Bitcoin Forum

Its an obvious question but is there a bank backed by Bitcoin?


Imagine a bank you walk into or online that simply took your fiat and gave you whatever the value of Bitcoin was at that point gave you a monthly statement that said how many Bitcoin you own and the fiat value alongside it. It could work exactly like a bank so it therefore took guaranteed your deposit by keeping Bitcoin safe in offline wallets etc, paid interest charged interest for loans etc like any other bank does. I don't think the average person wants to worry about Bitcoin wallets and security, let the bank worry about it. My point is have everything looking like from the front a normal bank but back the fiat up with Bitcoin. I mean banks originally owned Gold to back up deposits, so why not use Bitcoin to do the same function.


I think people need the interface of a bank but one clearly stating they are Bitcoin backed would for some actually be quite attractive. e.g Greeks right now.


Has anyone tried it?

not yet. a very bitcoin friendly bank is the Fidor Bank in germany. probably they would be the first to do such thing.

I hope you understand the concept of Bitcoin digital gold better than me, according to the knowledge given to me. since the most currency issued by central authority that controls the money supply, and to avoid that Bitcoin digital currency has been invented which is purely based on peer-to-peer network, so in this case, it they bank give such monthly statement as you mentioned, then we are inviting banks to act as a central authority to control the Bitcoin.

What would the point be? Most of us are using crypto currencies because we got sick of banks and their shitty practices.

Who would be having control over your private keys? {The bank}? I would not trust a central controlled entity with my private keys.

Nope, let's just get rid of the banks and be done with it. They dropped us before and they will do it again. It's like walking backwards... no point to it.  ;)

i know there are some bank about bitcoin that are in project like those in Switzerland , if they could offer something about interest, that aren't few pennies like we can earn with faucets, than maybe they could see some use in the future, especially because of security

at the moment I do not think so. if would be really great if there was.

I found this http://www.techradar.com/us/news/internet/a-major-bank-just-gave-bitcoin-some-of-its-mojo-back-1292575

me too, I get that. But we aren't sick of banks for mainstream sensible banking ie deposits, loans etc we are against banking for debasement of money, fractional reserve banking, risk taking derive ratios trading ect. I'm talking about returning banks to the original meaning. Plus I'm only talking about making the FRONT SHOP of banking normal and accessible to the masses, Bitcoin would be the foundation it's built on.



You know what, I'm just thinking aloud but if a bunch of large holders got together they really could make something like this happen. The thing is people here are hoping people will accept using money that disappears if they make a mistake or are hacked. not going to happen, this gives a user friendly face to what we all believe in here.

*You wouldn't have private keys, you would just have a bank account just like any other bank. It would be the banks job to insure its wealth, have comprehensive unhackble systems and wallets, risk shared around many wallets etc. let's professionals deal with security. Otherwise one little old lady loses their Bitcoin once they won't go back to it.

three questions with the answers for you.

what is a btc in usd?  about 250.
how many mined btc coins are there? about 14,323,000
how much is btc market cap? 3,580,750,000

What size is a small bank.

well this is a list of the top 100 banks in New York-Northern New Jersey-Long Island, NY-NJ-PA Area

http://www.bankbrief.com/city_results_by_assets.php?cbsa=35620




   

 
Banks in New York-Northern New Jersey-Long Island, NY-NJ-PA Area

Ranked by Assets

Records 1 to 100 of 195

View Ranked by Profitability - View Ranked by Asset Size - View Ranked by Deposits

Bank   City   Assets ($1,000)   ROA  so 1000 x each number below give you dollar value of assets at that bank.



The Bank of New York Mellon   New York, NY   $218699000   0.9%
Hudson City Savings Bank   Paramus, NJ   $51616117   0.9%
Deutsche Bank Trust Company Americas   New York, NY   $43932000   0.3%
Merrill Lynch Bank & Trust Co., FSB   New York, NY   $35845565   -0.4%
New York Community Bank   Westbury, NY   $29874746   0.0%
Bank of China   New York City, NY   $27194990   0.0%
Astoria Federal Savings and Loan Association   Long Island City, NY   $22135889   0.4%
TD Bank USA, National Association   New York, NY   $19800540   0.3%
Valley National Bank   Wayne, NJ   $14269419   0.7%
Banco Popular North America   New York, NY   $12801641   -1.3%
Emigrant Bank   New York, NY   $10705750   -0.2%
Israel Discount Bank of New York   New York, NY   $9395580   0.5%
Metlife Bank, National Association   Bridgewater, NJ   $9371443   0.5%
Apple Bank for Savings   Manhasset, NY   $7086683   0.6%
Investors Savings Bank   Short Hills, NJ   $7025628   0.3%
Signature Bank   New York, NY   $6699455   0.6%
Bank Hapoalim B.M.   New York, NY   $6512996   0.0%
The Provident Bank   Jersey City, NJ   $6436021   0.7%
Bank Leumi USA   New York, NY   $5605467   0.4%
Morgan Stanley Trust   Jersey City, NJ   $5254105   0.3%
Amalgamated Bank   New York, NY   $4573953   -0.3%
Columbia Bank   Fair Lawn, NJ   $4510686   0.7%
Bank of Tokyo-Mitsubishi UFJ Trust Company   New York, NY   $4146675   -1.1%
Ridgewood Savings Bank   New York City, NY   $4101225   0.5%
The Dime Svgs. Bank of Williamsburgh   Brooklyn, NY   $3814342   0.9%
Safra National Bank of New York   New York, NY   $3777224   0.5%

