True, it really seems to have touched on the forefront of how things get their value.. so peer-to-peer credit it is? Are we oversimplifying this? lol
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True, it really seems to have touched on the forefront of how things get their value.. so peer-to-peer credit it is? Are we oversimplifying this? lol
I do not feel it is going to be quite peer-to-peer. There are too many ups and downs in people's lives to deal with. This would cause ups and downs in income from lending.
If you are a land lord, you often find that people flake in December. So, while they are trying to make a happy christmas, you, as a land lord, have your leanest month.
Also, there is problems in lending to your friends.
So, I see a middle-man system. Something that collects all the incomes and apportions them all by whatever digital contract is chosen when lending. I guess this would be like buying insurance for your loans.
Thats a great explanation, thanks a lot @builderofcastles
Would the collateral for these block-chain loans be tied directly to block-chain assets? How could such a system hold the purchaser of these loan products accountable? I wouldn't want to be the insurer's insurer, oy vey.
The thing is its not really insurance. It would be spreading out the losses / gains.
Some of the schemes I have seen so far, is that you start rating the borrowers. And based on that rating, you choose the interest rate you will charge them. And that interest rate gains should be larger than the defaults. As a single person, most cannot accept 100% loss. But, collectively, if there is 3% loss on 5% loans, then you are making money.
There will be some loans that will put some collateral in escrow. And there will be some that just rely on people's good word. And, with the block chain, you can very accurately tell what a particular address' reliability is.