3 ms·

This is an improvement in my opinion. Normally banks only need a small % of the loan in deposits (see fractional-reserve banking), with BTC we see a bank asking

This is an improvement in my opinion. Normally banks only need a small % of the loan in deposits (see fractional-reserve banking), with BTC we see a bank asking you to have more than 3 times the amount of your loan in collateral. What's the result of this? For the loaner and borrower, less loans and more careful allocation of resources. For society as a whole, a smaller but more robust banking system not dependent on bogus money.

ethor 6y ago
I love how you refer to old traditional money (fractional reserve banking) backed by states with military power as bogus money, in regards to Bitcoin.
- MadSudaca 6y ago
  In the end everything is backed by our ability to kill each other. Bitcoin as well, because equipment needs to be somewhere and it must be protected. However, it's bogus because more can be created at a whim, as we've seen in the last months.
chii 6y ago
if this indeed be the result, you will see growth slow, and investment in innovation difficult. The fact that you can create "bogus" money out of thin-air (which, i dont deny is a huge responsibility given to the central banks) means that economic problems have solutions. Imagine the scenario such as this pandemic, where a gov't (or really, any entity) needed to borrow to weather the storm, but is unable to as nobody wants to lend. The world would be worse off than today.
- MadSudaca 6y ago
  Shouldn't it be individual's responsibility to save for bad times? This also includes the US government. Stop spending so much and start saving. Now the USD is being debased and the whole world will suffer. Maybe this change ends up being worse, but given that central banks are a century's long experiment, I say we should give a new system a chance. It looks like more power would be given to the individual and this is a good thing in my opinion.
quickthrowman 6y ago
I don’t think you understand what Coinbase is doing here. Coinbase is not using fractional bitcoin reserves to lend out to anyone. It’s a collateralized loan similar to a HELOC (the equity in your home is collateral) or a margin loan from a broker (your equities are collateral). They want 3x the loan amount because BTC is a volatile asset, and mass margin calls on your customers if the price drops precipitously is bad for business.
- MadSudaca 6y ago
  Thanks for the explanation. How do you think crypto loans would work in a world without fiat money?

ethor 6y ago

I love how you refer to old traditional money (fractional reserve banking) backed by states with military power as bogus money, in regards to Bitcoin.

MadSudaca 6y ago
In the end everything is backed by our ability to kill each other. Bitcoin as well, because equipment needs to be somewhere and it must be protected. However, it's bogus because more can be created at a whim, as we've seen in the last months.

chii 6y ago

if this indeed be the result, you will see growth slow, and investment in innovation difficult. The fact that you can create "bogus" money out of thin-air (which, i dont deny is a huge responsibility given to the central banks) means that economic problems have solutions. Imagine the scenario such as this pandemic, where a gov't (or really, any entity) needed to borrow to weather the storm, but is unable to as nobody wants to lend. The world would be worse off than today.

MadSudaca 6y ago
Shouldn't it be individual's responsibility to save for bad times? This also includes the US government. Stop spending so much and start saving. Now the USD is being debased and the whole world will suffer. Maybe this change ends up being worse, but given that central banks are a century's long experiment, I say we should give a new system a chance. It looks like more power would be given to the individual and this is a good thing in my opinion.

quickthrowman 6y ago

I don’t think you understand what Coinbase is doing here. Coinbase is not using fractional bitcoin reserves to lend out to anyone. It’s a collateralized loan similar to a HELOC (the equity in your home is collateral) or a margin loan from a broker (your equities are collateral). They want 3x the loan amount because BTC is a volatile asset, and mass margin calls on your customers if the price drops precipitously is bad for business.

MadSudaca 6y ago
Thanks for the explanation. How do you think crypto loans would work in a world without fiat money?