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.

[OcTradism]

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.

Banks are not able to arrest their customers but governments can do that and it's the only possibility for them to arrest people, then ask for Bitcoin wallets, passwords, and be able to seize bitcoins of those people. If you have bitcoins but don't do illegal things, you will never have such severe legal problems with governments and your bitcoin will be safe in your non custodial wallets.

Banks are centralized and they have terms to benefit their services while customers have to be very careful with decisions, as if they don't read terms of a bank, a specific contract carefully, they will likely face with big issues financially later.

[Tamaperdana]

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.

Honestly, I'm not sure if something like that could eliminate Bitcoin's decentralized nature. Because, fundamentally, Bitcoin will remain decentralized no matter where it's taken. The purpose of Bitcoin decentralization is that no one controls it, and even if Bitcoin is used to borrow money from a bank, or used as collateral, for example, Bitcoin remains decentralized, and in essence, it will remain that way. So, essentially, banking regulations clearly don't apply to Bitcoin.

So, essentially, banks only use Bitcoin for money lending, which uses the Bitcoin method. So, with that in mind, Bitcoin remains largely unchanged, because what's changed here, well, clearly nothing. It's just that Bitcoin is being used differently by this bank, that's all. But honestly, I'm not particularly interested in things like that. So, basically, I'd rather keep my Bitcoin to myself and I'd stay away from bank loans, as far as possible, because that's really not a good idea.

[Awaklara]

Of course, the BTC will be stored by a special custodian institution, not held directly by the bank or kept off the bank's balance sheet. But in the end, I thought, they would not pledge Bitcoin to the bank to get fiat.

You are right, banks will not be able to regulate or use Bitcoin as collateral. Besides, if you really need money, I think there is the option to sell Bitcoin rather than go into debt. Even if you want to take a loan, I think there are other asset options that can be used as collateral. Not all banks agree to accept Bitcoin as collateral. But whether this policy can help people or not is uncertain.

[Mr. Magkaisa]

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 ?

This is true as the people's demand for Bitcoin dictate the value of the coin in the market, The more people buy this BTC the more the value, come to think of it once bitcoin cannot be mine anymore.
As per the bank, Just like Cash in any currency around the wolrd, it will always depend on the people as noone will spend it will be less. All currency even crypto, it is because of the people coz the people are the one using it and without anyone using it then there will be no value. right?

[davis196]

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

No, it's not breaking decentralization because it does not break the Bitcoin protocol and the BTC blockchain.
Being "your own bank" is a personal choice. Most people would never truly believe in the power of financial decentralization and "be your own bank". Most people would always stick to using centralized financial services(fiat and crypto). This is their choice and who am I to try to lecture them and change their minds about this subject. No bank is forcing you to use your BTC as a collateral and borrow fiat money. I don't know what exactly do you mean by "confusing". The banks have to follow strict customer protection laws and regulations. A bank cannot act as a "loan shark" from the streets and confuse the people into getting loans, that have absurd interest rates and sketchy hidden strings attached.

[Uhwuchukwu53]

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

if the banks can control the people, what's left for Bitcoin ?

There's misused of word here, the bank is not confusing people to take fiat loan against their Bitcoin, it is rather convincing them. What I think is that those that will participate in such loan have self convinction before they decided to do so, else they won't just believe what ever the bank tells them. Such service is not breaching Bitcoin's decentralization at its protocol level but the way an individual chooses to use their Bitcoin is what makes them centralized. If you hold your Bitcoin in self custody and you control your private key, you don't need banks permission to do transaction, you still have your freedom, no centralized policy on you or your Bitcoin.

Banks are not controlling the people, everyone have the decision to either allows their Bitcoin to be under a third party custody or in their self custody, the bank is not forcing people to come and take loan against their Bitcoin.

