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Author Topic: usury = not cool  (Read 4674 times)
jixapori
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April 14, 2012, 08:54:31 PM
 #21

If someone really insists on borrowing money at 10000+% interest,
well, people do all kinds of things. But what kind of customers do you
attract with such terms? Scammers who have no intention of paying you
back and therefore could not care less about the interest rate (no
shortage of those), and on the other hand the truly desperate. Even if
you do not care about exploiting them, if 1-10 BTC is a big deal for
someone, how are they supposed to come up with the ludicrous amounts
of interest? (How do you honestly generate money at that rate? Play a
lot of roulette? Lend it to someone else at 10001%?) Either way, it
seems like a shaky business proposition, and it is not how
microfinance is supposed to work.

As for 10000+ btc loans, that is pushing the envelope if we are
talking about microcredits, but the principles of interest-free
lending should still apply, and nobody is claiming they are "have no
steady sorce of income, hand over cash to all comers, no questions
asked, and absorb all losses if/when they occur." It seems we are not
quite there yet, but none will be happier than I when experimental btc
finance like IBB gets to the point where one can fund your 15000 btc
project. Remember, a big part of the bitcoin philosophy was to solve
many of the problems people have with traditional institutions such as
banks, not make things worse.
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BTC_Bear
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April 14, 2012, 09:02:13 PM
 #22

Sent 100.5 BTC to 18CdYqwkLfmDhjvfueZmDpDcjBRLh8BEXr

http://blockchain.info/address/18CdYqwkLfmDhjvfueZmDpDcjBRLh8BEXr


So the system works. The interest charged is based off of many factors. The better the borrower you are the better the interest rate charged can be.



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BTW: I am not copumpkin, ineedausername, and obviously not shakaru.
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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
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April 14, 2012, 09:05:59 PM
 #23

No one and nothing is stopping you from lending out your own BTC at a 0% interest rate.

I will offer to take all of your BTC on deposit (no limit) at 0% interest rate.

You cannot tell us what to do.  You are not the boss of us.  Or, are you planning on implementing some sort of system to force us to do what you want to do?

Remember, a big part of the bitcoin philosophy was to solve
many of the problems people have with traditional institutions such as
banks, not make things worse.

Please tell me which part of the Bitcoin philosophy relates to the making or charging of interest.  I missed that chapter I guess.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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April 14, 2012, 09:13:33 PM
 #24

I don't recall there being any prescribed Bitcoin philosophy. Bitcoin is a cryptographic/network protocol that has attracted many people of many different minds.
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April 14, 2012, 09:24:36 PM
 #25

-----
...not sure why it seems to be tolerated here.  Please support IBB and
help put these thieves out of business ASAP!

(If there is some service you really need which IBB is not providing, I am
willing to work with them to make it happen, e.g. deposits, at
0% interest of course, chequing, whatever.)
-----

HKUQl1SRTIIVWEIiMfM0REEAWbAionmwSftaVOliUtzm/93Zm6iKklSr9z3oyawZon/LPSYu2tB+R0ViSj6dqD0=


And as to the OP, there is a place for 0% interest loans. But they really aren't loans though, are they? You are helping people out. No business model could do this because of inflation. You might as well just give people the amount of money at the current inflation rate over APR.

Which, btw, I would also do. Instead of me borrowing 100 BTC for the year at 3% inflation: Just send me 0.25 BTC per month to the following address: 1Pskdr7kciDbWwwTfiDvqWZNT6HGb6SPf2 

It will save us both a lot of work. Smiley


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
PatrickHarnett
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April 14, 2012, 09:50:54 PM
 #26

If someone really insists on borrowing money at 10000+% interest,
well, people do all kinds of things. But what kind of customers do you
attract with such terms? Scammers who have no intention of paying you
back and therefore could not care less about the interest rate (no
shortage of those), and on the other hand the truly desperate. Even if
you do not care about exploiting them, if 1-10 BTC is a big deal for
someone, how are they supposed to come up with the ludicrous amounts
of interest? (How do you honestly generate money at that rate? Play a
lot of roulette? Lend it to someone else at 10001%?) Either way, it
seems like a shaky business proposition, and it is not how
microfinance is supposed to work.

As for 10000+ btc loans, that is pushing the envelope if we are
talking about microcredits, but the principles of interest-free
lending should still apply, and nobody is claiming they are "have no
steady sorce of income, hand over cash to all comers, no questions
asked, and absorb all losses if/when they occur." It seems we are not
quite there yet, but none will be happier than I when experimental btc
finance like IBB gets to the point where one can fund your 15000 btc
project. Remember, a big part of the bitcoin philosophy was to solve
many of the problems people have with traditional institutions such as
banks, not make things worse.

A couple of things.

Stealing is "not cool" either, and if you knew anything about risk/return you might find that several months ago I wasn't making money off these high-interest rate loans.

Second, I would like to defend the good quality people that borrow funds from me at 10%-15% per month.  Most are reliable and good people that I have a good business relationship with.  I do not like you disparaging them and their motives for borrowing.

