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


#21

Thank you @ShaWazza. Definitely lots to think about!


#22

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.


#23

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


#24

Wow. The resolution of this picture just jumped a megapixel (or two) with that post. Thanks @Haskell-plus. I found myself reaching for a whiteboard marker and piece of A3 paper, and wanting to draw. Very valuable insight. It would be awesome if at some point a draft high level schematic of the desired future state results from the contributions to this thread [edited to include two emoticons] :slight_smile: :slight_smile:


#25

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


#26

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 ?


#27

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.


#28

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


#29

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


#30

@Haskell-plus I have been putting some thought to where I would start (in a ‘pen to paper’ sense). I will do my best to describe where my head is currently (and will likely confuse even myself in the process lol). Apologies in advance for another mini-epic (brain dump) of a post (this one will surely win the record for ‘edits’ :wink: (sip).

My current thinking is: This thread has great content, covering a few different themes are varying levels of granularity. Example: The future of lending; technology; macroeconomic considerations and adoption. That is very exciting in itself.

We have tech information available at the ‘roadmap’ level. Adoption commentary is at the ‘compass’ level. ‘Tech’ and ‘macroeconomic considerations’ are themes at two very different levels of granularity. ‘Adoption’ might be be a suitable bridge between the two - and for me is currently the weakest link (visually at least).

With this in mind, I realised I don’t yet have enough information/context to tackle the ‘lending’ space specifically. It relies on an intimate understanding of the broader ecosystem and a sense of how it links to macroeconomic considerations. Ironically, one of my first thoughts (similar to the title of this thread) was ‘what does a transaction look like in the new ecosystem?!’. This thought was motivated as much by the ‘tech’ development as it was the ‘nomenclature’ used within the Cardano ecosystem (I was starting to worry that I would need to learn an entirely new language in order to successfully purchase my coffee).

Where is my thinking currently:

I found myself visually dividing a A3 piece of paper into thirds… On the left hand side, I would like to see a series of bubbles containing statements to describe specific problems we are trying to solve and/or opportunities we are trying to leverage (use cases possibly?). On the right hand side, I would like to see a series of bubbles which describe the desired future state (outcomes we are aiming for). Ideally, I would like the bubbles on the right hand side of the page to lead to some sort of ‘focusing statement’ (which our compass is pointing towards): an overarching statement which reminds us ‘why we are doing this!’… A side thought: Ideally, this focusing statement might rescue me on ‘FUD’ days also :wink:

The middle third of the page is simply titled ‘magic happens’… That middle third of the page (for me) needs to demonstrate how we move from the left to the right (what is required). I anticipate lots of themes in that space: People, governments, regulation, technology, communications, change management, education, integration, policy - to name a few. Notice ‘tech’ is one of the considerations.

Going back to the original intent of the post, I have found myself asking: Is the discussion regarding the future of lending currently being ‘driven’ by the capabilities of this new ‘technology’, or is it being driven by the bubbles on the left hand side of the A3 page which current read [insert content here] for the moment?.

In the meantime, I will continue to read through responses and do lots more reading :blush:(sip). With the help/contributions of the community, I am already starting to understand this space more and more (beyond the exciting technological leap).

My goal (eventually) is to be able to describe this revolution to people at parties with enough context and confidence that I pique peoples interest so we can move them away from statements like ‘if you are investing in that Bitcoin stuff, I have a spare room available in my house for when you are homeless…’. This somewhat nerdy guy at parties might become the popular one some day soon lol.


#31

My original response was going to read ‘the dog ate my homework’ lol [edited to include 3 emoticons - it is Friday here] :slight_smile: :slight_smile: :slight_smile: (sip sip hic)


#32

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.


#33

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.


#34

I just read the ‘open letter’ to the community. Wow. Here’s hoping that the path forward includes a stronger focus on ‘community, education and adoption’ and therefore much of what we are trying to understand (as above) feel less like an extraction exercise and more like a journey :slight_smile: I am feeling more positive.