Loans in BTC

[MoonRise]

I think it is possible that loans could work on a contract basis where identification is required to be confirmed. Only way to make it work but there is still the problem of fake ids. Loans have no backing in any real organization. A loan of 1 btc could change over time (ex. Its 600 when given, 500 when its due) in value.

[Hashforfun]

BTC loans will be successful for big orders if the final amount to be paid is in BTC[not dollars] since for big amounts slight variation in market value can cause big profit/loss.

[nicojuritz]

bitcoin is not the right currency for loans.

I don't know if another alt currency would work or not, but any bitcoin loans would have to take place outside the blockchain and be done by contract.

I don't want BTC to replace fiat anyway, but rather compliment it.

There are companies that gives out loan in BTC, try btcjam.com

[tee-rex]

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

The penalty for not paying a debt is not jail. Loans are a civil matter, not criminal. As long as you did not willfully deceive the lender when you took out the loan (for example by forging income documents) then you will have zero chance of jail if you don't pay a loan.

This was a metaphor. You can always make someone's life unbearable even without throwing them into a prison cell.

Even this would be very difficult to do with the anon nature of bitcoin. People can and do easily use VPNs and socks5 proxies to hide their true identity and most people now are not willing to "show" their ID when taking out a loan (if they do show their ID it is likely to someone else). If you were to make someone's life hell then it would likely be for the wrong persona and regardless of it is for the right person or not you would likely be breaking debt collection laws which you can get in more trouble for then it is worth (read potential 6 figure fines due to the borrower).

I could hardly fancy anyone making a loan to an anonymous entity, whether it be in bitcoin or in fiat. Regarding making a debtor's life a hell, I didn't actually mean anything illegal. Sorry if I wasn't clear about that from the start. My point was that failing to repay the loan could entail such consequences that would make taking a loan with the purpose of not returning it an unwise decision.

[itsAj]

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

The penalty for not paying a debt is not jail. Loans are a civil matter, not criminal. As long as you did not willfully deceive the lender when you took out the loan (for example by forging income documents) then you will have zero chance of jail if you don't pay a loan.

This was a metaphor. You can always make someone's life unbearable even without throwing them into a prison cell.

Even this would be very difficult to do with the anon nature of bitcoin. People can and do easily use VPNs and socks5 proxies to hide their true identity and most people now are not willing to "show" their ID when taking out a loan (if they do show their ID it is likely to someone else). If you were to make someone's life hell then it would likely be for the wrong persona and regardless of it is for the right person or not you would likely be breaking debt collection laws which you can get in more trouble for then it is worth (read potential 6 figure fines due to the borrower).

I could hardly fancy anyone making a loan to an anonymous entity, whether it be in bitcoin or in fiat. Regarding making a debtor's life a hell, I didn't actually mean anything illegal. Sorry if I wasn't clear about that from the start. My point was that failing to repay the loan could entail such consequences that would make taking a loan with the purpose of not returning it an unwise decision.

The FDCPA allows for a debter to simply send a written request for the lender to cease communication and once this is received, further communication (with few exceptions) is allowed. In order to recover anything further the lender would likely need to pursue legal action which is very expensive, and even then they will only recover payment if there are assets to be recovered.

[giveBTCpls]

bitcoin is not the right currency for loans.

I don't know if another alt currency would work or not, but any bitcoin loans would have to take place outside the blockchain and be done by contract.

I don't want BTC to replace fiat anyway, but rather compliment it.

Yeah but what if a person wants to start a business and what not and has no spare BTC? How can an economy work without loans? Of course, that is if it doesnt replace FIAT which I think its impossible.

[botany]

bitcoin is not the right currency for loans.

I don't know if another alt currency would work or not, but any bitcoin loans would have to take place outside the blockchain and be done by contract.

I don't want BTC to replace fiat anyway, but rather compliment it.

I agree with your post. BTC should be complimented with Fiat, not arch enemies as some people make out on this forum. BTC has a lot of great upsides and so does fiat, so why not use both of them instead of making out as if only one can be used?

I personally think by combining both Fiat which offers offline use and Bitcoin which offers online user and it's benefits, then we have an even more advanced and powerful economical opportunity worldwide.

Correct. Fiat cannot be replaced completely.
At least, not until taxes have to be paid in fiat.

