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> The fact that you can take out a loan Why would any rational actor provide a loan denominated upon an insanely volatile "currency" like bitcoin or ethereum?
by spookthesunset 5y ago
> The fact that you can take out a loan
Why would any rational actor provide a loan denominated upon an insanely volatile "currency" like bitcoin or ethereum? The lender could loan 100 ethereum bux only to lose big time because the price of ethereum went up 10x in a week making the amount repaid worthless. Or it could go down, in which case the borrower would wind up defaulting because who would want to pay back 10x more than they were lent?
Lending requires a pretty stable currency...
- lowdest 5y agoHave you looked into any of the lending platforms? These are pretty well controlled for. Crypto loans are typically collateralized, so that below a certain loan-to-value ratio, the collateral belongs to the loan provider and the borrower can keep what was borrowed. The exact rules vary place to place. It's a calculated risk that is competitive with other investments. People borrow to avoid triggering capital gains, or to gain leverage or to short.