I was walking yo the bank before they closed today so I could deposit a check. It got me thinking, why can't cash it and get out #bitcoin? Becuas the bank doesn't have any bitcoin, of course.

But why not?

They don't want to hold your bitcoin and keep it safe. There's no incentive. That doesn't make them money. What does make them money is lending it out.

But what would it look like if they could lend it out? Hear me out here.

You deposit your BTC with the bank.

Option 1: you pay them to keep it safe. Thus reduces the anxiety that comes with "what if I muff up self-custody?" You pay a fee, they pay for security & insurance. Great.

Option 2: they do all that for free with the caveat that they can lend out your coins just like they currently lend out your dollars.

What's that look like on the borrow's side? They put up their collateral and get the coin. Just like any other loan.

But what if someone wanted to borrow BTC and put up cash for collateral? (maybe they get a bigger discount for paying in BTC than they'll pay in interest). Deposit the cash, get the coin, make regular payments and slowly re-gain access to your dollars.

Next post I'll talk about putting up BTC for collateral to borrow dollars in a reduced-trust manner...