Flushing Savings Bank, FSB   New York City, NY   $3613431   0.2%  this one little bank with 7 or 8 buildings in NYC has more then all the BTC in the world


Mizuho Corporate Bank (USA)   New York, NY   $3539479   0.2%


All of the above have more then 3.5 billion.  Which is all of the BTC in the world.

 My point is BTC is  far too small for the banks at this moment to even consider your idea.




Provident Bank   Montebello, NY   $2976498   0.9%
State Bank of India   New York, NY   $2710410   0.0%
New York Commercial Bank   Islandia, NY   $2628001   0.5%
Amboy Bank   Old Bridge, NJ   $2575682   1.6%
Lakeland Bank   Oak Ridge, NJ   $2571555   0.9%
Intervest National Bank   New York, NY   $2108233   0.5%
Sterling National Bank   New York, NY   $2097818   0.9%
Kearny Federal Savings Bank   Kearny, NJ   $2030926   0.3%
Spencer Savings Bank, SLA   Elmwood Park, NJ   $1934664   0.4%
OceanFirst Bank   Toms River, NJ   $1874790   0.9%
Bank of Smithtown   Smithtown, NY   $1689491   1.3%
The Suffolk County National Bank of Riverhead   Riverhead, NY   $1626694   1.7%
Northfield Bank   Staten Island, NY   $1605513   1.0%
State Bank of Long Island   New Hyde Park, NY   $1589310   0.6%
Oritani Bank   Township Of Washington, NJ   $1535736   0.5%
Ameriprise Bank, FSB   New York, NY   $1462413   -5.4%
Peapack-Gladstone Bank   Gladstone, NJ   $1363390   1.0%
Maspeth Federal Savings and Loan Association   Maspeth, NY   $1358740   1.8%
Interaudi Bank   New York, NY   $1286740   0.4%
The First National Bank of Long Island   Glen Head, NY   $1224208   1.2%
Boiling Springs Savings Bank   Rutherford, NJ   $1195091   0.2%
Emigrant Savings Bank - Manhattan   New York, NY   $1189722   0.4%
Union County Savings Bank   Elizabeth, NJ   $1099985   0.9%
Woori America Bank   New York, NY   $1083857   1.0%
Emigrant Savings Bank - Bronx/Westchester   Bronx, NY   $1047241   0.3%
Union Center National Bank   Union, NJ   $1043714   0.6%




When and if BTC gets to 10k per coin vs 250 usd a coin   or 40x bigger then it is now then we have a shot.

For now just exchanges.

Why does a bank need to be big?

Maybe i'm being naive but all someone needs from an average bank is for their money to be held safely. Plus a bank makes money from loaning money. So why can't it be scaled as the bank grows? I imagine there are a lot of laws and red tape to jump through I'm not going to suggest it would be easy but actually without red tape its an incredibly simply business model. You simply hold Bitcoin and pay a small interest of even none and loan Bitcoin for a charge. Community co-operative farming banks etc have been around for decades. Small banks were actually more the norm in the past I expect.


*Sorry but an exchange does not self the basic function of a bank i.e. keep your assets safe within reason. Exchanges are the opposite of safe.

I think you are thinking of something very similar to an exchange. There are a few exchanges that will pay interest on your holding, mostly Chinese exchanges, and mostly are probably not a good idea to deposit your fiat/bitcoin in any of them.

There is also bitfinex which allows you to lend your bitcoin/fiat to traders on the exchange and as long as you trust bitfinex and as long as bitfinex has sufficient controls to prevent traders from having negative equity in their accounts, then you should be safe from losses.

