Indeed, the challenge of utilising a bearer asset like Bitcoin as collateral while the owner retains control is a fundamental one, for which smart contracts or multi-signature escrows offer potential solutions. Your thoughts on interest and usury touch upon age-old economic considerations.

Loans can be restructured so the lender is actually buying a share at a higher than market price. There, usury finished. Some parts of the world do that and call it Islamic finance - it also was once Christian finance, before Calvin subverted the Reformation for his own usurious goals, which directly led to the first central bank, called the "Wisselbank" - it was part of the Netherlands' rise to power, and enabled extraordinary feats, such as invading England to install a Protestant king. The biggest part of the problem of usury is in the way fiat is created - its actually credit, not fiat. Slight difference, probably doesn't matter at this point. Banks create new money every time they make a loan. A modern bank is in no way related to the original banks, thus named for starting as dudes lending on the banks by Venice. Modern banks do not loan accumulated reserves, even if they're required to keep reserves. Their loans are always new money. The problem is, there's an interest rate on the loan, which means debt is always larger than the monetary base, and grows exponentially. The total debt can't be paid in full - that's impossible. Even were this not the case, usury would still be immoral. The moral way to lend is to pair it with ownership, which encourages some level of responsibility. The shift in finance that I want is not a violation of the time value of money. This is just a way to do it responsibly.