
Bitcoin-collateralized loans coming to Coinbase - abi
https://www.coinbase.com/borrow
======
lz400
Seeing bitcoin reinvent the banking system they set themselves to destroy has
a very Animal Farm-y feeling to it.

~~~
Traster
Silicon Valley very often falls into this:

Step 1: Claim you're disrupting an existing industry (or creating a new
industry that didn't previously exist because it was unviable - eg, electric
scooters).

Step 2: Claim that this is going to make you far more profitable than that
industry has traditionally been. Get Angel Investment.

Step 3: Raise money at a ridiculous valuation due to step 2. Series A.

Step 4: Use that money to undercut competitors in the existing market and gain
marketshare whilst taking huge losses. Series B, C.

Step 5: Realise that you've just built another company that's exactly the same
as all the existing companies in that industry with no real way of making a
profit. IPO.

Step 6: Having thrown so much money at the problem that you've now got
enormous market share (and driven the traditional companies out of business
because they can't operate at a loss), pivot to using your monopolistic
position to drive down costs and inflate prices.

Step 7: Slowly melt-down as investors realise Step 2 was all bullshit and
regulators start catching up with step 6.

~~~
kanox
Phone-based ride hailing and scooter sharing did not exist before. These
services are significantly better than previous alternatives.

Legacy taxi services in particular are extremely shitty and widely hated
because of scammers.

~~~
drdeca
Has anyone here tried libretaxi? (An open-source phone-based ride hailing
service, where payments are made directly to the driver) It sounds appealing
to me, but I haven’t tried it, and I imagine that it could be lacking in the
network effect department. Also, I am not sure if it has a reputation system
like Uber and Lyft do.

Edit: Suddenly unsure whether my comment here is sufficiently on-
topic/relevant to fit with the community norms here. My apologies if it is
not.

~~~
Alekhine
Crap name as well. It's a shame that open source projects can't market their
ideas to save their lives.

~~~
tanatocenose
You think it is worse based on what quality than the names uber or lyft? Uber
has to be by every known metric one of the worst names for anything ever.

~~~
Alekhine
By what specific metrics is Uber a bad name? Uber is a short, catchy, two-
syllable name. Libretaxi is a mouthful. The only good thing about it is that
it's descriptive. It doesn't really stick in your mind like Uber does, or
their branding.

Disclaimer: I think marketing is a parasitic industry that gets way too much
money for the value they provide. But marketing is important because it works.

------
spir
ETH-collateralized loans are permissionlessly accessible on the Ethereum
blockchain. Right now it's a 0% APR.

[https://oasis.app/borrow](https://oasis.app/borrow)

You can also get a Bitcoin-collateralized loan using the same service. A
Bitcoin loan on the Ethereum blockchain. But, it's less secure because the
WBTC "Wrapped Bitcoin" token on Ethereum relies on a network of custodians who
redeem these tokens for actual BTC.

~~~
imtringued
Why would anyone loan out money at 0% APR? That only makes sense if you value
the ETH far more than the money. There is no way to profit from borrowers who
pay the loan back. The only way you could possibly turn a profit is by
speculating that ETH is rising in price and getting ETH as collateral when a
borrower defaults but if that's your strategy why not buy ETH directly?

~~~
xur17
DAI, the stablecoin produced when you loan out money is in very high demand,
so Makerdao is trying to encourage more people to create it.

There's a lot of demand for DAI because several protocols that use it are
giving away tokens for using their platforms (governance tokens that have a
tradable value).

------
marcell
Aside from the brand name of Coinbase, this seems worse than similar offering
from Nexo (nexo.io):

\- Coinbase APR is 8%, Nexo is 5.9%

\- Coinbase max loan is $20k, Nexo is $2 million

I can see the appeal of borrowing against your bitcoin or other
cryptocurrency, but I'm not sure if there's much value in borrowing $20k. If
you're in a position to hold $60k bitcoin on Coinbase, do you really have a
need for a 1 year bridge loan of $20k? At a rate only slightly better than a
credit card?

~~~
vmception
> If you're in a position to hold $60k bitcoin on Coinbase, do you really have
> a need for a 1 year bridge loan of $20k? At a rate only slightly better than
> a credit card?

If the $60k of bitcoin on Coinbase was bought with a loan from Nexo because
you have $100k of bitcoin on Nexo, then yes lol.

Wrap that bitcoin in RenVM to use it on the Ethereum blockchain, maybe some
renBTC liquidity pool is earning you more, or sell it on Mooniswap for
something else that is earning more. YAM/yCRV staking anyone?

