I've only ever seen bad-faith arguments about oracles. They set up the goal posts as if the goal was "You can trust absolutely nothing. You are born and will die trapped in The Matrix. You are in Descartes's proposal where everything you can possibly observe is a deception from a malicious demon. How do you set up a home-loan contract?" And then declare themselves clever by pointing out that any input to the system requires trusting that input.
That's not the goal of trustless contracts.
The goal is that some resident of an oppressive nation can get a loan without being denied all access to finance at the whim of government-controlled bank. Can't trust your region's banks? Crypto is a wild land. But, it's a better alternative for billions of people.
It's easy to say that crypto is useless when you are in the top 2% of global wealth, a well-regulated banking system is scrambling to serve you, your government doesn't frequently confiscate your assets or inflate your hard-earned money to worthlessness.
And, it's easy to complain that crypto didn't magically spring from bottom-up grass-roots overnight, solving all financial problems by the poor for the poor in a single step before enriching a bunch of already-rich tech bros.
Creating a new global financial system from scratch is a lot of work. It requires a lot of investment, a lot of losses, a lot of hard-earned lessons. Blockchains have been demonstrating utility in that endeavor for 15 years. Growing from nothing to being valued higher than the global market of silver in that time.
Maybe "global financial system" is a small number of uses. But, it's a small number of rather large, rather important uses.
But is it even possible to achieve that goal? It seems like the only kind of loans supported by cryptocurrency use cryptocurrency as collateral - that is, they’re effectively margin loans used to increase leverage, or a way to cash out while avoiding taxes. That seems rather limiting. Are there other ways to implement loans?
I’m skeptical because repossessing real-world collateral is a physical process, not something just done on in software.
You are correct. There are no crypto police to confiscate your home as collateral. So, you have to do the whole deal in crypto. Without oracles, your only foundational tools are: wallets, time and sign-offs as inputs to smart contracts. Everything is built up from there.
Right now you can get a DeFi loan at places like changenow.io that don't even require you to sign in. You put up crypto collateral. When you pay back the loan with accumulated interest you get your collateral back. If your collateral drops in value to 50% of the loan amount, you lose it and are released from the loan.
You could pay for home that way. But, I wouldn't recommend it. Maybe there are more suitable options out there I'm unaware of. It's all definitely a work in progress :P
What work is in progress on making loans less limited?
I don't know off-hand. I do know that millions of people distributed around the world are motivated to the tune of trillions of dollars to figure out how to make this stuff work better in more situations.
Good that you admit you don't know. However, "motivated" is something someone could say about anybody's relationship to any important problem. There's a sense in which I'm motivated to invent a room temperature superconductor, but I'm not working on it and have no clue how to do it.
I had the same question. Typically, loans are inherently trustful, because the bank has to trust to get the money back at some point. And if the debtor does not want to pay, there is (hopefully) a working justice system to make them pay, which is also something the bank trusts in.
Right now you can get a DeFi loan at places like changenow.io that don't even require you to sign in. You put up crypto collateral. When you pay back the loan with accumulated interest you get your collateral back. If your collateral drops in value to 50% of the loan amount, you lose it and are released from the loan.
This all happens via distributed execution of a smart contract. No banks or governments required.
If you're getting a home loan in an oppressive nation that doesn't want you to for some reason, they can seemingly stop you from owning or occupying a house even if you managed to get a loan in a cryptocurrency rather than the nation's officially recognized currency. Putting aside that the home's current owner, which may be a bank, would need to accept that cryptocurrency in the first place.
Gah. I shouldn't have mentioned houses... Now everyone is drilling down into houses. Which is an obviously difficult use case.
I can't solve all of the worlds problems, for all possible situations, today, in pure crypto. It's new financial system that's just barely getting started.
The easiest solution would be to do a person-to-person trade of a house that's not owned by a bank. If it is owned by a bank, then the bank probably going to expect local currency. So, the buyer or seller will need to find a means to convert crypto to local money. Though with crypto ETFs taking off, banks are getting less picky by the day. As for "What if your govt just takes your home away?", crypto doesn't solve oppression directly in one step. It gives people a lot more freedom from government oppression. Ex: It gives them options to leave the country without worrying about how the govt is going confiscate their local currency in the process --because their wealth is not stored in local currency.
"You are in Kant's proposal where everything you can possibly observe is a deception from a malicious demon."
It was Descartes who made this scenario well known long before Kant.
Thanks. I confused the two. It's been a long time since "History of Philosophy" back in uni :P