You're missing the fact that people don't always succeed at the thing they attempt to do (with the big lump of money you gave them) and that even when they do, it doesn't work out for the creditor:
Say I'd enjoy it if there was a cathedral in town. Assume it's worth around 10 BTC to me wrt how much it will enrich my life. It costs 100 BTC to build. I have the money and there's a handy mason in town who has been dying to build himself a cathedral but doesn't have the initial capital.
Great, as long as he pays me back 90BTC, I can loan him the 100, let him build the thing and I'll still net out. I've "lost" 10 BTC but that's what the cathedral is worth to me, so it works out (if I were to lose any more than that, why would I even get involved? I don't do things that only put me in a worse situation, fiscally and emotionally/psychically). And he is happy because he's getting 10 BTC for his effort and a cathedral!
One problem: I give him 100BTC and he spends 5 months on the project and fails miserably. There's just a big pile of poorly-cut blocks in town that now we have to pay someone to remove. I'm out 100 BTC, don't have a cathedral, and the builder just says "aw sorry, didn't work out. Thanks anyway!".
Elsewhere you said "if you're worried about the debtor taking the money / not delivering, give the money in tranches and check progress" - that has numerous problems:
- I now have a part-time job of cathedral building site inspector. If I'm not an expert on the process I'm either going to have to trust the builder completely (if that was the case, why am I checking on him?) or hire an expert to consult. Now I'm out even more money that better be able to justify itself. Even without the expert consultant I'm spending _my_ time on this. Opportunity cost.
- What about a project that is nearly all up-front costs? Say 90 BTC is in buying the stone before starting work. The smallest feasible initial tranche is significant and risky enough that I won't do it.
Even if you assume that _all_ these problems can somehow go away, and everything succeeds... Great! Now the debtor is supposed to pay me back 90 BTC since he succeeded and we gave him some weird risk-free, zero-intrrest "loan" where he actually makes 10 BTC out of the deal and at the end of it he owns a cathedral...
We already know that he doesn't have 90 BTC lying around, which is why he needed an injection from us. And we have to assume that he expects to make revenue on cathedral ticket sales, or else he's scamming us with no intention to pay back the loan. Every year we're not made whole is basically an additional price to pay to personally enjoy the cathedral in town. I said it would be worth about 10 BTC to me, which was basically a statement about opportunity cost. If I had 10 BTC to spend to get lifetime access to a dozen different venues, I'd choose the cathedral out of the dozen.
But now for who-knows-how-many years I'm actually spending 90 additional BTC for access to the cathedral. I'm closing off nine more 10 BTC "lifetime access" activities until the loan is paid back.
That's _not_ what the cathedral was worth to me. It was worth 10. So why would I choose this, given that it's _not_ an outcome I desire, even when everything goes completely according to plan?
vinney
npub19ma…axkl
2024-06-17 14:56:57
in reply to nevent1q…lu9q
Author Public Key
npub19ma2w9dmk3kat0nt0k5dwuqzvmg3va9ezwup0zkakhpwv0vcwvcsg8axklPublished at
2024-06-17 14:56:57Event JSON
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"content": "You're missing the fact that people don't always succeed at the thing they attempt to do (with the big lump of money you gave them) and that even when they do, it doesn't work out for the creditor:\n\nSay I'd enjoy it if there was a cathedral in town. Assume it's worth around 10 BTC to me wrt how much it will enrich my life. It costs 100 BTC to build. I have the money and there's a handy mason in town who has been dying to build himself a cathedral but doesn't have the initial capital. \n\nGreat, as long as he pays me back 90BTC, I can loan him the 100, let him build the thing and I'll still net out. I've \"lost\" 10 BTC but that's what the cathedral is worth to me, so it works out (if I were to lose any more than that, why would I even get involved? I don't do things that only put me in a worse situation, fiscally and emotionally/psychically). And he is happy because he's getting 10 BTC for his effort and a cathedral!\n\nOne problem: I give him 100BTC and he spends 5 months on the project and fails miserably. There's just a big pile of poorly-cut blocks in town that now we have to pay someone to remove. I'm out 100 BTC, don't have a cathedral, and the builder just says \"aw sorry, didn't work out. Thanks anyway!\". \nElsewhere you said \"if you're worried about the debtor taking the money / not delivering, give the money in tranches and check progress\" - that has numerous problems:\n- I now have a part-time job of cathedral building site inspector. If I'm not an expert on the process I'm either going to have to trust the builder completely (if that was the case, why am I checking on him?) or hire an expert to consult. Now I'm out even more money that better be able to justify itself. Even without the expert consultant I'm spending _my_ time on this. Opportunity cost. \n- What about a project that is nearly all up-front costs? Say 90 BTC is in buying the stone before starting work. The smallest feasible initial tranche is significant and risky enough that I won't do it. \n\nEven if you assume that _all_ these problems can somehow go away, and everything succeeds... Great! Now the debtor is supposed to pay me back 90 BTC since he succeeded and we gave him some weird risk-free, zero-intrrest \"loan\" where he actually makes 10 BTC out of the deal and at the end of it he owns a cathedral...\nWe already know that he doesn't have 90 BTC lying around, which is why he needed an injection from us. And we have to assume that he expects to make revenue on cathedral ticket sales, or else he's scamming us with no intention to pay back the loan. Every year we're not made whole is basically an additional price to pay to personally enjoy the cathedral in town. I said it would be worth about 10 BTC to me, which was basically a statement about opportunity cost. If I had 10 BTC to spend to get lifetime access to a dozen different venues, I'd choose the cathedral out of the dozen. \nBut now for who-knows-how-many years I'm actually spending 90 additional BTC for access to the cathedral. I'm closing off nine more 10 BTC \"lifetime access\" activities until the loan is paid back. \nThat's _not_ what the cathedral was worth to me. It was worth 10. So why would I choose this, given that it's _not_ an outcome I desire, even when everything goes completely according to plan?",
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