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Author Topic: Bitcoin Loans?  (Read 1667 times)
aztec100
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December 07, 2011, 01:59:49 AM
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I'm trying to figure out how loans with bitcoins work.  Say I were to give John a loan, how can I be sure that John will pay me back if bitcoin is essentially anonymous?  I mean, with regular banks and financial institutions you can either get a secured loan or if it's unsecured and you don't pay them back they'll fuck up your credit.  How can loan companies that use bitcoin be confident that they'll get paid back?
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December 07, 2011, 02:01:36 AM
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I'm trying to figure out how loans with bitcoins work.

They don't work.

aztec100
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December 07, 2011, 02:04:22 AM
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I'm trying to figure out how loans with bitcoins work.

They don't work.

And there I have my answer.
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December 07, 2011, 02:13:25 AM
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Now more seriously. As far as you don't know counterparty, you don't have any way how to force payback. You answered yourself pretty correctly.

However I can imagine some web of trust where lending will be possible when there's at least some connection between both parties. Unfortunately I'm not a specialist to networks like Ripple, so I don't know how exactly it should work.

I have (good) personal experience with bitcoin lending. Few months ago I borrowed 700 BTC from one good guy on this forum, because I wanted to order some goods asap and I had money on the way. It was pretty big risk for that lender, because I had a chance to run away with those coins and he even didn't know my real name (well, it was long before I had 1777 posts Smiley.

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December 07, 2011, 02:27:03 AM
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Ona a large scale, this only works  if the loan is secured. in other words, you need to place a deposit.

We did try that out on our exchange but the interest was neglegtible and the discussions around the sense or nonsense made us switch of the feature again and replace it with an options system.

Here the basic thoughts on the loan system that we had in place:
1. Trader A would place an offer to loan coans for a defined fee, for a defined period of time and he specifies the deposit that he requires.
2. Trader B taking up the loan offer would then deposit the amount with the exchange, and receive the coins from trader A (obviously the deposit into the exchanges' escrow account happens automatically)
3. Trader B at a later point in time decides either to forfeit his deposit (incase the price of the loaned coins went up) or pay back the loaned amount and receive back his deposit (if the price of the loaned items went down).

Obviously Trader A - in order to protect himself against trader B forfeiting the deposit - will choose a deposit that is considerably) higher than the current market price of the loaned amount.

So the question is, why would anyone be loaning the amounts? Trader B could just go and buy the coins of the market with the current market value (i.e. lower than what Trader A asked as a deposit) , and in case he needs to hedge his investment, he can buy a sell-option.

But if you guys thnk it still makes sense to put up a loan system based on above "strategy", I will seriously consider activating the feature again.

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December 07, 2011, 02:33:36 AM
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Aggregating capital has become so common it's hard to imaging life without loans and debt. Loans should be the exception, not the rule. Financial sorcerers have conjured arcane debt based commodities that perpetuate debt. IBB has simplified loans to bring back loans to a community level. I hope this model catches on. Open Transactions will probably facilitate community based loans, even if the community is global.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 07, 2011, 04:16:01 AM
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We could build some sort of p2p credit rating system. 

Pipedreaming. 

Build a block chain that just does loans. A public key used in block chain would be your identity.  Loans would be like transactions.  The block chain length would compute the loan age.  A transactions back to the originator would complete the loan.  How well the loan was paid back and the age of the identity can be used to compute a credit rating.

Problem: How would you keep people from loaning money to themselves to artificially increase their own credit score? Possibly a loan fee?


Hello There!
senbonzakura
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December 07, 2011, 05:35:48 AM
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another idea i read somewhere else, is that you can give a loan in return for shares in a GLBSE company.

LIF.B shares are worth 0.77 , so if you want 7 BTC loan, give 10 shares of LIF.B that you already own and then once you pay back the loan, get back the shares.

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December 08, 2011, 03:18:21 AM
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Quote
I'm trying to figure out how loans with cash work.  Say I were to give John a loan, how can I be sure that John will pay me back if cash is essentially anonymous?  I mean, with regular banks and financial institutions you can either get a secured loan or if it's unsecured and you don't pay them back they'll fuck up your credit.  How can loan companies that use cash be confident that they'll get paid back?
Good question, very good question indeed.
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December 08, 2011, 03:34:32 AM
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Quote
I'm trying to figure out how loans with cash work.  Say I were to give John a loan, how can I be sure that John will pay me back if cash is essentially anonymous?  I mean, with regular banks and financial institutions you can either get a secured loan or if it's unsecured and you don't pay them back they'll fuck up your credit.  How can loan companies that use cash be confident that they'll get paid back?
Good question, very good question indeed.