Let me also ask you this: How do you think it is that banks are able to afford to pay interest on their deposits? The answer is that they lend out money their deposit holders give them prudently, and charge an interest rate greater then that they are paying to deposit holders. This means that any "bank" that will pay interest on your bitcoin holdings will, by nature need to lend it out in order to afford to pay you interest. It would not be realistic to believe that a bank will not touch your money and then turn around and pay you interest on it.

It's not a bank your talking about, but a currency exchange (which a lot of banks do), but there are also places that just offer currency exchange. It would be nice if you could go to a currency exchange and convert bitCoins to cash and visa versa.

You originally put your money into banks to make interest and the banks would loan out that money at a higher interest. Banks used to beg for your money (they actually did give away toasters if you opened a account and you actually made ok money with the interest when I was a kid). Banks suck you dry now with all their fees.

The only way a bank would work with bitCoins is if they could make money from your deposits. bitCoins is not big enough at the moment for banks to make money from it. Until that happens, you'll be hard lucked to find a bank to take bitCoins as a deposit. They would also have to offer a incentive for people to want to deposit bitCoins into the bank.

I said nothing about looking for a bank that does it, I'm saying now why not just start one?

of course a bank makes money from loans to pay interest. that's exactly my point. Why are people referencing exchanges which are often anonomous and don't do what I'm suggesting ie provide a front of shop service which would work like any other bank and holds your money for you and gives you a card you can use that is denominated in fiat.

I think people have such a distorted view of what a bank is that they simply can get their head around the fact banks existed in the past and were not much bigger a business that a hardware store. A bank simply stores people money safely and loans as much as it thinks is viable to keep them in business and attract savers. it's not rocket science. An exchange isn't anything like what I'm saying. With this concept users wouldn't use Bitcoin they would use fiat up to the value of their Bitcoin in their account. YOU WOULDNT DEPOSIT BITCOIN, YOU WOULD DEPOSIT FIAT.

If I was Greek right now I would run at a bank that was backed by Bitcoin and if it existed and worked just like any other bank that even your mom could relate too, no Bitcoin wallets not secret keys, none of the shit that stops average people touching Bitcoin. A bank like this would have to focus on security, just like banks used to, ie vault etc. So they would want to hold Bitcoin in the most secure wallets and have multiple wallets etc, everything encrypted etc. Maybe if possible insurance that guarantees a persons deposits.

This is where Bitcoin needs to go for the mainstream.

There was an attempt to do that in 2013, early 2014, it didn't end well.

https://bitcointalk.org/index.php?topic=289730.0

Thanks, it's kind of what I was saying but their failure doesn't mean the concept is flawed, it just means they didn't successfully run the business, the concept I know is sound, unless banks don't work? it seemed a bit convoluted with shares offers etc.  Plus it was trying, it seems to keep a consistent fiat price for their customers which seems foolish. people depositing fiat in the kind of bank I'm talking about would have to know their investments could fluctuate but also of course in their favour.


In many ways what I'm suggesting kind of works like some Gold backed funds that also give you a credit card you can use just like any other. I think Peter Schiff runs a gold account like this from outside the U.S.

I seriously hope nobody remembers to make a Bitcoin backed bank... That's just subverting the deepest meaning of Bitcoin.

its illegal.



edit: and doesnt make sense.

Banks will get more into Bitcoin and it will make it more valuable. The ideas surrounding banks are so negative but there are also good banks.
Why would we be happy when Facebook accepts Bitcoin and not when Barclays would get involved.

This is what already happens in altcoin:
http://bitcoinprbuzz.com/national-aten-coin-foundation-accepted-into-aba-aligning-cryptocurrency-aten-black-gold-coin-with-top-regulatory-agencies/

Atencoin will be available on 4th of July!
http://finance.yahoo.com/news/aten-black-gold-coin-available-131600955.html

Do German laws allow this kind of thing?


It's not illegal but it's not legal too. It's kind of a grey area. There's no law about this situation AFAIK.

You are talking about a drop in the ocean  btc is  so tiny.


 btc needs to be big .  no banks will touch a little thing like btc.

My post shows you a tiny little bank in New York is bigger then all of bitcoin.

I am not against a bank doing it.  but any bank would need backing from the country it is in.  lets Say Germany.

Next the bank is only going to have at most 5% of the worlds coins. (there is a reason I picked 5% )

 so that would be 5% of a 3.5 billion of about 175million in btc.  So any fiscally responsible bank would need to guarantee coins and the fiat value.

Or they would not be a bank they would be an exchange. 

I don't think there will be one, but I think there're banks that holds bitcoins as assets.
For instance they hold Euros as assets but also Bitcoins.

