Quote from: hugeblack on May 20, 2021, 11:01:28 AM

Quote from: Rival on May 14, 2021, 02:57:11 PM

Joe wants to buy a new car. He has bitcoin, but of course, he does not want to give up his $50,000 bitcoins expecting them to be worth $100,000 next year. Spending deflationary currency comes with it's own expensive repercussions, as anyone who as ever spent cryptocurrencies can attest. So Joe pawns (gets a loan on) some bitcoins. The bitcoins are locked into a smart contract. The bank advances Joe $50,000 on two $50,000 bitcoins. Joe pays back $1000 a month worth of stablecoins, and when he pays back the $50,000 his bitcoins come back to him, probably worth $250,000 by then. If he fails to make a payment, the bank gets his coins. There is a great incentive for Joe to pay, and essentially no risk to the bank. The bank can charge some nominal interest for an easy profit that in the end costs them essentially nothing.

Banks will not enter these deals, so what will happen if I locked my currencies in the bank and the price continues to drop, then the bank will lose.
Building on the assumption that the price will continue to rise is unrealistic.

Banks will love to enter this deal and I guess you didn't get the point. Joe is putting his 2 BTC worth coins to get 1 BTC worth of coins and if the price of BTC drops by 50% or more, the bank will ask Joe to either submit more BTC under the bank as collateral or they will liquid his coins and cover his loan. If you have taken a loan ever in real life, you should know that is the basic rule of collateral.