Charging interest on loans within a Bitcoin monetary system is a complex issue with valid arguments on both sides.
The Case for Charging Interest
Many argue that it is fair to charge interest on Bitcoin loans, and their reasoning is not tied to the supply of money. Instead, it's based on fundamental economic principles:
Time Value of Money: A Bitcoin held today is generally considered more valuable than a Bitcoin held in the future. This is because the holder can use, invest, or spend the Bitcoin immediately. The borrower is gaining the benefit of using the lender's capital now, so interest acts as compensation for the lender's deferred use of their funds.
Opportunity Cost: By lending their Bitcoin, the lender is giving up the opportunity to use it for other purposes, such as investing it, spending it on goods and services, or holding it in anticipation of a price increase. Interest compensates the lender for this missed opportunity.
Risk: There is always a risk that the borrower will not repay the loan. Interest, in part, serves as a premium to compensate the lender for this default risk.
The Case Against Charging Interest
On the other hand, some argue that charging interest on a fixed-supply currency like Bitcoin is not fair or even necessary. This perspective often stems from the philosophical view that a fixed supply fundamentally changes the nature of money and debt.
Deflationary Pressure: Because Bitcoin's supply is fixed and its value is expected to rise over time due to increasing demand, holding Bitcoin is already an act of saving. Some believe that this inherent appreciation should eliminate the need for interest. If a lender expects their Bitcoin to be worth more in the future, the primary incentive for lending is already present without the added burden of interest.
Unearned Income: Critics of interest sometimes view it as "unearned income." In a system where the base asset (Bitcoin) is naturally appreciating, a lender could be seen as gaining value both from the asset's appreciation and from the interest, which some see as an unfair double benefit.
Ethical or Religious Beliefs: Certain ethical and religious traditions view the charging of interest (usury) as an immoral practice, regardless of the monetary system. This perspective would apply to Bitcoin just as it does to traditional currencies.
Ultimately, whether charging interest on a Bitcoin loan is "fair" depends on one's economic perspective and ethical framework. The fixed supply of Bitcoin doesn't remove the core reasons for charging interest—risk, opportunity cost, and the time value of money—but it does introduce a new dynamic that some believe makes interest unnecessary.