Yep  and they may even offer you 1000 of  as an investment .  But it would be subject to market  price which means not insured for value.  which means while you may get your coins back but they would be worth 100 instead of 250.

in a tanking example.  they drop from 250 to 100.  since we all  btc know coins do this. they would be more like a stock investment.

i think it would be handled like its done with gold. im not sure you can correct me if im wrong but:

if you create your own currency backed by ANYTHING its illegal because its against the establishment of things like legal tender laws. the idea he has is basically the same as private banking with gold but they monopolized private issued money.

if that would be legal people would not be trading dollars :D

varies country to country.   but you are picking up on one of the  problems with his idea. 

 find a country that lets you open the bank.
then see how many other countries let you  bank there.
secrecy laws  they were worked around in switzerland.
how do I insure the coins.  against loss of coins and against loss of value.

what I would want is a legal exchange that insures me against loss of coins.
 that I as a USA citizen can use.
I would want the exchange to be backed by the government it is run in.

this way my risk is only price of coins.
no longer do I risk loss of coins.

They hold Bitcoins but they do this privately. Like Swiss accounts, governments don't know about it and can't track them.

Most Chinese exchanges are like this, however the more reputable exchanges, like Circle and Coinbase are not. Exchanges do not have physical branches because it is prohibitively expensive to open and maintain branches based on the amount of revenue each branch would be anticipated to generate; there are plenty of online banks that are FDIC insured that do not have any physical branches due to cost concerns.   
Banks fail all the time. The most likely reason why they do not fail more often is because they are generally heavily regulated and are backed by the FDIC (in the US, and often are backed by similar government agencies in other countries). It was not long ago (maybe ~100 years) that putting your money in a bank was not a safe investment, especially for very large amounts.

My example of what bitfinex does is exactly how you describe a bank. They lend money to others, and pay a portion of the interest they receive to their customers who have money deposited with them

Well I'm basically proposing Bitfinex (which I know little about) with a user friendly fiat front of shop (meaning an online website) so users never need to touch Bitcoin or a wallet but can use maybe a fiat type wallet even that can send money just like any other bank online does.

If Bitcoin serves the purpose Gold does then it's actually a natural base for an online bank.

The thing is that your talking about a currency exchange. Banks don't back up fiat money with some other type of currency. Why would a bank let you deposit fiat money and then back it up with something else that changes in price compared to that same fiat money? What would be the benefit to the bank or the customer? bitCoins fluctuate in price when compared to another currency, just like gold does. Either the bank would lose money or the customer would depending on which way the price of bitCoins compared to the fiat money goes.

I dont think so that there is a bank NOW, that is backed by bitcoins.

I told my bank manager (in germany) a few time ago about bitcoins, but even he dont know what bitcoins should be.
But wait 4-5 years, than i can introduce myself that there will be a few banks backed by bitcoins.

if I had a few million in Bitcoin and was smart enough I would be starting a bank not waiting for fiat ones to do it. Starting a bank now that is backed by Bitcoin but is user friendly in these times if done well could make you the next decades JP!organ, seriously it's a no brainier if you genuinely believe Bitcoin is going mainstream.


I think we are all programmed these day to think money and banks are for big powerful players and we can't comprehend that at some point these big banks were often started but some little guy.

What you have shared is pretty sad. Ypu basically have said fiat is safe while Bitcoin isn't. If you believe Bitcoin grows from this point then depositors would only be winners in terms of fiat value. You don't think in the early banks the value of Gold changed?

A "bitcoin backed bank" sounds like a contradiction to me.

The whole business model of banks is all about unbacked money. Printing money out of thin air, lending it at ridiculous interest rates. And if people (or countries) don't pay back, have the tax payer take all the risk liability.

EXACTLY!!! Which is why what I'm saying in todays world is almost radical. A bank that holds an asset and is running on quite conservative concepts of lending and deposits...nothing more.

The fact your description is so far from what a bank is supposed to be shows the thirst out there IF people understood corrupt modern banking. The fact is many in the world over the next few years are going to get a first hand education in the fact the money they thought they had in a bank simply isn't there. There's your ready made market right there.


What would be real genius is is the structure of the bank forced them to be only be able to lend out a proportion of depositors money and with Bitcoin attached to a fiat then it might be far easier to control. Say you were lent 10BTC into your account but it showed up as fiat as an extra layer which the user could spend just like any other fiat, but the underlying Bitcoin value would be deducted. I mean at the moment when we use Bitcoin we are acting like our own bak basically, all I'm saying is why not give that responsibility to someone who is better at keep the coins safe etc.


https://www.youtube.com/watch?v=7I_k0tAnQ7U

it's basically like scamming, but remember that bitcoin cannot be backed by bank, because it is decentralized, so if they hold your 1k coins, it isn't like holding the corresponding value in their local fiat money, bitcoin is not affected by crisis

I don't think there is any bank that I know of, which has been willing to back btc. Although, I have heard about banks which consider btc as an asset and make proceedings as follows which might deem requirement of such assets as safety or security.

