[makomk]

Based on previous businesses that've offered Bitcoin loans, a common reason to borrow money in Bitcoins is because the person has no intention of paying off the loan. It doesn't take a large proportion of loans going bad before lenders start losing money on average at any reasonable interest rate, and increasing the interest rate will just increase the proportion of bad loans to good loans.

[Jtsummers]

What legal or contractual constructs did previous bitcoin lenders attempt to use to ensure repayment? Surely they required some form of collateral or obtained sufficient information to be able to place a lien on the borrower's (thieves by your description) property.