What does the 'lending' space look like after this financial revolution?

I have been considering this question for a couple of months now. Most people have a relationship with the banks for ‘lending’ purposes (home loans/car loans/credit cards). Many (most) don’t actually manage their deposits (savings) very well, or are not in a position to ‘save’. Who in the future will we turn to for ‘lending’ solutions and what does that look like? (or does this entire financial revolution assume that there will be a fundamental shift in the way most people manage their finances also?). Just curious…

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Could I borrow 150,000 ADA? I found a new Alfa that needs me.

Maybe it will be P2P?

I believe that instead of Alice and Bob deciding terms on their own (although I assume if they both feel confident they could do so), there will be a plethora of smart contracts pre-written to fill specific circumstances. That’s how I understand it at least.

Although perhaps in the future there will be such a dependence on smart contracts that there will in fact be third parties anyway - smart contract creators - who write a specific smart contract between two transacting parties.

Maybe someone more au-fait with smart contracts could clarify.


Thanks Criterion811. Some great information to add in to the mix. There might also be the creation of businesses for the specific purpose of ‘lending’. The majority of the population will still need to fund the purchase of houses etc. Whether that need is absorbed within the current financial services institutions/infrastructure or whether a new breed of ‘lending institutions’ emerge over time.

Great question! I have been thinking about how the space will look like for a while, and my verdict is that platform’s like Cardano and smart contracts will indeed replace a bunch of intermediaries.

You may own a smart contract as an individual or as a business but given the fungibility of code, you won’t last long if you charge more than near zero prices for your “services”. Most likely these contracts will be made available absolutely free and you’d pay ADA to transact.

In transforming the financial system into a blockchain-based infrastructure we have to also solve the problem of creditworthiness, which itself hinges on the issue of digital identity. In short, credit terms would have to be risk dependent, which would require the risk assessment of Alice and Bob by looking at a host of their data.

The beauty of it is that your credit info could be encrypted and would belong only to you.

Exciting times ahead!


Absolutely agree! I think the blockchain technology is so cost efficient that nation states can no longer ignore it. Smaller or poorer states are most to gain from it as they are nimble enough to change or need it the most. The more established countries like the US face an uphill battle against the incumbents who will argue against any change. Blockchain will challenge their standing in the system or make them redundant completely. But like the argument of wired telegram over cell-towers. The latter is far superior no matter how much you invested in the old tech.

My sense is that we will see a tide of change engulfing nation states, starting with smaller ones (e.g. UAE’s a state-wide crypto/blockchain platform) and transitioning into big players. The costs are simply too compelling to ignore. US is almost guaranteed to have its own blockchain platform available to its citizens/residents, where your bank is a node on a Fed-run blockchain network and your social security is a unique cryptographic string that establishes your identity in the system. It’s coming sooner than we all think. In this system the incumbents will have a newly established “pecking order” where banks will become utilities and consumers could actually own their financial information (no more equifax hacks).

Cardano has a huge battle to fight as it effectively competes with nation states. One huge advantage of Cardano is its independence from a state. Its neutrality has a big selling point. So if you want your wealth be immune to a state-initiated forfeiture, you will store it on an independent blockchain. Cardano can also be a primary choice for countries that have no capacity to build their own financial infrastructure. This is what Charles has realized early on and wants to pursue.

The trouble is that countries have interdependent financial relationships and if Cardano wants to have a good chance in adoption, it has to work with established international entities (World Bank, IMF, etc.) to tailor its network to the needs of their member countries. These entities have an enormous power over individual countries. Every government will weigh the pros of adopting an independent blockchain-based financial infrastructure against the implications it will have on its relations with these entities. So it is wise to have them on your side. From what I have seen both IMF and World Bank are open to blockchain adoption.

You raise a good question on who should initiate an effort. My answer would be Cardano, most probably represented by the foundation. We have to realized that blockchain is a new and evolving technology that requires constant education of its future users about its potential. The platform that handles that most effectively (currently ETH has a head-start) is likely to win the day.

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I really hope they start doing something soon. It is a race and we need to be on top of this by hiring the best and brightest to further Cardano’s cause.

This is quite a plausible scenario. If you want to co-exist in a world with open blockchains, you would have to coordinate your efforts, including the entities that represent open crypto-platforms. If they play it right, open crypto-platforms can become a powerful voice in shaping global economic/trade affairs. Their Hodlers will reap huge benefits from it. This is one aspect of crypto that is extremely powerful. it is a catalyst for unprecedented growth as it unlocks human potential in unprecedented ways.

