If the banks can control people they can control their Bitcoin

[Stalker22]

due to the fact that banks will start giving loan services to Bitcoin holders ...

Will start? Can you give me the  bank names?

I think he is referring to this recent news from Switzerland about Sygnum and Debifi.

So now if banks offer loans to bitcoin holders and they require us to put our bitcoin as collateral, then we are just allowing them to dictate how we use our bitcoin through their banking system as using it as collateral does not mean they will simply hold it until you pay off your loan. There's always a clause in the agreement that allows them to sell your bitcoin if its price drops below a certain level based on the agreed price range, so if that happens, your bitcoin is gone and you may still have to pay the remaining balance of the loan.

As they say, you should always read the fine print.   But that is not necessarily the case here; they say that the client will have the option to add more BTC to the collateral should the value of Bitcoin fall below a certain threshold.  Standard margin call rules.  Nothing new.

[goldkingcoiner]

I'm not trying to take a side here, we are all here to lecture ourselves about Bitcoin and crypto, and since few discussions about Bitcoin and Banks have been coming on recently due to the fact that banks will start giving loan services to Bitcoin holders ...

This have raised some concerns inside of me, and I need to let it all out ...
I read through one of this discussion and people are liking the idea so far...I don't completely hate it but...

I'm thinking 🤔, if banks can confuse people to take loan from them using their Bitcoin isn't this breaching decentralisation?
I am not perfect and I am not trying to be, all I care about is knowledge acquirement.

Bitcoin, without it's people is nothing, if everyone decides to give up on Bitcoin in a go it will affects Bitcoin, on the other hand, if the banks can control the people, what's left for Bitcoin ?

Centralisation has it's way of controlling and forcing people, if they can get their hands on people then they can control Bitcoin, the real strength of Bitcoin is it's people.

It is not control, it is coercion.

Some are weaker to coercion than others and willingly give up their freedom and control of their money just because they got scared. And it is quite understandable as to why someone would break under pressure. We are all only human after all.

That is why Bitcoin has such an important role. Especially in order to replace the old fiat system, Bitcoin needs to show the uneducated masses the freedom of decentralization and privacy.

[Cryptomultiplier]

I'm not trying to take a side here, we are all here to lecture ourselves about Bitcoin and crypto, and since few discussions about Bitcoin and Banks have been coming on recently due to the fact that banks will start giving loan services to Bitcoin holders ...

This have raised some concerns inside of me, and I need to let it all out ...
I read through one of this discussion and people are liking the idea so far...I don't completely hate it but...

I'm thinking 🤔, if banks can confuse people to take loan from them using their Bitcoin isn't this breaching decentralisation?
I am not perfect and I am not trying to be, all I care about is knowledge acquirement.

Bitcoin, without it's people is nothing, if everyone decides to give up on Bitcoin in a go it will affects Bitcoin, on the other hand, if the banks can control the people, what's left for Bitcoin ?

Centralisation has it's way of controlling and forcing people, if they can get their hands on people then they can control Bitcoin, the real strength of Bitcoin is it's people.

It is not control, it is coercion.

Some are weaker to coercion than others and willingly give up their freedom and control of their money just because they got scared. And it is quite understandable as to why someone would break under pressure. We are all only human after all.

That is why Bitcoin has such an important role. Especially in order to replace the old fiat system, Bitcoin needs to show the uneducated masses the freedom of decentralization and privacy.

Whether it's control or coersion or compulsion, it doesn't interfere with the core function of Bitcoin or it's decentralized nature.
Only people who think they need to liase with the bank with their Bitcoin can do so and for the others, it's just not possible or not just yet after all it would only incur bigger tax deduction.

However I think it's a step further for traditional fiat banking system to come into terms with the existence of Bitcoin and crypto currencies in general and this should create an enabling environment where Bitcoin can in the future be spent and used freely without fear by both institutions and individuals.

[macson]

I read through one of this discussion and people are liking the idea so far...

For anyone who likes that idea, it means that they don't really mind that their Bitcoin is controlled by someone else. That's already contradictory to self-custody. But since it's their Bitcoin, it's their right to handle it that way.

I'm thinking 🤔, if banks can confuse people to take loan from them using their Bitcoin isn't this breaching decentralisation?

