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Comment by skybrian | Hacker News Reader

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.

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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.

This all happens via distributed execution of a smart contract. No banks or governments required.

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