Is Bitcoin the future of loans or just pocket change charity?

[Oasisman]

So, is BTC really the ideal tool to replace banks in typical loans and mortgages, or is it only designed for big players and small-scale charity "loans" like we usually see in this forum?

Why would we always see or hear the word "replace" between Bitcoin and Banks? I mean, not in this current lifetime, no, that won't going to happen, simply because the majority relies heavily on the banking system. If you fully understand how Bitcoin works, you won't question replacing banks in issuing loans and mortgages. Nobody's in control of Bitcoin.
This is why Bitcoin, Banks, and other forms of currencies will continue to co-exist. There are no replacements that would happen, as this will give the consumers and businesses a lot of payment options.

[Moreno233]

From what I’ve seen, BTC works better as collateral than as a lending currency. I’ve used BTC-backed loans before — useful if you don’t want to sell your stack. But yeah, most “charity” stuff is just people tipping sats for fun.

Bitcoin is good to be used for collateral but that is not all it is good for. Taking loans in Bitcoin can also be great just that people are skeptical about this due to the volatility of Bitcoin which can make either of the party be at a loss at the point of settlement. But borrowing in Bitcoin also helps create more value for Bitcoin as it makes it used for what it was created for which is as a currency. Hence both for loans and other utilities, Bitcoin serve them all perfectly well.

[Tinubu]

Really for me i don't think Bitcoin's neither..i feel it's something between..i think Bitcoin isn't removing old loans🤔. It's helping people borrow money using Bitcoin, without selling it...yeah... This fixes a problem tho...using money without losing Bitcoin.
That way I think the loans can be cheaper and it can be something anyone can use...

[Abiky]

From what I’ve seen, BTC works better as collateral than as a lending currency. I’ve used BTC-backed loans before — useful if you don’t want to sell your stack. But yeah, most “charity” stuff is just people tipping sats for fun.

That's due to Bitcoin's "store of value" properties. It's hard to lend it as a currency when market prices fluctuate at times (otherwise known as volatility). Not to mention, the core Blockchain network itself has very limited transaction capacity (hence the high fees when activity rises all of a sudden). Its use as "digital cash" are diminishing each day.

Fortunately, L2 networks and sidechains bring hope to Bitcoin by making it ready for large-scale mainstream demand. "De-Fi" on Bitcoin will allow you to borrow/lend BTC quickly and easily. It's the future of "decentralized banking" as we know it. With this, who needs banks? I hope that as Bitcoin gets more popular, governments will adopt it as the "Global Currency" and ditch Fiat for good. At least, that's the dream.

[Tinubu]

That's due to Bitcoin's "store of value" properties. It's hard to lend it as a currency when market prices fluctuate at times (otherwise known as volatility). Not to mention, the core Blockchain network itself has very limited transaction capacity (hence the high fees when activity rises all of a sudden). Its use as "digital cash" are diminishing each day.

Fortunately, L2 networks and sidechains bring hope to Bitcoin by making it ready for large-scale mainstream demand. "De-Fi" on Bitcoin will allow you to borrow/lend BTC quickly and easily. It's the future of "decentralized banking" as we know it. With this, who needs banks? I hope that as Bitcoin gets more popular, governments will adopt it as the "Global Currency" and ditch Fiat for good. At least, that's the dream.

You're absolutely correct....Following what you said about volatility...i think Bitcoin functions more like digital gold than a transactional currency due to its fixed supply of 21 million coins.

Also Solutions like the Lightning Network are already enabling near-instant, low-cost Bitcoin transactions that the base layer can't handle," follows the discussion of L2 networks....Prior to the conclusion regarding governments..Lets look at Regulatory uncertainty, scalability issues that still need to be resolved, and the fact that governments may prefer central bank digital currencies (CBDCs) they can control are all obstacles that this vision must overcome..

Whether Bitcoin becomes a global reserve currency or remains primarily a store of value, its L2 ecosystem is clearly expanding its utility beyond just 'hodling.'" is a more measured alternative conclusion.

[Satofan44]

There are crypto lending already from CeFi to DeFi and what I noticed is that they set a max LTV and liquidate your asset. Since they got your asset as a collateral they can do just that.

It's different when your collateral is property, or anything that's pretty illiquid. But when it's liquid asset like stocks, etc. I guess they could do that. Still pretty rare sight to see though.

It is not that different if you understand that this is how things work. Your property will be taken away from you, when the bank sells it does not matter to you -- it is no longer yours. The same thing in theory could be happening on a CEX, what you see as "liquidation" could them simply be setting your balance to $0. They don't have to liquidate anything if they want to take that risk, but why would they? In the case of DeFi it makes no sense for it to not be automatic, therefore these things work almost identically given that the contexts are different -- they just translated the mechanism into one that is appropriate to the crypto.

Most just require you to deposit other crypto and allow you to borrow other crypto with max LTV.

Most are shit. You get a bad LTV, you get a bad and variable interest rate, and if the platform goes bust due to a hack or mismanagement you get $0. The risk is extremely high, the benefits are not that worth it. They are primarily accessibility and usability, and some anonymity for DeFi. You can lend and borrow right now, no paperwork, no restrictions that relate to you as a person. However, the risk is extreme -- despite the claims to the contrary by many crypto addicts.

I don't think Bitcoin in 50-100 years or in the future will be the future of loans or charity change.

For me, those who are stupid in their view think that Bitcoin in the future will become a field for loans and small change charity.

At no point do you explain why, you just merely state it. In reality, Bitcoin is already used in the process of lending. Both by private people and by large entities, both in decentralized and centralized structures. Your view is that this will simply go away, instead of becoming more competitive and better? Why?

Really for me i don't think Bitcoin's neither..i feel it's something between..i think Bitcoin isn't removing old loans🤔. It's helping people borrow money using Bitcoin, without selling it...yeah... This fixes a problem tho...using money without losing Bitcoin.
That way I think the loans can be cheaper and it can be something anyone can use...

If you made a large return of course it helped you repay an old debt. Plenty of people paid back their debts this way, there were stories every now and then. The difference is that Bitcoin itself does not enable debt repayment, you need to make and realize gains to be able to do it. Even if you do it in an indirect way, by supplying BTC to borrow USD to repay the debt. Without gains, this is either not possible or risky.

[Antona]

Designed? No evolved into? possibly right now, BTC is better as collateral than as a currency for repayment the "loans" here are often informal trust-based things or tiny amounts more like proving a concept. For it to replace banks, you'd need deep liquid markets and stable prices, which we don't have it's a future potential, not a current reality