Hacker News Reader

"I'll give you X dollars-today, in exchange for 1.1X dollars-N-months-from-now."

Isn't that the very definition of interest?

No, interest usually compounds. This is more like a one-off currency trade of now-dollars versus future-dollars.

Still, you are giving some amount of today's dollars in return for a larger amount of tomorrow's dollars. That implies some effective interest rate over that time period. Also, while most financial institutions use compound interest, the concept of simple interest also exists.

Am I missing something?

This thread reminds me of Islamic laws dealing with interest. Since you can't charge interest, the solution is to go into a trade like transaction.

http://en.wikipedia.org/wiki/Islamic_banking#Modern_Islamic_...

So even if charging interest is forbidden in one way, there are ways to circumvent that.

That's called simple interest, as opposed to compounding interest.

Reply on news.ycombinator.com