21 sats \ 1 reply \ @Brunswick 16 Jun \ parent \ on: I'm Max Webster, founder of Hivemind Ventures, a Lightning Network seed fund - AMA! bitcoin
Funny you replied now. I just got my SN account logged in again.
I think you misunderstood my question. The products you describe are 100% backed token assets. What I'm asking about is collateralized debt, as in debt that is collateralized with the very thing being purchased like a house or a car.
I agree that things like ecash/cashu/fedimints may draw parallels, but these are not 'free banking' per-se.
By definition, free-banking is an independent business engaging in fractional reserve lending. They place the collateral on their books as an asset the same as any bitcoin their ecash may represent. So long as nobody drains their accounts at once, they are solvent.
When demand for bitcoin begins to exceed their bitcoin reserves, they either need to take a loan from another bank, get their customers to make more bitcoin deposits (remember certificates of deposit?), or they need to force their customers to liquidate (sell) their property (car or house) and pay their loan immediately in actual bitcoin.
What thinks ye? Does this lead us back to where we are today with un-backed fiat?
Perfect timing ;)
Tbc, I actually do think the mints will lead us to free banking. If everyone in the world becomes a mint and can issue whatever token they want, then there will be a ton of experimentation with reserve ratios. I do think BTC will be the underlying collateral for most of these mints though. Eg imagine I run a small mint with 1 BTC collateral - I could issue 1BTC worth of ecash tokens, 70k USD worth of ecash tokens, or $700k USD worth of ecash tokens. All will be backed by just my 1 BTC though. I think reputation for these mints will develop over time and collateral ratio might be just one factor. As you mention, the mint’s size and/or ability to secure a line of credit in times of distress might also mater a lot. I’d be much more trusting of Tether’s mint even if the ratio isn’t 100% because of their size/ability to access capital. Perhaps other factors will emerge that are hard to predict as well!
Will this lead us back to the same fiat system in the long run? I don’t know. I’d like to think Bitcoin will make it much better. Interoperability with the Lightning Networks means that these USD tokens might just be used for payments and rarely held for more than a few minutes. Better proof of reserves, ability to switch mints, and nostr reputation should also all be major factors in favor of the average user. But who knows? Maybe the future looks like more of the past?
On the question of lending for someone buying a house, I think housing will still have some value (though much less than today) and will still be collateral for loans. BTC holders will likely use their BTC as a first option though because the markets will be so much more liquid at that point I think.
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