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> I have not figured out how this would solve the problem of on-blockchain debt There really is no problem, unless you have unrealistic expectations as to what
by runeks 9y ago
> I have not figured out how this would solve the problem of on-blockchain debt
There really is no problem, unless you have unrealistic expectations as to what a blockchain can do.
There’s essentially no difference between lending a company money, with which it purchases machinery, and lending this machinery directly to the company. Believing a blockchain can ensure that when I lend you my car (a form of machinery) I will get it back without a scratch, is simply unreasonable.
- mannykannot 9y agoI don't know if you have a valid argument in general, but your specific example seems to be a bit off the mark. If I buy a conventional bond issued by a company and hold it until term, and the company does not default, I am owed coupon payments and a return of the principal. I am taking interest-rate, inflation and default risks, but not depreciation. I expect an on-blockchain contract would have to allow for default (which I suppose it could, given a way to signal external events.) Currently, of course, this is handled through negotiation, arbitration, or ultimately the bankruptcy courts. It would certainly seem unrealistic to expect that to be replaced by smart contracts anytime soon.
- runeks 9y agoYou’re right. Only if we ignore depreciation of capital goods are the two examples equivalent. But I was trying to convey the fact that money is just a replacement for physical goods, such that if the lender doesn’t purchase something with the lent funds, the loan would be meaningless. And as soon as the lender spends the lent funds, there’s a risk that it won’t be able to recover this cost. In other words, riskless credit makes no sense, since the presence of risk is why there’s a potential return for the lender in the first place.
- deleted 9y ago[deleted]