Bitcoin Forum

In the US some non-banks are getting into savings account game. Robin Hood, a mobile app for stock trading, created buzz about a project offering 3% interest. It offered no FDIC protection however and has yet fully launch. Wealthfront and Betterment have been offering ~2% interest rate as leading 'high yield" savings accounts. Credit Karma announced this week that they will be joining the fray offering a ~2% interest savings account with industry-leading $5M in FDIC protection.

These are not banks. Technology is already eating up banks and governments around the world are clearly conscious of the fact they won't be able to maintain faith in their national currencies while increasing money supply to bail out failed banks time and time again. We are now seeing the FDIC extend coverage to non-banks that do not have the intention to ever become a bank. What cannot go on forever won't.

My hypothesis is that a primary hurdle that keeps people from seeing bitcoin as an option for their savings strategy is the learning curve with safe storage combined with a lack of consumer protection offerings for those that are willing to sacrifice their financial liberties for custodial security. This market segment includes early majority and late majority adopters. I understand Bitgo has tackled this problem set to some effect and seems established as an industry leader. Some other interesting teams are looking to nail down custody as a service, so I feel there is some validation here.

In searching for solutions that might convince people that see this as a fatal flaw for Bitcoin, I thought about dao projects that we've seen rolled out with varying levels of success and blazing flames of failure. A dao could be the perfect format for a FDICesque organization that allows holders to pay a small premium for btc protection. Without the shareholder profit prerogative the dao would be able to offer the most competitive combination of high limits for protections and low premium costs.

What are the other solutions you've turned to or are excited about?

Cheers

Can you protect a piece of paper with 12 words written to it better than a third party entity yes or no? If yes, you don't need any other (State/Private) protection gimmicks.

If no, go place it in a bank vault and pay the monthly fee to have it secured. At least you are forcing that bank to play by full reserve rules, without they even knowing it.

Banks by themselves are not evil, its the current version of banking, under fractional reserve that is more akin to a ponzi scheme that is.

It is the same story. These non-banks that are playing banks and are accepting deposit, they are called bank-like organizations they exist in cooperatives in remittance centers and others financial management businesses. But even though people are getting into non-banks , these entities or non-banks are still depositing their collected money on the banks. This means that it is an old story with only new characters. In terms of Bitcoin, those entities have no effect at all to the cryptocurrency market nor they are related.

Same for people with traditional investments like savings accounts - there have been cases that have caused those people to lose their money as well, due to the trust your placing into a 3rd party entity. Hell, even if you have your money in a savings account, the interest rates are usually not enough to cover regular inflation!

With bitcoin at least we have full control over everything, and we are responsible for everything - not a 3rd party that may or may not have your best interests in heart.

Bitcoin is a digital money that many people get some income and also a profit that we can use to answer our daily finance. To make secured in your bitcoin because there are to many scammer that wants to get your money.The another way to keep your money is banking system. We also need the old transaction and banking system.

something like this is only suitable for those people who are either opposed to change or are incapable of changing so they tend to try and stick to their old ways (handing over their money and control to a centralized entity).
but the thing is, such people don't even come near bitcoin because it is scary to them due to all the differences it has. i am not even sure if they deserve to own any bitcoin though. people come to bitcoin when they want financial sovereignty otherwise they are better off with banks and fiat.

I am actually getting surprised here that people are taking money out of the bank because of the benefit of 2% where the place I am currently resident, what would come as an incentive is within the range of 10% and 15% as against the 5% to 7% banks are giving on saving deposits but really people should be further encouraged to save money and the incentive should be something to be on the high side. The reason for that for me is due to the fact that in an established economy and advanced economy a whole lot of people have been captured into the banking net while lots of transactions have equally been captured.

The solution, for me, is no solution. Its good that interest rates are low, it further put some entrepreneurship spirit in the minds of people to better utilise their funds rather than keeping or saving thinking its going to make them rich. I would prefer to be in that economy rather than this. Crypto as a solution, I would agree what is lacking is the customer protection because investing in crypto is opening up to risk which no one is ready to subsidize for you and that is a turn off for many people especially the risk averse individuals.

Your hypothesis is definitely on point and true. Most Bitcoin holders are usually scared that their funds can easily be stolen and there is nothing they can do about it since they are solely in charge of the safety of the funds. With this nature of Bitcoin, adoption into the financial mainstream  is very slow. 

BTC Wallet itself act as a bank why do you need to send it to them for protection. You'd be more at ease when you know no corrupt government agencies will ask you to pay for depositing your own money. And they allow mobile app for stock trading to take part of thier scheme. Its more like FDI-see you later money!

What's the point of operating it as a DAO? After all, this model boils down to trust-based dynamics anyway -- custodians must be vetted and trusted not to defraud the insurance corporation.