It seems that banks are failing everywhere. Maybe loan companies are becoming obsolete. I guess it depends on the risk vs reward. Why are you lending money? Are you lending simply to make a maximum profit? Are you lending to help someone improve their quality of life? It's about trust. Communities have a stake in helping one another. Even social networking communities can build trust. Maybe social networking will replace banks.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 08, 2011, 03:35:26 AM
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I'm trying to figure out how loans with bitcoins work.  Say I were to give John a loan, how can I be sure that John will pay me back if bitcoin is essentially anonymous?  I mean, with regular banks and financial institutions you can either get a secured loan or if it's unsecured and you don't pay them back they'll fuck up your credit.  How can loan companies that use bitcoin be confident that they'll get paid back?

We'll there is a form of credit... it is the WoT gpg system. Although it might not be tied to you IRL, it is tied to your nick. Then it is not that simple to get a 'loan' because you will have to have the 'credit' or lets call it the 'credibility' on the WoT. Then there is still the chance that <nick> will not pay you back. So what do you do?

The same thing banks do, you spread the risk and work with in a margin of acceptable risk. It would not be wise to get into the loan business until you become familiar with the nicks and you can work with in an acceptable margin of risk.

PS, If you find anyone giving loans of BTC without a 'Credit Check', they won't be doing it for long and will probably go out of business.

Corporations have been enthroned, An era of corruption in high places will follow and the money power will endeavor to prolong its reign by working on the prejudices of the people until wealth is aggregated in a few hands and the Republic is destroyed. ~Abe Lincoln 1ApJdWUdSWYw8n8HEATYhHXA9EYoRTy7c4
antihexe
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December 08, 2011, 05:58:06 AM
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The only way bitcoin loans work are if they happen within a closed community. I've loaned significant sums before, but only to those I have extremely high confidence in--and who also would lose if they were 'blacklisted.'

It's the wild-west. The only 'laws' that exist are the ones you, as a lender, can enforce.


tl;dr You can't send anyone to collections!
senbonzakura
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December 12, 2011, 01:48:32 AM
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https://bitcointalk.org/index.php?topic=54048

newbie loans
bazza14
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December 13, 2011, 09:05:40 AM
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Aggregating capital has become so common it's hard to imaging life without loans and debt. Loans should be the exception, not the rule. Financial sorcerers have conjured arcane debt based commodities that perpetuate debt. IBB has simplified loans to bring back loans to a community level. I hope this model catches on. Open Transactions will probably facilitate community based loans, even if the community is global.

Absolutely agree, neither a borrower or a lender be, live within your means etc etc etc when you borrow for business purposes you are selling your company to the the bank far better to grow slowly from your own efforts.

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December 13, 2011, 04:21:03 PM
 #15

I have 3 loans going on currently.

One is in the form of a bond traded at GLBSE BIB.goat. Around 340 BTC

The second I used stock as collateral.  40 BTC

The third, I am paying a small amount of interest for something the loaner is providing.  35BTC   (But the seller is loaning me his future hashing power so its a bit tricky)

Smiley
I will look at GLBSE, thank you.

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December 13, 2011, 04:26:06 PM
 #16

banks could say: if you don't proof that you are you, and that you live at x, and signs here, here, and here, then fuck you we are not gonna lent you our money

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
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December 14, 2011, 07:47:55 AM
 #17

banks could say: if you don't proof that you are you, and that you live at x, and signs here, here, and here, then fuck you we are not gonna lent you our money


Lol, maybe you mean "prove" instead of proof.  Grin

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December 14, 2011, 07:58:07 AM
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banks could say: if you don't proof that you are you, and that you live at x, and signs here, here, and here, then fuck you we are not gonna lent you our money


Lol, maybe you mean "prove" instead of proof.  Grin

Is that the only typo you caught?  Grin

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
kokjo
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December 14, 2011, 08:50:36 AM
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banks could say: if you don't proof that you are you, and that you live at x, and signs here, here, and here, then fuck you we are not gonna lent you our money


Lol, maybe you mean "prove" instead of proof.  Grin

Is that the only typo you caught?  Grin
IM DOES NOT HAVING ANY TYPOS!

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
reg
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December 14, 2011, 10:41:12 AM
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Quote from: kokjo on December 13, 2011, 04:26:06 PM
banks could say: if you don't proof that you are you, and that you live at x, and signs here, here, and here, then fuck you we are not gonna lent you our money

What banks actually do say is : if you already have £ 100 (in collateral ) then we will loan you £100. Larger sums are coverd by endowments or annuities. I have already implied that banks are not buisnesses because they are guaranteed to get their money : ie win win.  The islamic bank offers interest free loans (small amount) based on trust. I loaned 2 BTC last week and will pay it back next week- I needed the 2 BTC fast and got it. whats in it for them? If I dont pay it back my name is mud on the forum! would I risk that ? no. would you?  reg>
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