~~~
grenoire
Daily reminder that leveraged investment strategies can and will blow up in
your face...

~~~
vmception
daily reminder that non-accredited investors should be able to blow up in
private equity too, because they can already blow up in worse ways so it
doesn't make sense to shut them out of everything that has a chance of being
professionally run

------
raesene9
I wonder how they're hedging the risk of Tether/Bitfinex losing their case(s)
against the NYAG and others and the likely resultant drop in value of BTC.

~~~
martinko
Even if they do lose, it will not have a material effect on the price of btc
(apart from a potential short-term wick)

~~~
raesene9
That's an interesting view, what makes you say that? Tether's market cap is
about $10b now and it's daily transaction volume regularly exceeds that of
BTC.

It would seem likely that if that volume left the market it would have a
significant impact on the cost of other coins, especially if they are not 1:1
backed.

~~~
martinko
Tether is just a vehicle for transferring offshore USD between third parties.
It does not underpin the value of bitcoin, it is more of a parallel system to
bitcoin for transferring USD.

~~~
raesene9
you're assuming that Tether is not just printing Tether's out of nothing of
course :)

As they have never had an audit and have already admitted to not being 1:1
backed, that's not necessarily an assumption that'll play out well.

~~~
martinko
Even if they are (having spoken to the cfo and ceo personally, i dont hink
they are), this affects tether holders, not btc holders.

~~~
raesene9
err it's been publicly admitted by Tether in documentation submitted to the NY
courts hearing their case against the NYAG that they're not 1:1 backed.

From [https://bitcoinmagazine.com/articles/holders-are-not-at-
risk...](https://bitcoinmagazine.com/articles/holders-are-not-at-risk-
bitfinex-lawyer-responds-to-ny-attorney-general)

"Hoegner admits that Tether is operating under a roughly 74 percent reserve"

~~~
martinko
Thats two different things. They are backed by loans to bitfinex, like your
money in the bank is backed by mortgages etc. I am not defending this, I think
it is a major fuck up (one of many by bitfinex), but again, I do not think
they are insolvent and that they will not be able to cover tether liabilities.

------
zalkota
Ethereum decentralized finance is not “copying” the current financial
institutions. If you think that, then you are misinformed.

------
ur-whale
This is a very interesting development, especially given Coinbase's reach and
visibility.

The unfortunate effect might be that people who have been so far stubbornly
HODLing their BTC themselves (self-custody) will be tempted to surrender their
coins to the exchange in exchange of immediate liquidity thereby increasing
the concentration of _actual_ custody of BTC by the exchanges ... the very
thing Bitcoin was designed to avoid.

The temptation here is (at least on paper): you get to "keep" your Bitcoin
while enjoying the benefit of them at the same time (betting. of course, that
BTC will keep going up over time).

Here's to hoping hodlers will resist the temptation.

------
jtchang
Sounds like a terrible idea given how much bitcoin's value can fluctuate. And
they may call the loan. This is if you are really bullish on bitcoin.

~~~
oleganza
They loan up to 30% of the BTC value. So as long as it does not crash more
than 70%, everything's fine [1].

[1] Which happened every time after the peak of a big bitcoin run-up ;-)

~~~
hydraxis
And then there will be margin calls and forced sales, which in case of a crash
will accentuate the drop considerably...

~~~
rkagerer
In the scenario where the market is crashing faster than they can keep up
with, do you think they'll put their own sell orders ahead of those of other
customers? Could they get in trouble for that?

------
RichardHeart
Cryptocurrency was invented to remove middlemen and counterparty risk.
Centralized finance (lending/borrowing) is the opposite of what Bitcoin was
invented for. Decentralized finance extends Bitcoins vision beyond the small
subset of finance that is currency. One such open source project is uniswap.
Disclaimer, I founded a cryptocurrency.

------
solotronics
A lot of people are missing the fact that loans are not taxed in the US.

------
apta
Lending money with interest has been a known evil for thousands of years now,
Judaism, Christianity, and Islam all prohibit it. Yet, we do not learn from
the past.

------
mrkramer
Coinbase is supported by Goldman Sachs and JP Morgan[1][2] no wonder they told
them to start giving loans and turned them into a bank. Satoshi wouldn't like
this; you can make smart contracts directly on the blockchain and give loans
if you want.

[1][https://web.archive.org/web/20130109041534/https://blog.coin...](https://web.archive.org/web/20130109041534/https://blog.coinbase.com/post/39672092708/fred-
ehrsam-joins-coinbase)

[2][https://www.wsj.com/articles/jpmorgan-extends-banking-
servic...](https://www.wsj.com/articles/jpmorgan-extends-banking-services-to-
bitcoin-exchanges-11589281201?redirect=amp)