If profit motive is what you're trying to avoid, why not aim for a nonprofit insurance association? That way, custodians could pool their risk together instead of hiring for-profit insurance companies at higher premiums.

This is a bit of a useless post - he's talking about the interest rates that savings accounts offer, and what benefits there are from holding BTC compared to the benefits of having regular savings account and just keeping money in it.

I agree - in the place I live, interest rates are pretty low and it actually barely covers the inflation that happens every year, and due to this, people need to be smart about how they keep their money, whether it would be in real estate, or cryptocurrencies, or actually using it.

There is no question that there are a lot of people who are looking for another option for their saved money maybe giving them a little more than what traditional banks can offer. Hence, what Robinhood is offering may eventually a big hit and will of course encourage other entities to offer similar programs. But these people failed to get it that Bitcoin can be offering the best and most profitable way to grow their assets and at the same time being a part of the digital and financial revolution. As far as Bitcoin is concern, I think what we really need is a good campaign for this cryptocurrency the only problem is that Bitcoin is decentralized hence it has no marketing team that can help spread more about facts and the potential that Bitcoin has. So far, we are relying on sporadic mainstream media mentions and of course the word-of-mouth people are doing especially in social media platforms. But why there can be people who are afraid to take Bitcoin? In my view, it can primarily be because of its volatility which new entrants may find beyond their taste to accept and manage with.

I'm willing to assure you, they don't. Funny thing is that they know it.
Mentality of a slave is the worst, while one dos not comes to self realisation of it. At some subconscious level, people that are afraid of any investments, know that it's not for them, they wont be able to endure the risk phase and most importantly, they know that having bigger amount of cash will drive them to overspending and eventually to bankruptcy. So they avoid it.
And I think it's a good thing, none ever truly is and the moment clever people realised this, welfare-state was born.
Self keeping always going to be a better option because nobody accept yourself really cares about your well-being.
Besides holder "protection" schemes have to much possibility of backfiring and depriving thousands of their goods. 

If someone is incapable of protecting their private key or seed, then they should have nothing to do at all with cryptocurrency. But being your own bank is not easy at all, therefore, the vast majority opts for a lighter solution, and that entails great risk. I always say that people should learn from other people's mistakes, and in 10 years of Bitcoin, there are countless examples of this.

People are too used to others taking care of everything, especially their money, but crypto is trying to change that. There is no bank or any institution whom I would trust to guard mine coins, even on hardware wallet I don't consider them completely safe.

I don't think it would be efficient for a company to offer interest for Bitcoins , holding Bitcoins might cause a great deal of trouble for the so call Bitcoins banks since they would actually be in losses 90% of the time , everyone knows that the highs are not that frequent therefore I think it won't be a good thing , maybe these things are just a scam and nothing else , one should refrain from adding their money in accounts like these , well I am myself interested to know how this interest system works ..

totally agree...!!! it is a step that must be realized for all bitcoin holders in order to get security and have guarantees from hackers and bitcoin thieves .... it must also be addressed by the legal system in force in each country, because each country has its own legal policies .. Even many countries do not have a legal umbrella policy for bitcoin holders.

Yes they will. You're your own protection and you make it as good or bad at your discretion. You can make your money even more secure than banks if you would like too because there are multiple ways a bank can lose money. Banks invest your money and have the potential to lose it this has caused banks in the past to go bankrupt. The banks can be robbed and the key difference between you being robbed and the bank is people know that banks have money but you can keep the fact that you own Bitcoin a secret.

You cannot trust a third person to protect your coins and the safest option is to have complete authority of your coin where you hold the private key, the concept of bitcoin is to have complete control over your financials without the help of a third person to safe guard your wealth and if you are not capable enough to safe guard and look for a third person to take care of that basic thing, then you are not capable to hold bitcoin.

This is recommended for the investors who are not able to protect themselves from the hackers cause they only  have a little knowledge about the blockchain technology.
this service is a must for them. actually this is a good service to make it easy for them to secure their crypto assets. As for the people who are knowledgeable enough to protect their crypto assets, this service will no longer needed by them.

In my opinion, No one is really safe when you hold Bitcoin it is always prone to hackers and fraudulent things that are online, I am not judging their service because I don't have any experience in using it, but if it is online it is always prone in getting hacked, if you would think about exchange getting rob by hackers, All services online can become victims and I think there is no 100% perfect technology there will always this flaw that can be expose.

I think there is cold storage that is 100% offline that is really safe for storing cryptocurrency.

Indeed like for example newbies, most of them are still confused and doesn't have enough understanding about safety and security which makes it more bad because as we can see it is definitely speculative. Its the reason why many of them had some bad experiences because of hackers who easily access and take their assets away, its helpful for each and everyone of us who badly want to ensure that our assets is safe.

