The LTB Network Forum

Issuing debt with Counterparty

Back to General

Comments

loon3

Offline
Posts: 243
Location: Rhode Island, USA

I'm curious how people feel about using the Counterparty protocol to issue debt as opposed to issuing equity.  The only real difference is the nomenclature.  
You could issue an asset that represents a loan.  When you pay dividends, you would essentially be making interest payments.  Once the loan is paid (plus interest), the asset would no longer have any value as it would stop pay dividends although until that point the value could be calculated fairly easily based on the principal, no. of "shares" issued and payments remaining.

Posted on March 19, 2014 at 3:07 PM
Last Edited: March 19, 2014 at 3:09 PM

0 likes

• mmanvil74

  

  Offline
  Posts: 59
  Location: Canada

  The trick would be to code the asset to pay back the principle after a certain time period (assuming an interest only payment), unless you are talking about a mortgage style loan where the payments include principle and interest.  I am not familiar with all of the possible commands for a CounterParty asset - have you found a good resource page for this?

  Posted on March 19, 2014 at 8:56 PM
  Permalink
  0 likes
• loon3

  

  Offline
  Posts: 243
  Location: Rhode Island, USA

  I'm thinking more of a mortgage style loan with a fixed interest rate, term, and monthly payment (in this case, monthly dividend).
  The release of a new digital asset is often compared to an IPO and the tokens are considered equity.  Why can't the opposite be true with that release signifying a bond offering and the tokens representing a stake in that promise to pay.  Since the tokens are tradeable, the issuer can potentially buy back shares which equates to paying down on the principal.
  I don't think it's necessary to do anything complex with Counterparty.  Just use their basic framework for creating an asset and paying dividends.  Loan information can be included in the description.

  Posted on March 20, 2014 at 3:22 AM
  Last Edited: March 20, 2014 at 3:23 AM
  Permalink
  0 likes
• loon3

  

  Offline
  Posts: 243
  Location: Rhode Island, USA

  From the Counterparty Github readme.md...

  Assets may be ‘callable’: callable assets may be forcibly ‘called back’ by their present issuer, after their call date, for their call price(in XCP), these values being set at the time of the asset’s first issuance.

  Callable assets may be called back after their call date has been first passed by a block in the blockchain.

  This feature would be perfect for setting the maximum life of the loan.

  Posted on March 20, 2014 at 3:52 AM
  Permalink
  0 likes
• Omnio

  

  Offline
  Posts: 14

  This goes against the very nature of Counterparty and cryptocurrencies in general: That is to free humanity from debt. These mechanisms have no place in our world, though they still exist in fiat-based economies. We're so much better than this.
  

  Posted on March 27, 2014 at 4:21 AM
  Permalink
  0 likes
• loon3

  

  Offline
  Posts: 243
  Location: Rhode Island, USA

  Your premise is that all debt is bad?  

  Posted on March 27, 2014 at 3:34 PM
  Permalink
  0 likes
• markymoo

  

  Offline
  Posts: 3

  In a deflationary environment hoarding is highly encouraged but debt too could be a useful concept. If you know you can make more money investing in better assets than other people, you can afford to contract debt. There's nothing productive in this, it's pure speculation. Debt is surely more positive in the real world than in the crypto-deflationary-universe. In the real world there's productive business eligibles for debt in a fair way.

  Posted on April 27, 2014 at 5:39 PM
  Permalink
  0 likes

Post Reply