nostr:npub1h8nk2346qezka5cpm8jjh3yl5j88pf4ly2ptu7s6uu55wcfqy0wq36rpev a good friend finally conceded I was right about #bitcoin today (I felt nothing). He did however bring up a query about how credit would work on a #BTC standard. My response is fundamentally credit doesn’t work in a deflationary environment. After a few beers and crossed eyes, I still stand by this statement. But is there a possibility for credit on a Bitcoin standard in your view? I can’t see how it works?
Discussion
I tend to agree and I'm always curious to hear alternatives
Lending your Bitcoin to someone for a return? Why not? If someone wants to open a bakery and needs 2 Bitcoin, but only has one, you can lend him yours for a share of the profit of the bakery until your friend, with his share of the profit, can give you your Bitcoin back. In a larger sense, there may be pools of Bitcoin facilitated by enterprises…am I missing something?
So no “tradfi” interest rate, just share of profits. I think this is the crux of my mental dilemma. If there is interest applied where does it come from? I guess this is the fiat ponzi…
Exactly. “Interest” has to come from value creation. That’s how it all started under good standard as well. Banks held your savings. And when someone wanted to star a business, they could borrow the money. Pay it back from adding value, and the bank passed it through mines their take and paid the saver; however, when you print money, you can all the sudden make money with money itself.
Lending and borrowing at interest are already happening with DeFi. The interest rate on bitcoin is tiny. The trick is that you have to repay in bitcoin. Few people want to take the risk having to pay double in fiat terms.
Yes there will always be someone who needs more capital to start or expand a business. The rate of interest however would need to be much lower. I think the principles of Richest man in Babylon will still apply however the money lenders will maybe be individuals with large stacks instead of just banks.
yes. credit is granted as a form of trust backed by the potential of future earnings. a bitcoin standard doesnt eliminate trust and credit, but people will be free to form whatever contracts make sense to them, even if you are i see the risks as too high to consider
"I'll pay you later" ... That's credit as far as I'm concerned.
Otherwise, there was a TV spot about using Bitcoin to de risk multi family home loans
Interest bearing credit is a requirement and a precursor to any failed monetary system as it WILL require the currency to be inflationary.
All money is credit.
That’s the idea of a ledger that tracks unspent purchasing power in a system.
There will be those who trade their accrued purchasing power for a return, and there will always be those who need money now and are willing to pay it off.