Third, the service I offer is competitive - there are several others around and rates are negotiable, as are payment terms. 

I have previously donated to IBB and like what Sen is doing.  At the level I typically loan at (not micro) there are high stakes and real money involved.  I give awa enough money elsewhere to not be worried about the high rates I charge, and if all my loans were repaid tomorrow and I didn't do any more, that would be fine.
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April 14, 2012, 10:01:20 PM
 #27

As much as i dislike spongbobsquarepants.

Patrick is always Owning people with his posts. AKA, You have been served by a starfish sir.

http://bitcoin-otc.com/viewratingdetail.php?nick=DingoRabiit&sign=ANY&type=RECV <-My Ratings
https://bitcointalk.org/index.php?topic=857670.0 GAWminers and associated things are not to be trusted, Especially the "mineral" exchange
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April 14, 2012, 10:23:43 PM
 #28

As much as i dislike spongbobsquarepants.

Patrick is always Owning people with his posts. AKA, You have been served by a starfish sir.

Maybe you need to watch it in a different language/country/time of day.  It's hilarious in Japanese, and helps pass jet-lag hours at 2 a.m. 
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April 14, 2012, 10:30:36 PM
 #29

Someone please loan me: 100 BTC for <24hrs, I will repay at 0.5% for a total of 100.5 BTC.

Someone get their $2.50


edit: oh, send to: 1G12XfoPSLYiCdCH49qtN6NHMmHPQwPUta

same as before.
I'm willing to do this, but I need to grab four other lenders to split this into blocks, and we require 10% "DPR" (the "D" is for daily!). Either you take the loan, or you're unable to pay for the psych eval. required to retrieve your kids from CPS.

Don't mix your coins someone said isn't legal
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April 14, 2012, 10:35:45 PM
 #30

Someone please loan me: 100 BTC for <24hrs, I will repay at 0.5% for a total of 100.5 BTC.

Someone get their $2.50


edit: oh, send to: 1G12XfoPSLYiCdCH49qtN6NHMmHPQwPUta

same as before.
I'm willing to do this, but I need to grab four other lenders to split this into blocks, and we require 10% "DPR" (the "D" is for daily!). Either you take the loan, or you're unable to pay for the psych eval. required to retrieve your kids from CPS.


First: WTH are you talking about? I missed the joke obviously.

Second: To late, someone already got it. nanah boo boo.  Grin



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
jixapori
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April 14, 2012, 11:37:09 PM
 #31

To clarify, I am not prescribing anything or telling anyone what to do. If you are lending money as a business, you probably need to cover your costs somehow (that money has to come from somewhere), whether by charging interest or via some alternative arrangement such as profit-sharing. If you are offering loans at 20000% interest and someone accepts, then they brought that upon themselves (or more likely are trying to scam you), but that's just crazy and I have no qualms about calling you a thief. However is 300% acceptable? How about 30%? 3%? I would rather not try to seriously argue this here, or be glib. Perhaps there is no "Bitcoin philosophy", it is just a tool and certainly does not tell you how to set interest rates, but I was suggesting that reducing the cost of transactions should be on people's minds, and there is no reason why things should evolve in the direction of insane loans.
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April 14, 2012, 11:51:07 PM
 #32

Yes, the cost of transactions.  Interesting you should bring that up.

The cost of setting up a loan varies, but does take time.  I've spent several hours in pre-work on some, and a few minutes on others.  Even valuing my time fairly frugally, it adds quite a lot to what are short duration loans.

For example, if I spend 10 BTC of time on a 50 coin loan for a month, then before accounting for risk, that's 16%, and doesn't cover the back-end or collection.  The loan I did with Cobra took about two hours before we finally agreed terms, and for 200 coins, it's still a decent few percent.  (and if you think the cost of my time is high, yes it is and I would recommend you don't employ me)

The point I think you are missing is that most loans are not for a whole year, so the multi thousand percent numbers you are throwing around are not valid.  My longest loans are current 27 weeks (half a year), and the people paying interest on those know the total cost of finance.  Also, I don't long for long periods where the interest cost would cause a problem for the borrower.  It's bad for business.
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April 14, 2012, 11:56:27 PM
 #33

To clarify, I am not prescribing anything or telling anyone what to do. If you are lending money as a business, you probably need to cover your costs somehow (that money has to come from somewhere), whether by charging interest or via some alternative arrangement such as profit-sharing. If you are offering loans at 20000% interest and someone accepts, then they brought that upon themselves (or more likely are trying to scam you), but that's just crazy and I have no qualms about calling you a thief. However is 300% acceptable? How about 30%? 3%? I would rather not try to seriously argue this here, or be glib. Perhaps there is no "Bitcoin philosophy", it is just a tool and certainly does not tell you how to set interest rates, but I was suggesting that reducing the cost of transactions should be on people's minds, and there is no reason why things should evolve in the direction of insane loans.