While I puzzle on the topic, I found nothing but inevitable truth in your clarification "Dr.Bitcoin_Strange" you  emphasis align directly to your point,  in addendum to this common example of our fiat bank many who are taking loan are not forced to do so but personal decision and some don't even take the loan base on problem or investment but having it as means of relief to ease their current predicament which even when such opportunity is not available would survive without it, just as the whole narrative is not persuasion but conceptional it's hard for bank to control people on Bitcoin loan individual who venture to such having many options to avoid middle men should see any terms and conditions favourable rather than other way round as much as one can use self custodian it's hard on bank to have such dominion except on the ground it's policy placed on Bitcoin which can't be currently.

[Asuspawer09]

I mean, they do a lot of things to persuade users to take loans, do you mean, like using Bitcoin as collateral on a loan?

Technically it is still two seperate things if the banks are doing loaning stuff it is still fiat money, and fiat cash is completely different on Bitcoin. Maybe it is a bad habit for sure for people to take loans and also have some Bitcoin so they might just end up selling there investment like Bitcoin just to pay up there loan but for me it is just a mindset problem not anything related to this kind of stuff, because you could get a loan and still do it the right way without affecting your Bitcoin at all.

They could probably do something on their marketing but it doesn't mean easily that they could control our Bitcoin at all, unless this is pure mind control, maybe?

[Jubilee58]

I think collecting loan from bank with your Bitcoin as a collateral is based on individual choice, and when you give out your Bitcoin for loan , and you could not repay such loan, automatically the bank becomes the owner of your Bitcoin. Furthermore, if it is true that banks are now collecting Bitcoin as collateral before giving out loans, it shows that banks have interest in having Bitcoin as reserve against inflation because they already know that Bitcoin value increases with time. I think this idea of bank taking Bitcoin as a collateral for loan is not to make Bitcoin centralized but to sustain financial growth, and profitability in the banking sector.

This method will be very profitable to any bank doing this because even while you return your loan, you will likely return with the accrued interest, and when you don't your Bitcoin adds value to their Treasury.

[gracreavix]

Well, one can say another way banks wants to make money. But what they are doing is just offering a loan service. Before and they still do it is to use lands as collateral or business. It's just them offering their service.They do same with art, cars, watch and gold.  Bitcoin as we know it as gained so much value that it has entered such circle. Which can be used as Collateral to get money from the bank.

If anything was to be of concern, it will be the way the loan is structured. If the person defaults, what's the next step to take. You can't share your keys with anyone. People know that. So how have they structured the loan service. That is what I think we be of more concern.

[The Cryptovator]

If you hand over your Bitcoin to the bank to take a loan or you send Bitcoin to the centralised exchange, then they own the Bitcoin, and they control your Bitcoin as well. It doesn’t mean that’s affecting Bitcoin decentralisation; it means you are losing control of your Bitcoin.

As long as you hold your Bitcoin in a non-custodial wallet, you are the owner. If you sent it somewhere else, then they are the owner – simple calculation. Don’t blame the bank or exchange; you are the one who has been deciding where your Bitcoin will exist. You are the one who can protect your Bitcoin and protect your privacy as well.

[Luzin]

You are right, banks will not be able to regulate or use Bitcoin as collateral. Besides, if you really need money, I think there is the option to sell Bitcoin rather than go into debt. Even if you want to take a loan, I think there are other asset options that can be used as collateral. Not all banks agree to accept Bitcoin as collateral. But whether this policy can help people or not is uncertain.

Yes, I prefer not to take risks with banks. If absolutely necessary, my first choice would be to sell a little Bitcoin. Only afterward would I sell or pledge other assets to get fiat money. But some people may have several considerations. Loan package offers with collateral provide many benefits for banks. So every bank tries to sell its money in various ways. For example, loans with Bitcoin collateral are programs targeting crypto traders and investors. Just look at how there are currently many attractive loan offers with promises of easy requirements and low interest. Although there are some special notes that are sometimes not disclosed in detail by the bank. So we should be more careful and detailed when transacting with financial institutions like banks.  CMIW