Thank you for raising a very interesting topic. Cardano seems to attract a really top-notch group of people and I am glad you are now part of the community!


I’ve really enjoyed reading this thread - some excellent discussion and points raised. I especially agree with @ShaWazza about the need for adoption and indeed awareness of what is possible.

@ZCryt0Knight also nails it:

In transforming the financial system into a blockchain-based infrastructure we have to also solve the problem of creditworthiness, which itself hinges on the issue of digital identity._

I’ve got a personal thought around financial evolution and that is already happening… and that, certainly in the UK, is the way people are being made more aware of spending, lending and saving via mobile apps. Using data and UX makes a huge difference for a lot of people.

Mobile first is the way forward and even more so with the explosion of mobile usage in countries who need this revolution the most.


It is alarming how many people miss this part of the puzzle… Infrastructure is boring and too abstract for many to understand. User experience and actual use cases will drive adoption. The community has a long way to go to make this tech ‘digestible’ for masses. I understand that will come when Goguen is rolled out, but it always helps to explore what could potentially be built on Cardano.

Like we have 100’s of delegation pool websites for Cardano even though not everything is known about Shelley.


Pardon my ignorance, but I’m just curious: how would lending in crypto even work? Unlike FIAT, we would not be able to print more crypto or create it out of thin air.

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Thank you @ShaWazza. Definitely lots to think about!

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Well let’s talk about real world assets when we discuss how lending in crypto could work, I have been involved in a crypto project that will digitize the equity in someones home, giving them the freedom to use their equity when they please without having to take out a mortgage or a loan of any type and increase their monthly debt, so if someone with a large amount of equity was able to digitize what they own and loan out a digital asset that represents real property then there is no printing of crypto it is basically just issuing a contract that represents something, this was part of the original ideas of crypto tokens, they were not meant to be what so many ICO’s have become which are basically for speculators that think they will gain a profit when their coin gains value based on catchy idea’s of why it should.
If there is a reason for a contract to have real value then it surely could be loaned out to another person with fee’s and what not, in the Cardano ecosystem the little bit that I know there will be a way to develop creditworthiness in the future when user specific accounts can be generated, meaning that you and I will be able to show that our account that is requesting a loan has built up a reputation that can be trusted, someone will be able to tie real property to a contract that a person could use as collateral for a crypto loan, obviously it is not truly something being practiced today but that is most likely caused by the void caused by crypto being a tech instrument and not a real world tool right now, it is just emerging now from being a tech item to being a real world tool.
So if I was sitting on a million dollar property in my locale (U.S.) and I had 50% equity in my property I would seriously think of increasing my wealth and taking the risk to open up a crypto loan platform by charging a fee and legally binding someone in the U.S. to pay back what I loan them, it can be done and there would be no “printing of crypto”.
Crypto is not just a monetary object anymore, the smart contracts are not exactly intended to be a cryptocurrency, the design of a smart contract should tie in real world objectives and even real world tangible assets, it is no wonder that with all the printing that has been done has caused for the crypto space to be stalled, the space could have been more progressed than it is if the ICO’c had not splashed a dark stain on it.


I take one every time I find an alt-coin that seems interesting.

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Draw it out! I would like to see what you come up with.

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Seriously ? Everything is recorded on the blockchain so it’s all there for public viewing. A simple algorithm will continue to determine credit worthiness.
The entire American economy is based on credit. Who is to say banks won’t buy up much of available crypto and issue loans as they do now ?

It’s just fractional reserve banking. Banks loan money but only have a small percentage of all customers money at any given time. Theoretically, they could do the same with crypto.

Isn’t that the same as taking out a home equity loan ( 2nd mortgage ) ?

A 2nd mortgage would have interest associated with a loan.

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Yes, but no one knows who is behind addresses, do they? The fact that transactions are public means nothing as addresses change every time you transact. Now, you as the owner of your data, see the whole picture and can make that data available to creditors with a flick of a switch.

Algorithms could run locally on your machine and spit out the score to interested parties upon your consent.

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I bet credit companies would. Just as there are companies that track and reveal BTC transactions ( the ones that revealed Russia using crypto to hack the Dems ) they could do the same with Ada.