4 ms·

Would be happy to buy a usable cryptocoin card. I was thinking about interest-free crypto-loans where the debtor would speculate on the value of the currency at

Would be happy to buy a usable cryptocoin card. I was thinking about interest-free crypto-loans where the debtor would speculate on the value of the currency at the time it will paid off (like options trading). If you loan 100btc you would loan with the speculation that for example it would be 10% more valuable in a year. If in a year your speculation is correct, you break even, if the price is 10% lower, the debtee still has to pay using your speculated valuation, if the price is 10% higher you lost potential money you coulf have gained had you hold onto it. Either way, you have insurance against loss the debtee takes on risk but they don't get endlessly canibalized by interest payment. Escrow or credit rating is something I have not figured out. Regardless, an acual card and a payment processing network would cost billions to deploy.

milkytron 6y ago
That seems extremely risky.
- badrabbit 6y ago
  You will still have credit checks and collaterals as usual. The person taking on the loan absorbs all risk in exchange for not having a interest accumulate. Think of it this way, with APR loan, how much you pay at the end depends on how the interrst rate is adjusted and how long it takes you to pay off. With my approach you might end up owing a lot of money but it will never depend on how fast you can pay it off. It will not canibalize your cash flow like an interest debt. The debtor gets free loss insurance and debtee gets freedom from interest and the total cost depends on the currency value at the time of first payment. Also,the total cost will not be a surprise to anyone, the person taking on the loan knows how much they have to pay back. Ideally if you don't have credit, you will need to place in escrow some amount of the base loan and take on more risk in terms of paying at a higher valuation should the currency value be higher at the time of payment(which all goes away with collateral or good credit score) Anyway, I was just thinking out loud my idea. I hate interest and mandatory insurance alike.
bluesign 6y ago
You have 1 btc lets say 10k usd. So in one year i have to pay you 11k. It is basically 10% interest.
- badrabbit 6y ago
  Intetest accumulates, if it takes you 2 years to pay, you owe 12k normally. Regardless of how long your payment plan is, how much you owe depends on the speculation date (the sooner it is, the more predictable and less risky). Bigger loans would be issued for less trustworthy customers if the speculation/first payment date is very soon. But let's say the first payment is a year away and the debtor speculates too high of an increase in currency value,then they would come off as bad debtors no one wants a loan from. But the more conservative their speculation on long term currency value, the more reasonable and appealing of a debtor they appear to be. So if you will start paying me back a year from now,I might speculate a 2% increase in value but if you will pay back in a few weeks I can more accurately predict and say a 5-10% increase. Since the worst outcome for the debtor if payment is made is "my cash is insured against loss" they have the incentive to make conservative speculations that lure debtees. If a well known and reputed person uses their valuable site/business for a $1M loan that will be paid in 5 years and you loan them with a 3% increase speculation you will get 30k for the risk you took on and guarantee that not only will you not lose money but will gain at least 3%,regardless of economic crashes or market volatility.

milkytron 6y ago

That seems extremely risky.

badrabbit 6y ago
You will still have credit checks and collaterals as usual. The person taking on the loan absorbs all risk in exchange for not having a interest accumulate. Think of it this way, with APR loan, how much you pay at the end depends on how the interrst rate is adjusted and how long it takes you to pay off. With my approach you might end up owing a lot of money but it will never depend on how fast you can pay it off. It will not canibalize your cash flow like an interest debt. The debtor gets free loss insurance and debtee gets freedom from interest and the total cost depends on the currency value at the time of first payment. Also,the total cost will not be a surprise to anyone, the person taking on the loan knows how much they have to pay back. Ideally if you don't have credit, you will need to place in escrow some amount of the base loan and take on more risk in terms of paying at a higher valuation should the currency value be higher at the time of payment(which all goes away with collateral or good credit score) Anyway, I was just thinking out loud my idea. I hate interest and mandatory insurance alike.

bluesign 6y ago

You have 1 btc lets say 10k usd. So in one year i have to pay you 11k. It is basically 10% interest.

badrabbit 6y ago
Intetest accumulates, if it takes you 2 years to pay, you owe 12k normally. Regardless of how long your payment plan is, how much you owe depends on the speculation date (the sooner it is, the more predictable and less risky). Bigger loans would be issued for less trustworthy customers if the speculation/first payment date is very soon. But let's say the first payment is a year away and the debtor speculates too high of an increase in currency value,then they would come off as bad debtors no one wants a loan from. But the more conservative their speculation on long term currency value, the more reasonable and appealing of a debtor they appear to be. So if you will start paying me back a year from now,I might speculate a 2% increase in value but if you will pay back in a few weeks I can more accurately predict and say a 5-10% increase. Since the worst outcome for the debtor if payment is made is "my cash is insured against loss" they have the incentive to make conservative speculations that lure debtees. If a well known and reputed person uses their valuable site/business for a $1M loan that will be paid in 5 years and you loan them with a 3% increase speculation you will get 30k for the risk you took on and guarantee that not only will you not lose money but will gain at least 3%,regardless of economic crashes or market volatility.