What does credit and lending look like to you under a Bitcoin standard? \ stacker news ~bitcoin

What does credit and lending look like to you under a Bitcoin standard?

4625 sats \ 14 comments \ @cornfarmer 5 Jan bitcoin

Just read through this article and it got me wondering what the state of lending could look like under a Bitcoin Standard.

Will the size of credit markets shrink to a mere fraction of their current levels? Will the mortgage as we know it cease to exist as people instead opt to save their way to home ownership in stats? Will any loans that do exist function via time-lock contracts?

Please educate this pleb

view all related items

1268 sats \ 4 replies \ @grayruby 5 Jan

Yes credit markets will definitely shrink as credit won't be a means of arbing melting fiat value.

It should be much healthier and reduce a lot of malinvestment.

698 sats \ 0 replies \ @kepford 5 Jan

100% co-sign this and appreciate the humble response. Beyond what you are saying is going to be very speculative. We can look to the past for ideas about how harder money worked but technology has advanced in ways that will make this different. Also, there has never been anything like bitcoin. The truth is no one knows how it will work out but we can speculate about problems that will be fixed by bitcoin.

100 sats \ 2 replies \ @Undisciplined 5 Jan

credit won't be a means of arbing melting fiat value

Succinctly put and I think that's the main difference. There's less incentive to "save" in the modern sense (which is really just lending), because actually saving an appreciating currency more than preserves purchasing power.

That should mean that real interest rates (interest rate above inflation) might be higher on a bitcoin standard. However, nominal interest rates will likely be lower.

640 sats \ 1 reply \ @grayruby 5 Jan

I like the point about real and nominal interest rates. Makes sense.

100 sats \ 0 replies \ @Undisciplined 5 Jan

Good, because as I've said before, I'm not a macro guy. I always worry I'm going to get something backwards when I write about this stuff.

661 sats \ 0 replies \ @TheBTCManual 5 Jan

Depends on the timeline I suppose, under a Bitcoin standard credit markets should shrink for the consumer as deflation drives down the cost of home ownership, car ownership, and those big-ticket items, a few who managed to save in Bitcoin can use their equity straight up.

If fiat is still around, then some will rather opt to borrow against bitcoin for large purchases if that's the more tax efficient way

I would imagine that the deeper we get into a Bitcoin standard the more people need to earn it versus buying it and there will be a time vs cash flow difference where people would choose to acquire things now and pay a premium and that's where I see credit working but Bitcoins annual appreciation would have to be pretty flat or you just reking yourself

51 sats \ 1 reply \ @OT 5 Jan

There's some lending happening today with hodlhodl and ledn. Generally the loans are up to 1 year and the interest rates are quite high <15%

This is using BTC as collateral to borrow stablecoins BTW.

The future is anyone's guess. I think there will be less wasteful lending/borrowing. Putting up BTC as collateral will carry high risk so you'd better be sure to make a profitable venture.

0 sats \ 0 replies \ @cyberpunk02 5 Jan

sound like a bargain!

20 sats \ 0 replies \ @jtwoodhouse 5 Jan

The balance sheet becomes this:

Bitcoin = Assets Dollars = Liabilities

Lock up bitcoin on some L2 protocol and mint stablecoins on a timelock contract. Bitcoin becomes the world reserve asset. The dollar remains the world reserve currency, but increasingly outside U.S. control. Best of both worlds.

21 sats \ 0 replies \ @billiam 5 Jan

The question is: Will a fixed money supply lead to economic collapse? And will lending work?

https://www.swanbitcoin.com/why-a-fixed-supply-money-does-not-lead-to-economic-catastrophe/

I think that fractional reserve banking is sort of baked into our gens. Our brain will always go for it.

21 sats \ 0 replies \ @Undergotten 5 Jan

I'm hoping Bitcoin will greatly reduce the need for credit.

0 sats \ 0 replies \ @orangecrush 6 Jan

Banks will accelerate the credit short on the dollar. During hyperbitcoinization, yield-seeking paper-bitcoiners will loan fiat against their (paper) bitcoin to buy more (paper) bitcoin accelerating liquidity into bitcoin. In the end the banks and governments will seize the true assets and paper bitcoiners will get wrecked (again).

0 sats \ 0 replies \ @piecover 6 Jan

Bitcoin is value based not credit based so No need

0 sats \ 0 replies \ @Lost_dogz 6 Jan

Currently, all fiat money, except for the tiny fraction of physical notes and coins, is created as debt. So by definition moving to a Bitcoin standard (where money is not debt) will decrease the credit market. With the world at ~400% of GDP in debt now, it's going to be a significant difference