You answered your own question.. because we still live in a fiat world
Discussion
Yes but exactly. Jack is framing this as a better way to do lending and borrowing. It's not a better way. It's just a new way to short fiat.
This is no different than getting a line of credit against your home or business. If you don't repay you fork over the asset.
That being said if I was to take a loan against my bitcoin, the bank should be paying ME interest to get my bitcoin.
So unless these come at a negative rate (which it won't) they are a scam.
Except a home or a business is not money. It's not liquid.
There is no good reason to use money as collateral for money UNLESS what you're really trying to do is short fiat on leverage.
It's about the equivalent of taking your bitcoin to a pawn shop.
Usually you swap debt for an asset. A bank is always happy to swap an asset for debt.
Imagine getting your money to a pawn shop instead of simply spending it. I don't understand why someone would want to pawn their money.
UNLESS this person is looking for a way to leverage short fiat.
My interpretation of ‘better lending and borrowing’ is there isn’t such a social component which involves your personal data and who you are. With BTC backed, because what’s backing your loan is a scarce, digital asset that I can send to you. It speaks for itself. You send the BTC, we trust you, you get your credit. Where in the current system, you can’t send your house, so now we have to look at all this other personal data to determine if we trust you enough to give you your money
Why not simply spend the BTC?
Because why would I spend a scarce, appreciating asset like Bitcoin, when I can borrow against it for fake money, and let Bitcoins appreciation ‘pay’ down my loan over time
Same reason why someone wouldn’t sell their home if they need liquidity. Why would I sell my home that’s gaining value, if I can just borrow against it and get some liquidity to purchase what I need
I see where you’re coming from as a bitcoin-only business like yourself. However the world is still fiat. So until everyone accepts bitcoin, borrowing fiat against it for liquidity, is a much smarter move financially than to part ways with it
The difference is that the home is not liquid. It's not money. This is why you don't spend it and instead offer it as collateral. If I already have money in pocket, there is no reason to use it to get a loan of money.
But you say you don't want to spend it because it appreciate in value. And THIS is why this financial product actually exist for. It's a way to short fiat like I said before. The only reason to use good money to borrow bad money is to leverage the NGU of the good money.
Okay so you get it. Then what’s your issue with it?
It's marketed as a revolution in finance when it is actually just an other tool to go leverage. I don't believe it helps restoring good market signals because this tool is not Bitcoin but rather a symptom of fiat.
My OP was saying this: "This is not a revolution in finance it's just a way to short fiat".
What I mean is that it's not much different than trading. You take such loan because you bet on NGU of Bitcoin.
The reason someone takes a real loan is because he bet on himself.
I consider the first one to be a form of shitcoining.
My position on this have nothing to about me running a business. I don't believe the people loaning their Bitcoin have and ever will have a significant impact on me. It might actually end up do publicity for Bitcoin and be good for me in the end.