pull down to refresh

Not sure I understand everything you said but here goes:

Assumptions

  • Bitcoin is the "unit of account" used globally
  • Bitcoin is legal tender everywhere
  • People earn salaries and income in Bitcoin (mainly, not eliminating executives paid in stock, for example)

Credit and lending

It would word pretty much the same way that normal lending works today, except the nominal value of the debt and interest would be in BTC and not a government issued currency
I need to borrow 10BTC in order to buy a house somewhere I go to the Bitbank and ask to borrow 10BTC, repayable over 10 years at a 5% annual interest rate I provide the bank with proof of my income, being my salary from the one job that I work and I earn, for instance, 5BTC per annum
Assuming the bank approves my loan, at the end of every year, I will have to make a payment to the bank of about 1.3BTC. In year one the interest would be 0.5BTC and the rest a redemption of the debt and every year the interest amount will decrease
As long as I keep my job, I should be able to pay back the loan with interest without any issues and if I can't then the bank keeps the house
Hope this made sense and was what you were asking?
Well, in theory, your salary should go down in bitcoin terms. As the purchasing power of bitcoin goes up it becomes very expensive for your employer to pay you the same nominal sum (unless the value you provide as an employee is always increasing but that too approaches an asymptote). The nominal price of your house might go down as well (although this is hard to predict and depends on local supply and demand - a penthouse in NYC might even appreciate in bitcoin terms because there is high demand and no one can arbitrarily inflate the supply of penthouses overlooking Central Park). The longer the term of the loan the more difficult it is for you to pay me back even in nominal terms, much less with interest. So it's very difficult to justify lending you money.
reply