I think the lenders could be somehow pooled in a technical fashion. Thinking outside of the box a bit, the risk to an individual can be distributed and reduced to a negligible amount, and accounted for with insurance, smart contracts, etc. The market already knows how to do this.

Right.

So interest would be paid on loans because the lender is at risk of default. But unlike with fiat, there is no one to bail you out if this does happen. No FDIC insurance if the bank blows up. No click of a button to reimburse you in case things go belly up.

You'd have to ask yourself whether that risk is worth a bit of interest. Is the interest needed in today's world, where Bitcoin already keeps going up in price as people figure out its value proposition?

And after that? In a hypothetical world where Bitcoin is the standard? The interest you're looking for is found in the productivity improvements in the world, which will show up in Bitcoin price deflation. nostr:nprofile1qqsg86qcm7lve6jkkr64z4mt8lfe57jsu8vpty6r2qpk37sgtnxevjcpzpmhxue69uhkummnw3ezuamfdejsz9rhwden5te0wfjkccte9ejxzmt4wvhxjmcprfmhxue69uhkummnw3ezummjv9hxwetsd9kxctnyv4mqgevlfj wrote an interesting book called "The Price of Tomorrow", which goes into this subject. Worth a read 😇.

What would justify the interest?

Treat your ability to choose what you give attention, the same way you treat your private keys.

Make sure to sovereignly control it, don’t let anyone or anything custody it for convenience or yield.

To be fair, it's not unreasonable to have this primal desire for subkeys and key rotation. The problem is that:

1) it's not possible to do without centralization (or a blockchain) -- Bluesky tried, and the best solution they came up with was a big server that hosts a history of keys for everybody and can censor anyone;

2) doing it by means of Nostr events that declare subkeys or delegation or whatnot, creates insurmountable complexity that turns Nostr into an unusable pile of bloatware and away its most basic feature: the chance of working;

3) it's not the only way to protect your key from rogue computers and apps -- NIP-46 and other methods exist and are much nicer to use, with still many unexplored possibilities;

4) it's not clear that more than 16 people in the entire world want this at all -- when was the last time a normal person thought about rotating their PGP keys?

Uploads are centralized to a few services

There are only a few big relays

Not really

Something like the bitkey is a good multisig solution for the masses. There’s more of a trust trade off there. But I view it as a good onboarding tool.

Have you ever used a multisig?

Most of which can be mitigated with multisig. Why people refuse to upgrade to multisig is beyond me.

Fascinating study by nostr:npub1n3sjlzmhpu8rl56umtptc4lua6zkretq2p82yhytnmlcuq639vlqd0te5l

“Part of what shapes identity and behavior in America--surprise surprise--is political orientation. Our political divide seems not only to be deepening, but also becoming the most important fact about identity, the one that trumps all others. So we polled it 5 different ways: What we found was definitely our most shocking result. Like most everyone on this app, our critics in the media, academics who write about bitcoin, and almost all politicians, we thought #bitcoin ownership would skew towards the political right, and towards libertarianism.

Wrong!”

The left right paradigm is a false narrative. The real battle is the state vs the anti-state. Hopefully you will learn to reject coercion.