[tee-rex]

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

The penalty for not paying a debt is not jail. Loans are a civil matter, not criminal. As long as you did not willfully deceive the lender when you took out the loan (for example by forging income documents) then you will have zero chance of jail if you don't pay a loan.

This was a metaphor. You can always make someone's life unbearable even without throwing them into a prison cell.

Even this would be very difficult to do with the anon nature of bitcoin. People can and do easily use VPNs and socks5 proxies to hide their true identity and most people now are not willing to "show" their ID when taking out a loan (if they do show their ID it is likely to someone else). If you were to make someone's life hell then it would likely be for the wrong persona and regardless of it is for the right person or not you would likely be breaking debt collection laws which you can get in more trouble for then it is worth (read potential 6 figure fines due to the borrower).

I could hardly fancy anyone making a loan to an anonymous entity, whether it be in bitcoin or in fiat. Regarding making a debtor's life a hell, I didn't actually mean anything illegal. Sorry if I wasn't clear about that from the start. My point was that failing to repay the loan could entail such consequences that would make taking a loan with the purpose of not returning it an unwise decision.

The FDCPA allows for a debter to simply send a written request for the lender to cease communication and once this is received, further communication (with few exceptions) is allowed. In order to recover anything further the lender would likely need to pursue legal action which is very expensive, and even then they will only recover payment if there are assets to be recovered.

So it doesn't make much difference whether you loan in bitcoin or in fiat, correct? Also FDCPA (don't even know what it stands for) requirements are only valid for one country. Other countries may have other regulating bodies apparently with different requirements.

[Dyklotz]

If FIAT doesnt exist how is people suposed to do business without loans?

[itsAj]

Bitcoins in my opinion is really not the right currency to be able to allow loans. I personally feel that trying anything like this with bitcoins could lead to a lot more ways to end up being scammed.

Why? It's money. BTC

You can walk away from a loan in fiat. Easy.

Lenders of fiat currency aren't protected from making bad investments by some sort of magic. They critique and analyze the data submitted by applicants for loans and verify their ID. This system would work for Bitcoin. It would work for any sort of cryptocurrency. It's just a payment method.

If a borrower was to walk away from paying a loan then the lender can sue the borrower for payment and if they win a judgment against the borrower then the lender can seize a borrower's assets. It is not possible to seize someone's bitcoin if they hold/control the private keys.

But it is still possible to put this person in jail, right? So it seems not much different from loans in fiat as long as you can reach the borrower.

The penalty for not paying a debt is not jail. Loans are a civil matter, not criminal. As long as you did not willfully deceive the lender when you took out the loan (for example by forging income documents) then you will have zero chance of jail if you don't pay a loan.

This was a metaphor. You can always make someone's life unbearable even without throwing them into a prison cell.

Even this would be very difficult to do with the anon nature of bitcoin. People can and do easily use VPNs and socks5 proxies to hide their true identity and most people now are not willing to "show" their ID when taking out a loan (if they do show their ID it is likely to someone else). If you were to make someone's life hell then it would likely be for the wrong persona and regardless of it is for the right person or not you would likely be breaking debt collection laws which you can get in more trouble for then it is worth (read potential 6 figure fines due to the borrower).

I could hardly fancy anyone making a loan to an anonymous entity, whether it be in bitcoin or in fiat. Regarding making a debtor's life a hell, I didn't actually mean anything illegal. Sorry if I wasn't clear about that from the start. My point was that failing to repay the loan could entail such consequences that would make taking a loan with the purpose of not returning it an unwise decision.

The FDCPA allows for a debter to simply send a written request for the lender to cease communication and once this is received, further communication (with few exceptions) is allowed. In order to recover anything further the lender would likely need to pursue legal action which is very expensive, and even then they will only recover payment if there are assets to be recovered.

So it doesn't make much difference whether you loan in bitcoin or in fiat, correct? Also FDCPA (don't even know what it stands for) requirements are only valid for one country. Other countries may have other regulating bodies apparently with different requirements.

The FDCPA is the Fair Debt Collection Practices Act. Generally speaking fiat based loans will have more options to guarantee payment. Even signature loans for example will require a borrower to have an active checking account that money can be automatically withdrawn.

