Comment by DennisP | Hacker News Reader

Comment by DennisP | Hacker News Reader

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In theory, they can be done just fine without blockchains, but in practice, it doesn't always work out that well, especially when the borrowers don't have much money. Matt Taibbi's recent book The Divide described all sorts of abuses, in which loans are sold and resold, the loans' owners swear they have records they don't actually have, courts trust them because they don't have the resources to check, and borrowers lose to default judgements because they weren't properly served, and in some cases didn't owe the money in the first place or had already paid it off.

Whereas if the loan and payment data were on a public blockchain (with personal details hashed), records wouldn't get lost and courts could easily verify them.

You could argue that we should reform our centralized systems, but that's hard to actually do, which is sorta the point of removing the need to trust them in the first place.

http://www.blunderingcode.com/ethereum-credit-cards/

This is an interesting point, until now I thought blockchains were only useful for decentralisers, which in turn were only useful for people who wanted something like censorship resistance.

But here is a different use-case -- keep records well. Traditional systems are actually pretty bad because of the incentives. My bank statements for example are often very confusing, and online data only goes back 18 months, because the bank has little incentive to do better.

And that is in a relatively benign market. Title deeds, and the kind of loan documentation you are talking about create positive incentives for abuse.

While some important records are public, many are not. It isn't obvious that all debtors want the details of their debt made world-readable, for instance.

you can use zeroknowledge proofs for things you don't want to reveal. it's called zk-snarks

Right, which is why in the article I linked, I describe a system that stores only the hash of the debtor's personal data on chain. A lender with the preimage can still use that to prove its case.

For stronger privacy we'd need ring signatures or zksnarks, so a person can't be identified by the flow of payments, but those technologies exist on various blockchains already.

Yes but I can also imagine all kinds of problems coming from keeping private keys. Stolen, lost, hacked (see Estonian id card)(well all right, secp256k1 is much less susceptible to it than RSA).

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