years that I ever heard of.   It was people and this is a good rule for the entire economy, people are strength and wealth in any nation far more then the largest apparent entities like banks or governments.   Actual assets, products, innovation and the greatest growth comes from the smallest entities in an economy which is plain people, sole traders and very small companies of people.  How can that be is also simple because there are millions of the very smallest traders, producers, users of BTC are ultimately what is going to decide if BTC grows.   Banks are just a sideshow, they appear because its already an established trade and they want a cut of that revenue.

[davis196]

Peer-to-peer lending is a thing in the crypto industry.Some p2p lending platforms disappeared,like BTCJam.
You just send 120% worth of altcoins,that have a relatively stable price as a collateral and you get 100% worth of BTC as a loan.There's a lending category on this forum.
Big crypto companies like Nexo are offering such services and promising a pretty good 12% interest rate,AFAIK.I have never used their services and I don't recommend anyone to borrow a crypto loan,unless he knows what he's doing.
Crypto lending seems pointless to me,because of the volatile prices of almost all cryptocurrencies.

[TheUltraElite]

Yeah ... So the main problem is tying loan to the "real world".

This is the real world. Get a grip on buddy.
The moment you stop differentiating real world vs crypto world, things will get better for you to understand. Loans are still going to happen in fiat. This is an early stage to comment conclusively though. DeFi does not solve every problem, just like bitcoin is not the answer to every problem.

I heard that someone is making stablecoins tied to fiat. Is this a half measure and not a solution of the problem? Couldn't this attract manufacturers who are interested in crypto but are afraid to mess with it? Pegging stablecoin to USD as example could push them to work with crypto, I think.

There are stablecoins pegged to USD. But I dont think this idea is what crypto users like in the majority. They are useful as intermediary for dollar cost averaging while trading but beyond that I find no extra use.

Moreover, if there would start lending in terms of crypto, the already existing P2P systems are going to work fine. But here you need to pledge another form of asset as collateral to get the loan. In fiat economy you also need some sort of security for the bank to protect against a default too.

If in future, banks start allowing cryptocurrency lending, this can be a big opportunity for them and a big competition for the existing p2p lenders, because after all, nobody trusts loan sharks and their interest rates.

[paxmao]

I opened a thread to discuss the problem not that long ago. What I got from it is that you would likely need some short of intermediary to make it work, call it a bank or a rating agency and certainly a legal system that can enforce contracts outside the blockchain. Crypto in that sense is not that powerful, but the good nes is that you can build a system on top that works as good or perhaps better than current banking systems.

https://bitcointalk.org/index.php?topic=5357200.msg57814452#msg57814452