The real bitcoin killer app is already here

[daviducsb]

Thanks:)

Of course one ought to try this out with money one can afford to lose and thus encourage the platforms that are doing this. The answer to the question about getting paid back is most of the loans appear to be short term (though I have no knowledge, no liability, am not giving advice etc etc etc).... But I am talking about examining their model and that of others with an open mind. Because the ability to earn interest on a non-inflationary currency is something people will pay for. It is the classic "good money" (bitcoin) takes out bad money (fiat) scenario which leads to a rise in price and use of the "good" currency.

It is our job as a community to properly vet the companies that are trying to provide interest, encourage them, give them feedback if they need to modify, spread the news if there is one doing it in an unsafe way, and so on.

Right now with rates in the 5% to 8% range, they don't come off as scams. I would use caution, but these companies do look more legit than many of the first batch who were offering unreal interest rates trying to scam people. Also some of them are also exchanges which would perhaps imply they have reserves...

Thoughts? How do we encourage the growth of the bitcoin interest rate economy?

wouldn't many people go bankrupt/default on their loans if they take a loan in bitcoins?

how are they going to pay when they borrowed a bitcoin and suddenly the bitcoin is worth 10 times more?

Instead of explaining this.

Create a BitFinex account.

Load up some bitcoins.

Loan out some bitcoins.

Get paid.

I made about 1 BTC earlier this year over the course of about 2-3 weeks loaning bitcoins on BitFinex (while the price was falling).

[Marlo Stanfield]

What is the current rate right now?

500%+ year over year.

I've held for about 9 months. In that time BTC went from ~150 to ~650

I think they were asking what the current rate of interest the companies are offering, no?

[daviducsb]

The companies mentioned are offering rates from 5% to 8% a year APR

What is the current rate right now?

500%+ year over year.

I've held for about 9 months. In that time BTC went from ~150 to ~650

I think they were asking what the current rate of interest the companies are offering, no?

[rufusBTC]

The companies mentioned are offering rates from 5% to 8% a year APR

but on bitfenix people are lending at that rate per 30 days.  its peer to peer.

[statdude]

Why should I "trust" bitfinex?

Can't this be "decentralized"?

[Ron~Popeil]

wouldn't many people go bankrupt/default on their loans if they take a loan in bitcoins?

how are they going to pay when they borrowed a bitcoin and suddenly the bitcoin is worth 10 times more?

Instead of explaining this.

Create a BitFinex account.

Load up some bitcoins.

Loan out some bitcoins.

Get paid.

I made about 1 BTC earlier this year over the course of about 2-3 weeks loaning bitcoins on BitFinex (while the price was falling).

I just signed up and sent about .4 in. How much would you recommend lending to get a return like yours?

[theblacksquid]

Why should I "trust" bitfinex?

Can't this be "decentralized"?

There is currently an implementation of a "borrower's market" for OpenBazaar in the works, so that should decentralize lending out bitcoins well enough

[pening]

Someone is going to have to explain where the interest is coming from?  Loans you say?  Why would I loan Bitcoins when due to the very deflationary nature advocated i'm likely to have to pay back more value than I borrowed?  Accepting borrowing for margin trading (great... just what bitcoin needs, short selling), what would i possibly need a Bitcoin loan for that couldnt be served by a conventional loan?  Therefore how is this a killer app?

[Ron~Popeil]

Someone is going to have to explain where the interest is coming from?  Loans you say?  Why would I loan Bitcoins when due to the very deflationary nature advocated i'm likely to have to pay back more value than I borrowed?  Accepting borrowing for margin trading (great... just what bitcoin needs, short selling), what would i possibly need a Bitcoin loan for that couldnt be served by a conventional loan?  Therefore how is this a killer app?

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

[statdude]

Why should I "trust" bitfinex?

Can't this be "decentralized"?

There is currently an implementation of a "borrower's market" for OpenBazaar in the works, so that should decentralize lending out bitcoins well enough

So it already works? Link? you can earn interest on bitcoins? what is collateral?

[pening]

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

I'm well aware of how trading accounts work, and loans in general.  Thats why i find i it odd anyone thinks this is a killer app for Bitcoin. 

[theblacksquid]

Why should I "trust" bitfinex?

Can't this be "decentralized"?

There is currently an implementation of a "borrower's market" for OpenBazaar in the works, so that should decentralize lending out bitcoins well enough

So it already works? Link? you can earn interest on bitcoins? what is collateral?

