Quote from: PeterGuinness on July 15, 2015, 12:59:01 PM

Quote from: neoneros on July 15, 2015, 11:39:20 AM

But I would still have a debt, for infinity. I do not want to be cleaning windows/rely on a loan my entire life. Paying a loan with another one only makes the other loan a bigger one, original plus interest. ....

Acutally, No. A very common reason (if not the most common) for refinancing a loan is so that you pay LESS overall. Here's an example: Imagine that you have clocked up a $10,000 unsecured debt on a credit card at 15%pa. Instead of paying this high rate, you go to a bank and take out a $10,000 loan (secured against an asset of yours) at 7% and pay off the credit card. You have now made the interest payments smaller and thus will pay less. Another example is when a central bank lowers its interest rate which causes the other banks to offer lower rate loans-- people often refinance their existing loans to take advantage of the new lower rates.

Quote from: neoneros on July 15, 2015, 11:39:20 AM

If all BTC is given as a loan, with a 5% interest, you have to pay back 105% of the available bitcoin, how would you go about that?

I've already demonstrated in my first post how it is possible to payback interest even though the total amount due is greater than 100% of the hard currency supply. It's possible because we can arrange loans such that interest due by different parties will cancel each other. I gave the simplest example with just two protagonists, but in the real world it involves more actors, eg: the banks. In the real world it is the banks which handle the cancelling of interest. This results from the fact that the banks continuously borrow off each other to balance their books and a bank only pays back what is due after the cancellation of interest owed to each other.

Quote from: neoneros on July 15, 2015, 11:39:20 AM

And interest on loans work on a per month basis, so 5% per month.. that adds up each month, let's say that 50% of all BTC is in a loan, for 5% after a whole year it will be 62% on interest alone to be paid. No matter how simple you example may be, you cannot expect this to work if the numbers do not work out.

What does this particular example prove about anything in general? If you're stupid enough to take out a long at 5% per month and have no hope of paying it back then you deserve to go bankrupt! I've not said that ALL loans can be paid back, I've only said that loans taken out wisely can be paid back.

For your general enlightenment: If you can earn more profit than what you will pay in interest from money supplied by a loan then the loan is a wise move (of course you have to also balance it against the risk involved in deriving your profit-- equations that compute this are very well known). If you will not earn more profit than what you will pay in interest than the loan is a very bad idea! It's that simple! Owing debt baring interest can make you money in the right circumstances.

So short answer is that yes, if someone loaned out 100% of bitcoin, they would not be able to pay back more bitcoin than the 100%. But if they used that bitcoin to generate profits, they could pay back the interest in another currency, or with goods and services. In the case that everything was valued in bitcoin, the value of bitcoin would simply increase to reflect the increased amount of goods and services, and when they paid the 100% of bitcoin back it would be worth more than when the bitcoin was originally loaned out.