That is not what I'm saying. I think I'm not explaining my self right or something. Banks, "don't back up money with some other type of money". They or the customer would lose money if they did that. For example, if I deposit Euros into a US Bank, they will immediately convert (currency exchange) it to USD and only return it to you in USD (unless you want to do a another currency exchange). If a bank did what you want, they would convert the fiat money to bitCoins, but only give back in bitCoins. The reason is that bitCoins fluctuate compared to the fiat money. You can have the bank do a currency exchange from fiat money to bitCoins, but you would have to do another currency exchange if you want the bitCoins returned to you in fiat money because the difference in the fiat worth compared to the bitCoin worth.

Banks don't backup money with some other type of money pretty much because either the customer or the bank would lose money. Early banks didn't back fiat money with gold and never have. Your thinking of the US goverment backing US dollars with gold and they made it so that gold couldn't go up or down in price.

Edit: To give you a better example why banks don't and never have backed up fiat money with something else. Say I deposited $900 into a bank when it was $900 per bitCoin and the bank converts it to bitCoins. I decide to withdrawal my money today at the price or $250 per bitCoin and the bank converts it back to the US dollar. I just lost $650 and the bank just made $650 off of me. Let's say I do a deposit of $20 back when it was $20 per bitCoin. I decide to withdrawal my money today at $250 per bitCoin. I just made $230, but the bank just lost $230.

Hi, I'm looking for an email service that I can use to send a fax, can anyone help me?

Lol, I see what you did there :) 

You've stumbled on my point and argued for it. My wife insist on getting a printer with a FAX function. I'm like why the hell do you need to use a FAX machine, but it's what she understands and no telling her that she can just scan and email or there are fax services online that will send to a telephone number will budge her.


My point is Bitcoin for the masses needs a few things I believe for them to 'bank' with it.


One, the masses including your mom and dad will never use a system that if they lost some long string of numbers and letters lose their entire nest egg, they simply won't. People need their bank to offer insurance, which in theory is perfectly possible if A bank that holds people's Bitcoin proves the risks are low due to due diligence.

Two, people need some human trust and interaction so money can be tangible for them, even a website with a helpline does this. They need a physical address of a company, a CEO name and staff, financial regulation and accountability. Otherwise they will think shit they could just walk off with my money, this stuff is a must.

Three, People have been brainwashed to understand fiat, they want to pay for stuff in dollars, pounds and cents etc. not pay 0.00003 BTC for a T-shirt.


I am surprised so many people here can't accept a simple concept. Maybe if I describe what I'm suggesting as a coop bank or farmers bank it will be understood. Simply pooling wealth to gain community benefit to hold and lend money isn't exactly a radical proposition. The mainstream banks would by the way be terrified if someone started such a service as it starts to undermine their business, am I being attacked by CIA or Treasury agents on here?

Actually, they use a system requiring keeping a small piece of information secret and accessible exactly because it enables them to -not- lose their nest egg.  If there were another way we wouldn't bother.  If your parents prefer to hire a money manager, I recommend: you.  If they don't trust you, one good way to see if the people offering them services are honest is to see if they avoid the word "insurance".


As you pointed out in point 1, bitcoin is already too tangible for your parents.  If a "website" (what's that by the way?) makes people feel comfortable giving their money away, they need to lose some of it to learn a lesson.  Thinking that money managers might walk off with what you give them is also known as common sense.  We -should- think that, and therefore be careful to use people we know and trust and proper incentives.


3000 sat for t-shirt is damn cheap!  Anyway, people have been brainwashed to accept all kinds of total nonsense [snip list].  Do you suggest we cater to the idiots?  I don't see why idiocy should be rewarded.   


As I see it your suggestion is neither radical nor new.  See e.g. mybitcoin.com which was the first bitcoin bank I heard of.  Now there are a lot like xapo, mpex, btc-e, to pick three services randomly which hold funds on your behalf. 

You opinion is not illogical but a bit too Darwinian for me. There will always be a large proportion of a population that needs handholding. To not cater for them means Bitcoin stays a niche currency rather than a mainstream one. We do all benefit from mom and Dad using Bitcoin....even if they never use a Bitcoin wallet etc.