Does a lender profit when a loan denominated in fiat and settled in ₿ occurs during a fiat/₿ exchange rate decline?

External answer — Bitcoin Stack Exchange Author: Geremia Original post: https://bitcoin.stackexchange.com/a/130767 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Yes. You lent him $70k worth of ₿. If he repays you $70k worth of ₿ back at $60k/₿, he has to send you $70k / ($60k/₿) = 1⅙₿, so you profit by ⅙₿.

External question — Bitcoin Stack Exchange Author: Geremia Original post: https://bitcoin.stackexchange.com/questions/130766 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Say I lend my friend 1₿ worth of fiat at the rate of $70k/₿ and he repays me back when the exchange rate is $60k/₿. Do I make a profit? my "loan was denominated in dollars while settled in Bitcoin"; 🎩-tip to Murch for this phraseology

External answer — Bitcoin Stack Exchange Author: RedGrittyBrick Original post: https://bitcoin.stackexchange.com/a/130771 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. If the loan is denominated in Bitcoin and is interest free, on return of the loan amount, you have the same amount of Bitcoin. If the loan is denominated in US dollars and is interest free, on return of the loan amount, you have the same amount of US dollars. You would have have an unusual loan agreement for the outcome to be different. For example if you loan your car, worth $70k to your friend and when they return it the car has a market value of $60k. Your agreement says your friend has to return 1.13 cars to you. And you also consider this a profit. This would be unusual. Presumably, if the car appreciated in value, you friend might only have to return 0.9 cars?

External answer — Bitcoin Stack Exchange Author: Murch Original post: https://bitcoin.stackexchange.com/a/130834 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I would challenge the framing that you profited from lending the Bitcoin. The lending aspect just obfuscates what happened: think of it as you having sold a Bitcoin for a $70,000 IOU, and the timing of the IOU being redeemed enabling you to buy back lower at $60,000. You could have done the same selling and buying back lower without lending the money. The lending just forced a lucky timing for you.