Yes, as explained interest is high but for short term loans. As demonstrated, the interest rate is based on many factors including Trust. I rarely lend on the forums. But when I have done so, I feel I have offered really reasonable rates.

Please remember, a 10 BTC loan at 15% or 30% MPR is reasonable considering the time required to service such a short loan.

Again, if you have Trust from the lenders, the interest demanded can be a lot lower. The important thing is to start acquiring trust so that you may lower interest that you have to pay.

If you are just asking for a 'friendship' loan that is another matter and is often done for 0% or cost adjusted rates. But you can't imply that 'letters' in a nick on an internet forum about the bitcoin community raises the standard of association to a 'friendship' status.

While I don't necessarily agree with IBB as a business model, I do agree with their intent. The interchangeable words of 'gratuity' and 'interest' doesn't bother me. I bet they at least keep track of the amount of 'gratuity' that was given for each loan size and from whom.

But their intent is still an important part of the community, as is the more traditional business models.

btw: I think the last loan I gave on the forums was for 3% MPR. Can't remember might have been 1%.

If one wanted to and was willing to take the risks involved, you could displace all other lenders. Or at least, get them to pay you to not issue loans.


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
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April 14, 2012, 11:59:07 PM
 #34

I accept 10% interest rates at the moment due to having very few previous transactions within this industry. I also accept this rate as it gives me the chance to get mining hardware online now and have that hardware pay off the loan. Right now whatever hardware I buy tends to pay off the interest and the rest of my farm pays off the hardware. I'm a quarter of the way through paying off my second loan and it looks like this process will continue until the block reward drop after which I'll have to see how mining is affected.

In the end, for me at least, so long as the hardware pays for itself and for power, if I lose 10%/month to expand then I'm fine with that for now.

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April 15, 2012, 12:29:44 AM
 #35

Hgh interest rates in Bitcoin are mainly due to high credit risk and currency risk. I’m sure they will decrease with time.

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April 15, 2012, 01:35:20 AM
 #36

Percentages always look huge...

On the other hand consider that you can get a short term loan here basically anonymously with less than two dozen dollars interest in total. You will be able to shop for groceries a few times with that, not much more - but it seems there is a real need here that gets filled.

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April 15, 2012, 01:36:08 AM
 #37

I would rather not try to seriously argue this here, or be glib.

OOPS, too late.

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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April 15, 2012, 03:06:15 AM
 #38

To clarify, I am not prescribing anything or telling anyone what to do. If you are lending money as a business, you probably need to cover your costs somehow (that money has to come from somewhere), whether by charging interest or via some alternative arrangement such as profit-sharing. If you are offering loans at 20000% interest and someone accepts, then they brought that upon themselves (or more likely are trying to scam you), but that's just crazy and I have no qualms about calling you a thief. However is 300% acceptable? How about 30%? 3%? I would rather not try to seriously argue this here, or be glib. Perhaps there is no "Bitcoin philosophy", it is just a tool and certainly does not tell you how to set interest rates, but I was suggesting that reducing the cost of transactions should be on people's minds, and there is no reason why things should evolve in the direction of insane loans.

My main issue is that you came in here and out of nowhere called us thieves for not doing charity work.

If our borrowers are scammers, that's our business and we'll get screwed for it. We're taking big risks here and lose a lot of sleep over whether people are going to default or not. We're not doing it out of the goodness of our hearts, but it is a useful service to people who need to get coins for investing in things. Yochdog recently got 10,000 bitcoins to invest in more mining hardware. That kind of stuff helps everyone. The lender was just sitting on the coins so it was a waste, and Yochdog was willing to administer more mining power and didn't have the up-front funds to buy it, so the loan was beneficial, and will end up increasing overall mining power for the community (thus making transactions more secure). I'm not sure about you, but lending $50k to a stranger on the internet is scary business. Would you do it? If not, what would it take to make you do it? If there is nothing that could make you do it, then we are providing a service that someone with your beliefs is unwilling to provide. If there is something that would make you do it, what is it? $50k is a lot of money to be without, particularly when, even if he does repay you, bitcoins may have meanwhile have crashed to $1 apiece. It's really scary, but that doesn't make it not worth doing.

There are lots of risks involved in lending. I'd even say it's probably one of the riskiest things to do in this community (and that's saying something!). If charging interest goes against your beliefs, then don't do it, but it's a dick move to call us thieves in this kind of situation.
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April 15, 2012, 03:45:13 AM
 #39

Not lending, but bitcoin related economy stuff, I would like to mention that recently I purchased some shares on GLBSE for 0.41 on 4 April.  I had someone buy them 14 April for 0.50.  So the 25% return is about 75% MPR.  Someone obviously is happy to pay me a decent return.
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April 15, 2012, 04:19:35 AM
 #40

Not lending, but bitcoin related economy stuff, I would like to mention that recently I purchased some shares on GLBSE for 0.41 on 4 April.  I had someone buy them 14 April for 0.50.  So the 25% return is about 75% MPR.  Someone obviously is happy to pay me a decent return.
Are you also philosophically against making a profit on a stock transaction like this one?

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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