Fiat based loans also generally will require more documentation regarding a borrower's ability to repay their loans. Yes this is not something that BTC based lenders cannot do but the economy is generally not setup to do this.

[botany]

The FDCPA is the Fair Debt Collection Practices Act. Generally speaking fiat based loans will have more options to guarantee payment. Even signature loans for example will require a borrower to have an active checking account that money can be automatically withdrawn.

Fiat based loans also generally will require more documentation regarding a borrower's ability to repay their loans. Yes this is not something that BTC based lenders cannot do but the economy is generally not setup to do this.

Once licences come into play, I can see documentation for bitcoin users getting more cumbersome than fiat documentation. 

[coinits]

With fiat, bank loans create money out of thin air increasing the money supply thus promoting inflation. Nowadays the banks can free wheel as there is little to no requirement to hold reserves. BTC is different because lending BTC is real. None created from the loan.

[FloodZone]

Imo modern economy can live without loans and loans in Bitcoins will help current banking system to stay alive. It's not we are want, am I right?

[wasserman99]

The FDCPA is the Fair Debt Collection Practices Act. Generally speaking fiat based loans will have more options to guarantee payment. Even signature loans for example will require a borrower to have an active checking account that money can be automatically withdrawn.

Fiat based loans also generally will require more documentation regarding a borrower's ability to repay their loans. Yes this is not something that BTC based lenders cannot do but the economy is generally not setup to do this.

Once licences come into play, I can see documentation for bitcoin users getting more cumbersome than fiat documentation. 

I really don't think you need any licenses in order to lend either BTC or fiat. You just need to be sure to comply with anti-discrimination laws when lending to people.

I think the biggest challenge that lenders will have is lending to people who are potentially in another country. Having a loan agreement cross boarders is not an easy task and would likely be very expensive and difficult to enforce.

[tee-rex]

With fiat, bank loans create money out of thin air increasing the money supply thus promoting inflation. Nowadays the banks can free wheel as there is little to no requirement to hold reserves. BTC is different because lending BTC is real. None created from the loan.

Just like with gold in the 19th century, BTC banks would "create" BTC bank notes (receipts) with all ensuing consequences like bank runs and bank defaults.

[CraftingTable]

How do you "lend" BTC? Once the transaction is done, the other person owns the BTC.

[botany]

How do you "lend" BTC? Once the transaction is done, the other person owns the BTC.

Yes. The other person has to repay you.

[itsAj]

The FDCPA is the Fair Debt Collection Practices Act. Generally speaking fiat based loans will have more options to guarantee payment. Even signature loans for example will require a borrower to have an active checking account that money can be automatically withdrawn.

Fiat based loans also generally will require more documentation regarding a borrower's ability to repay their loans. Yes this is not something that BTC based lenders cannot do but the economy is generally not setup to do this.

Once licences come into play, I can see documentation for bitcoin users getting more cumbersome than fiat documentation. 

I don't think licenses will so much have to do with the expenses of lending in BTC. I think it is mostly the fact that once you give someone BTC it is very difficult to force them to give it back (repay their loan).

[wasserman99]

With fiat, bank loans create money out of thin air increasing the money supply thus promoting inflation. Nowadays the banks can free wheel as there is little to no requirement to hold reserves. BTC is different because lending BTC is real. None created from the loan.

Just like with gold in the 19th century, BTC banks would "create" BTC bank notes (receipts) with all ensuing consequences like bank runs and bank defaults.

If loans are given prudently then this would likely not happen. I also do not know of any banks that deal in BTC that are doing this. The possibly exception to this would be bitfinex woh recently saw larger then the rest of the market drops in their prices, likely due to margin related issues (loaning BTC out in order for traders to buy more BTC). 

[odolvlobo]

With fiat, bank loans create money out of thin air increasing the money supply thus promoting inflation. Nowadays the banks can free wheel as there is little to no requirement to hold reserves. BTC is different because lending BTC is real. None created from the loan.

Just like with gold in the 19th century, BTC banks would "create" BTC bank notes (receipts) with all ensuing consequences like bank runs and bank defaults.

If a person has 1 BTC in their Coinbase account and Coinbase lends 0.9 of it, then there is effectively 1.9 BTC. Money has been created. That's classic fractional reserve banking. No banknotes are needed.