All the way back in 2005, I was living in Arizona working for “the man,” the giant corporation we all love to hate: McDonald’s. Although I’m grateful for the experience, and even get melancholic over it, I’m glad to be out of that world. That said, yesterday I was remembering one of those mind-blowing moments that happened in the kitchen.
I was talking to one of the other cooks (yes, I worked the line) about how to get ahead. Back then, less so than now, it was quite difficult to get away from the paycheck-to-paycheck existence(today its impossible). So, a lot of the lower-wage staff began coming up with their own loan system. No banks needed to get involved at all. Funny thing is, it truly helped everyone get a little bump, a little pep in their step, as they say.
Don’t quote me on this one, but I want to say they called it “batches.” So how did these loans work?
A group of people would get together. The idea was that the vetting for this group had to be done right. Everyone had to compromise, to commit, towards making these batches work. They would each come up with an amount they could commit to and reach consensus.
For example: a group of ten people would agree to each pay “the batch” a hundred dollars every month for a whole year. Then, each member of the batch would get 1200 dollars in different months, allowing each person to get a lump sum at some point to make a big purchase.
We’re talking about people who are operating completely outside of traditional banking here. As a matter of fact, most of them didn’t have bank accounts to begin with, so the idea of securing a loan isn’t even in their conversations.
Honestly, I loved this idea. I loved how creatively they had solved their financial woes. Of course, the trick here is to have enough responsible people to make this work, and also to come up with a reasonable monthly payment everyone can afford.
As you can guess, this system scales. Given its social nuance, it has its limitations, but again, it’s a viable alternative for people who are outside of the traditional banking system. Whether it’s for legal reasons (most of the cooks had no papers) or simply due to personal philosophies.
But why am I talking about this, you may ask? Like a lot of you, I’m one of those people who would love to get rid of traditional finance altogether, and wouldn’t mind one bit if the banks go away. So, with that in mind, I keep asking myself if there are implementations of these sorts of systems that would work in our environment, on the blockchain.
Hear me out for a second…
Long ago, @klye began talking about a loan system for Hive too. I wrote about it even before that,(cough, cough) in 2018, even mentioned it to @neoxian back then, but I was glad to see a developer working on it finally.
As we know, such an app was never made. I don’t begrudge @klye for not delivering on the idea. God knows I’ve shared hundreds that never saw daylight, but I never truly scratched the itch away. I thought we could use it back then, I think we could use this now.
Enter VSC.
It feels like I’m putting so much weight on VSC already, but the truth is that I do love the idea of having smart contracts on Hive. As a matter of fact, most of the ideas I’ve shared this year can be made – or should I say, should be made – on smart contracts. So, there’s that.
That said, the one I’m sharing today can only, in my opinion, be made in a smart contract system. I can imagine these “Loan Batches” being implemented on top of VSC.
Is the image beginning to form in your mind already?
A smart contract could handle the “escrow” services, if you will, leaving human corruption, temptation, stupidation, outside of the picture altogether.
Allow me to draw the entire picture for you, lay out the scenario where this would work wonders.
The Big Purchase
Let’s say the wife and I are discussing buying a new car. Let’s say our mechanical woes have left us hopeless. We don’t want to fix the damn thing, rather just sell it as is, and get a new one. Well, I need 3000 bucks to do this, and although I have the HP to back it up, I don’t have it right now, right now.
I could power down, of course, and I would (in this hypothetical story) but it would take me a month to get all the tokens I need to sell, from the blockchain all the way to the bank (yuck!).
But, you see, I have friends. And they can help me make this happen faster, because we could use the batch payment system together.
I reach out to @edicted, to @acidyo, to @buttcoins, and maybe even @ecoinstant. I tell them to help me out here with a loan, but not in any tradish way, no, with our system.
We would then initiate the batches. They would send liquid tokens to the batch system, as would I, and it would begin disbursement of the payments accordingly. Every week, as the powerdowns happen, directed straight into the escrow account managed by the batch system, the smart contract would be making the lump payouts to each of the members of the batch.
This means I would get a lump sum one week, then @buttcoins another week, then acid another week, etc.
WAIT!!! I know what you’re thinking…
Why would they agree?
Well, there’s “the fees,” of course. They split the “fees.”
So me, as the batch initiator, I would be “charged” a percentage for requesting the loan. This would be agreed upon with the other members of the batch system.
That would effectively mean I would be paying 10%, 15%, 20% – whatever we agree on – to the butt, acid, eco, edicted. They make the ROI, minus what the smart contract takes for the service. Dunno, 3% sounds fair?
Does any of this make sense to anyone else, or am I losing my mind here?
We provide almost instant liquidity to someone who needs it, someone who is a trusted member of our clan, of course, but the people who “save the potatoes” stand to make ROI for providing the service.
How is this not a win/win?
Yes, the liquidity providers could just power up all the Hive they get, since they just want more hive. They just made some extra tokens by participating. Or, they could also use the lump sum, up to them.
Alright people, let’s fight/talk/discuss in the comments. Am I not making sense?
I’m going to tag @vaultec too, because he’s the VSC guy after all. Can this not be built?
Is I crazy?
MenO