Why do you refuse? Here, I'll lower my rate to 1.05x. If CPI remains stable and mtgoxUSD goes up by 1.06x between now and next year then you'll owe me less BTC than what I gave you. If mtgoxUSD goes down then you'll owe me more than 1.05 BTC but it'll be that much easier for you to buy them.
I am happy to offer you the loan, because Bitcoin prices are volatile and there is no guarantee if I keep my Bitcoin in storage that it will still be worth much one year from now. There have been many crashes. But if you agree to repay me an amount equivalent to 1.05x my current spending power then I know whatever you pay me I'll be in a better position than I am today in terms of my ability to pay my rent.
Such a loan offers me a drastically different risk profile than holding Bitcoins. If BTC were as guaranteed to increase as you say then they would cost more.
Oh, sorry, I didn't understand your original proposal.
This is a loan denominated in dollars, it's just being transaction-settled via Bitcoin. The medium of account is dollars and the medium of exchange is Bitcoin. This is pretty much exactly the original point I was talking about. :)
Well, it's not really denominated in dollars, it's denominated in the CPI. You could also have a Bitcoin Price Index that tracked how much spending power Bitcoins had and denominate your loan in that.
I am happy to offer you the loan, because Bitcoin prices are volatile and there is no guarantee if I keep my Bitcoin in storage that it will still be worth much one year from now. There have been many crashes. But if you agree to repay me an amount equivalent to 1.05x my current spending power then I know whatever you pay me I'll be in a better position than I am today in terms of my ability to pay my rent.
Such a loan offers me a drastically different risk profile than holding Bitcoins. If BTC were as guaranteed to increase as you say then they would cost more.