No, it's still being developed and the desktop client isnt live yet. Collateral will be something included in the smart contract facilitating the loan (mastercoin/nxt tied to an existing asset, etc).

check out the forums and the github pages:

https://forum.openbazaar.org/index.php?p=/discussion/16/borrowing-market

https://gist.github.com/drwasho/2c40b91e169f55988618


Check them out yourself and contribute whatever you think could make it better.

[Ron~Popeil]

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

I'm well aware of how trading accounts work, and loans in general.  Thats why i find i it odd anyone thinks this is a killer app for Bitcoin. 

I think they are referring to the ability to stockpile coins and have them actually grow the way fiat used to before the monetary system was destroyed. It creates more demand because holding them is even more profitable.

[DannyElfman]

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

I'm well aware of how trading accounts work, and loans in general.  Thats why i find i it odd anyone thinks this is a killer app for Bitcoin. 

I think they are referring to the ability to stockpile coins and have them actually grow the way fiat used to before the monetary system was destroyed. It creates more demand because holding them is even more profitable.

It should be noted that this would not be without risk. In the event of a market crash/spike then the exchange may not be able to liquidate traders' positions at a rate that would allow them to fully repay their margin loans. The lender would have to take a loss if this were to happen.

[Cicero2.0]

I am taking a wait and see approach with this kind of stuff. It sounds tempting but as was pointed out above there is some risk involved. My strategy is pretty risk averse at this point. 

[Beliathon]

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

I'm well aware of how trading accounts work, and loans in general.  Thats why i find i it odd anyone thinks this is a killer app for Bitcoin.  

I think they are referring to the ability to stockpile coins and have them actually grow the way fiat used to before the monetary system was destroyed. It creates more demand because holding them is even more profitable.

It should be noted that this would not be without risk. In the event of a market crash/spike then the exchange may not be able to liquidate traders' positions at a rate that would allow them to fully repay their margin loans. The lender would have to take a loss if this were to happen.

QFT.

Increased reward is almost always associated with increased level of risk. Remember that. And don't get too greedy.

[DannyElfman]

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

I'm well aware of how trading accounts work, and loans in general.  Thats why i find i it odd anyone thinks this is a killer app for Bitcoin.  

I think they are referring to the ability to stockpile coins and have them actually grow the way fiat used to before the monetary system was destroyed. It creates more demand because holding them is even more profitable.

It should be noted that this would not be without risk. In the event of a market crash/spike then the exchange may not be able to liquidate traders' positions at a rate that would allow them to fully repay their margin loans. The lender would have to take a loss if this were to happen.

QFT.

Increased reward is almost always associated with increased level of risk. Remember that. And don't get too greedy.

This is not 100% true in terms of lending to margin traders as any loan could potentially end up turning bad regardless of the interest rate in relation to the market rate

[ThomasCrowne]

The thing to do would be maybe to create an entity that will vet and perhaps even ensure certain of these platformsn exchange for a fee from the entity . The entity ought to be backed by VC money, which would have an interest in spreading bitcoin use. And all parties would be subject to reserve wallet audit via the blockchain and other methods. Win-win for everyone.

Kind of like what Andreas A. did with bitstamp , but more formal, with a set audit methodology that applies to every participant and so on.

I absolutely 100% agree with this comment and actually believe that regular independent third-party audits will become the proverbial norm by 2016 (at least I'm hoping) rather than the exception.  Independent audit by one or more highly trusted members of the community...just imagine how many bitcoins would've been saved had this practice been implemented 2 years ago with Gox.  Soon I believe that exchanges will basically be forced by the free-market to allow said audits in the near(ish) future :p

[Denise520]

That's a good idea.

[transient858]

The traders pay interest on the loans out of their exchange wallet. It is a way to leverage your balance to get a larger return. Any borrowing in any currency requires repayment of a certain percentage over what you borrowed. Have you ever bought a home? A car? Same thing.

I'm well aware of how trading accounts work, and loans in general.  Thats why i find i it odd anyone thinks this is a killer app for Bitcoin.  

I think they are referring to the ability to stockpile coins and have them actually grow the way fiat used to before the monetary system was destroyed. It creates more demand because holding them is even more profitable.

It should be noted that this would not be without risk. In the event of a market crash/spike then the exchange may not be able to liquidate traders' positions at a rate that would allow them to fully repay their margin loans. The lender would have to take a loss if this were to happen.

QFT.

Increased reward is almost always associated with increased level of risk. Remember that. And don't get too greedy.

This is not 100% true in terms of lending to margin traders as any loan could potentially end up turning bad regardless of the interest rate in relation to the market rate

Has been addressed here:
https://bitcointalk.org/index.php?topic=667105.msg7533611#msg7533611