[mywaifuismeta]

> You don't seem to get it

No, you are only describing a part of what borrowing is about. Your use case is valid, but it is just one of many use cases. Consider the following:

I own a a long-term retirement account, but I need to pay an emergency medical bill and don't have cash at hand. Obviously I don't want to liquidate my savings account, but I can put it up as collateral to go to a bank and get a cash loan. If I'm unable to pay the account may be liquidated. That's an overcolleralized loan. It's useful. The same is happening when you put up your house as collateral, or arguably even your reputation.

The blockchain equivalent of this is the same. You put up one asset as collateral e.g. Bitcoin, and you can get another more liquid asset.

Another use case for this is simply market exposure and hedging. You can put up Bitcoin as collateral, still having exposure, and then use the loan to buy another asset to get exposure to, creating a more complex structured exposure. This has nothing to do with blockchain, it's the same in traditional finance.

[lottin]

An overcollateralised loan is equivalent to a swap (a type of derivative). Swaps have their uses, and are used in finance, but they don't provide financing. The point is if blockchain technology can't be used to do financing, and it definitely can't, just don't call it the "future of finance", because it is not. It can't perform the basic function of finance, which is financing.

[carlosdp]

How is a mortgage not financing, and how is a mortgage not just another over-collateralized loan?

Every loan has some form of collateral. Even credit cards do, it's just less tangible: you are staking your credit score, which they'll start chipping away at as soon as you start defaulting.

[lottin]

A mortgage is indeed a form of financing because the lender does not keep the collateral until the debt is paid off in full. If they did, there would be no financing going on. It would be equivalent to saving for 30 years and then buying the house.