I'd rather trust a hardware wallet for my bitcoins and altcoins than saving it on a bank account, I am not that suicidal. This bearish market is scary enough and I don't want to add another problem to my life right now. I'm going to add that we don't need no Government for protecting our bitcoins, we, ourselves are the one who is responsible on doing such a bitcoin enthusiast thing, if they don't trust, well I don't trust them too.

Then it’s definitely better to keep Bitcoins on a hardware wallet, not store or trade on the exchange. It is better to make money and invest their free amount in Bitcoin.

You can't call an investor an investor if they can't protect themselves especially their funds on their own and an investor with little knowledge of what he is investing in? the blockchain technology?.
Government services aren't needed and necessary for bitcoin wallets, you will always rely on your own actions, not government protection. Even the government gets hijacked sometimes.

actually this is an interesting offer to invest our money with a pretty good commission but I am still hesitant to invest there because this is a new project to run especially they offer quite a lot of commissions, but I prefer investing with bitcoin even though we know bitcoin is not so safe but I'm sure about bitcoin for our future.

Fiat holders will never be completely safe with the bank too, they are just thinking its safe for their own peace of mind because they don't have any options left where they are going to store their wealth. Furthermore, it is much easier to everybody to use something that has many reviews, I mean if you are buying a dress, you are going to ask first if it is their best seller, that goes the same with the people to the bank, since many are using it, people are easily persuaded by the majority.

If people need protection from volatility, there are futures contracts exactly for that. They are if you are confident about a certain deal, and you can win or lose depending on what really happens at that point in the future, but at least you know what to expect. Interest rates are boring anyway, IMO. We have some "incentives" to hold money in the banks in my country, but this percentage is miserable. If people need protection from hacks, then they need insurances for their bitcoins. Some insurance companies are now offering deals to insure cryptocurrencies, but this market niche is still fairly empty, although I think it won't be so for long.

That's certainly true, but what we don't have is a regulated platform at which people can safely do so. There is CME, but the minimum order is a 5BTC contract, and you don't actually get any Bitcoin at all since everything is cash settled. This is exactly why I like that we have a platform such as Bakkt now, where people as time goes by can enter very easily and they can get actual Bitcoin delivered.

1BTC contracts may still be quite steep for a lot of people, but at least it provides some variety and much needed legal recognition, and who knows, if the demand really picks up, Bakkt may introduce smaller contract sizes.

Bang on, I am also struck in these cross road to believe it or not, I mean this looks so attractive with a reasonable commission amount but nothing compared to the profits which can be earned through bitcoin within a fraction of time during Bitcoin's heyday. I would prefer to stick by loyalty to bitcoin and other altcoins like ETH and BNB.

Exactly what do you talking about bitcoin, but investing money offering a big commission I advise learn well to avoid a victim of scammers. Yeah bitcoin is a risky investment but of course people knows the capability of bitcoin and it is proven way back in 2017 the all time high history of bitcoin a lot of people are getting benefit on that time to get better profits so nothing doubt holding bitcoin into safe wallet is profitable than to use bank or anything.

Sve with the bank and pay monthly payment fee I think is better than we hold in our wallet, saving in the bank more safety than we hold or save our bitcoin in wallet, by saving in wallet we faced with thousand kind to stole our balance where many hacker try to get access to our bitcoin wallet, its not worry to pay monthly payment fee if our bitcoin keep save for long time.

for this discussion, I think it really needs each individual to see and pay attention to how the results are, because bitcoin protection will be very useful for those of us who have several in the wallet. I also think that the advice of friends here is very helpful to be able to protect my coins here ...

Cold storage is a great option which some exchanges are using to protect their digital assets and those entrusted to them and I think so far they are the safest platforms and as for others they should start praying that hackers will not be interested with what they are holding otherwise it can be a hell of an experience and can even put the death certificate into one's business. This is one of the biggest challenge I see in the world of cryptocurrency. Now, if big banks can be subjected to successful hacking, much more with small platforms who can not afford the highest and the most effective security technology. No wonder there are some people who are staying away from cryptocurrency as they are aware of the risks including getting hacked. For individuals, the best way is to use hardware wallets just don't forget the keys.



I read somewhere that one big beneficiaries with hacking and ransomware are the insurance companies providing their services to different platforms who are looking for some protection and assurance that if something can happen they can still recoup even part of what they lost. Actually, this is going to be a booming business and the market can be big. Just another business is born because of this problem.

Technically, the cryptocurrencies particularly bitcoin is created mainly as a decentralized platform. Wherein, no interference of banks are need to provide support and security for hodlers. We just need to become personally responsible for our transaction and make it clean that each and every transaction made by us is legal. In this case, as we should also consider providing another computer or storage that is not connected to our personal computer to avoid being breached. Our security will start on our self, and we should always  be aware of that.