The bank only offers loans with Bitcoin as collateral. They're not confusing anyone here because the terms are already clear and can be read by everyone, and it’s an individual's own decision whether to take part in the loan or not.

Bitcoin, without it's people is nothing, if everyone decides to give up on Bitcoin in a go it will affects Bitcoin

Affect what? Bitcoin remains decentralized and operates as usual even though many people are interested in collateralizing their Bitcoin. And there are still more sensible people who continue to secure their assets in their self-custody wallets.

Centralisation has it's way of controlling and forcing people, if they can get their hands on people then they can control Bitcoin, the real strength of Bitcoin is it's people.

Banks don't force anyone. It's a choice for people to give up their Bitcoin to banks. Even though holders are the strength of Bitcoin, it's not the 'real strength' of Bitcoin like you said. They still can't do anything to Bitcoin because it runs on a decentralized system.

[Hamza2424]

Nothing wrong with asking this question, bro, chill. In my view, it is not directly breaching decentralization because the protocol is not being changed. The BTC network doesn't really care who is using it to take out a loan. The rules are still the same, whether banks control your funds or not. It's you who has to worry about it.

Although, bro, I can understand that centralization can come from the user's side, and nobody can stop it except the users themselves. If they prefer centralized methods over decentralized ones, then we can say centralization won. Personally, I'm against taking loans, especially interest-based ones, as the interest is not halal, so I will not recommend it.

[nelson4lov]

Bitcoin, without it's people is nothing, if everyone decides to give up on Bitcoin in a go it will affects Bitcoin, on the other hand, if the banks can control the people, what's left for Bitcoin ?

Well, it's a good thing because not everyone would submit their Bitcoins to bank in order to take a loan. Most Crypto savvy people know how to get the exact same service that banks are offering all onchain and it's been available for the longest time. I also think your fears are exaggerated. It's the same concerns people had when the Bitcoin ETFs were approved. Look how far we have come over the years with ETFs and you'll realize that it doesn't have the centralization concerns anymore.

[mirakal]

Centralisation has it's way of controlling and forcing people, if they can get their hands on people then they can control Bitcoin, the real strength of Bitcoin is it's people.

Banks do not force the people to take their offer, but they will do everything to convince the people. However, those who have truly understood what decentralization is about, what privacy is, and what full custody is all about, I bet they will not bite the offer of the bank. Because they know that once they entrusted their bitcoin to a third party, they will not be the sole owner then.

Banks cannot control the people that are truly in love with bitcoin.

[Franklyn-wood]

Not necessarily breaching, because the Bank only have control over their own acquired Bitcoin not the whole Bitcoin entirely, and whoever decides to use his Bitcoin for bank loan is the person's choice because the Bank can not force a person to use his Bitcoin because they do not even know if a person has some Bitcoin in possession, but it not possible to use an asset as collateral because Bitcoin is an asset and the person is also taking loan (money) which is also an asset, it is like an exchange of money for money, I have not experienced such exchange before unless the loan the person is getting with his Bitcoin is in form of something else.

One thing I have noticed with banks is that they wish anyone who borrow money should not be able to pay, so that they can poses what ever is used as shorty for the amount of money collected. Bank can control people despite the fact that they have there individual security's, yet they dont have full control over it to manage there funds like Bitcoin. Every thing about Bitcoin is perfect, reliable and good. Using investment that should bring more money as a collecteral. How will I expose my Bitcoin because  of loans like this which bank operators who can do and undo because of loan collected sell out the holding, and far too small than the investment it self.

[Questat]

Using your bitcoin as collateral is a choice, banks are not forcing anyone to use their bitcoins as collateral. Decentralization will not be affected and there is no way that every bitcoiner is going to give up his bitcoins for fiat loans all at thesame time like you are insinuating in the op.

I have already said this before about bitcoin collateral, if you have another suitable asset, using bitcoin as collateral will not be neccessary. The only reason I am in support of such an idea is because, it will save you from selling your bitcoins when you are not ready to do so.

Banks cannot control the people's decisions because that is certainly against the law, though they can strongly influence the people through easy credit access and financial services. But forcing the people to make use of their bitcoin as their loan collateral, that's already another story to tell. No banks as far as I know can do that, the final decision still relies on the customer itself.

However, we can't control if some bitcoin holders will use their bitcoin and take a loan. That's also their right because its their own rules with their own bitcoin.