>The bitcoin price doesn't matter for the linked loans

This is only true if the loans are a ponzi scheme and not being spent on goods or anything else :)

I'm sure you don't care, you'll get your fees right up until the moment that you don't. As far as investigating or thinking about this as a personal individual, even if you are an employee, you can look at it this way, especially how the situation would change if BTC experiences even worse deflation (if it were to be adopted as a serious money supply without the supply increasing):

What is the average per annual interest rate on all loans on BTCJam? A cursory look reveals "invest your bitcoin and earn 19.3% APR". Assuming your fees and other friction amounts to just an additional 2.5%, then we are at 21.8% - meaning, that if you have a business opportunity that you have a 98% expectation of generating a 21% return within 1 year, ($100,000 in, $119,000 out in year 1), you cannot finance it with this type of bitcoin loan. And this is today, during a far from certain period for bitcoin and by no means a heavily deflationary one.

We are not currently in a great deflationary period for bitcoin. If bitcoin were to tend toward $300K per btc - so that it represents value around the value of the gold supply or other world money supplies - from its current value of $450, in, say, 10 years (an eternity for the Internet) that would represent a 666x increase in value.

Annually, that would translate to a 91% APR. (1.91^10=646) So the only way for anyone to borrow bitcoin, spend it on an investment, and then both return bitcoins - with an interest rate! - and still have some personal profit from the investment, is that if the risk-adjusted return from the actual real-world investment is 91%. But that makes bitcoins impossibly expensive to denominate the loan in.

What if we denominate the loan in dollars? Well, during a deflationary period, anyone would be nuts to lend bitcoins and receive 91% less back the following year, recouping just a little bit in interest rate. The interest rate would have to be around 91% just to cover the new value of the bitcoins being returns. Essentially, a lender of bitcoins would be short selling them. A huge risk. It might well be the case that they lend out 100 bitcoins, and a year later get back 1 bitcoin. If they had held onto the bitcoins instead of lending them out, they would have enjoyed a +10,000% return on the real value of that specific holding. Instead, the real value of the holding has remained steady at 110%, since it was denominated in dollars.

This establishes a very difficult hurdle rate. Currently bitcoin does not experience such a deflationary period (indeed, it is worth less than it was at xmas and before), which makes lending denominated in usd considerably easier.

At other times however it will be far more difficult.

Essentially, bitcoin lending works "ok" as long as bitcoin itself is not taking a large role as a money supply. If it does, then due to the impossible of scarcity (again, reasonable target is $300K/bitcoin under this scenario) lending will grind to a halt where lending is used for real-world production of value.

Lending may still occur under literal ponzi schemes. (Borrow 10 bitcoins, promise to pay back 12 in a month...which you do - how, because in the meantime you've borrowed 14 bitcoins, promising to pay back 16 in a month...which you do - how, because in the meantime you've borrowed 18 bitcoins.... );

I think if you take a good, hard, look, at the source into the way in which these bitcoins are being paid back, you will find more than one literal ponzi scheme under BTCJam. There is scarcely other explanation for the lending behavior of many of the entities there. (Despite

For example,