Bitcoin Forum

Hi Guys

I have been doing a bit of thinking today and talking with a friend and wanted to express my view on Bitcoin, and ultimately get some feedback from you guys on it.

For this thing to really get popular, everyday users who know nothing about bitcoin and don't care about it either need to find it is cheaper for them to transact in bitcoins rather than normal currency.

That means that the benefit of bitcoin, ie. not having to go through 3rd parties, needs to be realised.

The reason why I think bitcoin has got potential to really do well is that businesses pay so much money to 3rd parties for transacting. Think about it: Every time a business accepts cards, it pays anywhere from 3-8% of the transaction value to the credit card company.

Businesses would kill to be able to avoid that.

However, here's the commercial problem with bitcoin.

(aside from the fact that governments probably won't like it for tax reasons).

Bitcoin is ultimately competing against some of the biggest and most interconnected institutions in the world: banks & credit card companies. Most of these companies are very closely connected.

Bitcoin unfortunately to work depends on banks. Why? Because users need to be able to convert their USDs/GBPs/EURs into bitcoin and then their bitcoins into USD/GBP/EUR. This can only happen if a bank is involved somewhere, either directly (through a bank transfer) or indirectly (through paypal/online payment processing).

Banks will not be happy about Bitcoin, due to the fact it competes with them.

Therefore they will not allow their customers to convert into Bitcoin. They will block the accounts of the biggest individuals or companies that are exchanging BTC to mainstream currencies. And yes there are a lot of different banks out there, but all the worlds banks are closely connected and I am sure they will ALL be in agreement that bitcoin is not in their collective best interests.

Not saying that Bitcoin will be extinguished: they will always be individuals who will convert BTC into currency via exchanges like MtGox. But there will never be one big company or institution that supports bitcoin conversion, and without that the currency cannot enter the mainstream. (ie. be used everyday for consumers, online or offline).

Bitcoin will always be useful for some things I believe, and it will still have value. But it is not going to change the world for this reason.

(BTW this ignores the fact that banks have huge political influence and will support any political attempts to block the advance of bitcoin.)

What do you guys think?

I think there's a good chance (mmm... 65.3%) that within 4 years one or more of the largest 1,000 US banks will support currency exchange to/from bitcoin for their customers.

Why would bitcoin be a threat to banks?  They're really good at securely handling currency; that's a valuable service, whether the currency is dollars or euros or bitcoins.

Because every electronic transaction that occurs in Bitcoins means less revenue for them, as they are not in the middle.

They might indeed gain from more FX conversions, and I guess they could charge fees for that, but I bet they stand to loose more from lets say "intermediatary fees" than they would gain from additional forex transactions.

Isn't that the whole point of bitcoin? That it frees users from the high fees embedded in the banking system?

Btw don't Bitcoins securely handle themselves? So there is no need for 3rd party security? Or are you saying that banks might offer to protect users' wallets for them?

Gavin picked an interesting number in one of the top 1000 banks.  Now this is interesting from a couple of interpretations.  Does he mean *currently* 1,000 biggest banks?  Or does he mean a bitcoin bank will grow so big it will be in the top 1,000?  I'd assume he's talking about a company that currently is a top 1,000 bank.  But even then, the banking industry is interesting.  The big players have so much influence and power and a lot of the little guys- not so much.  So the little guys might be tempted to adopt Bitcoin because it gives them protection against the big guys.

A brick and mortar (or even online) bank that supports Bitcoins would be great for casual users, and a point of sale instant network would also be quite good.  Hell, if this really caught on, maybe banks would be the only ones that actually were running the software and we all just had interfaces to it and they still had some transaction fees, although much smaller.

This ignores the simple fact that the parties that bitcoin relies upon to succeed have the most to loose from bitcoin's success.

I'm not saying bitcoin isn't going to be more successful than it is.

But for businesses (online and offline) to take it seriously, it needs to be supported by mainstream banks not just by backroom dealers. And I can't really see that happening any time soon.

Am I just being too negative?

Not only are you being too negative, you don't seem to get it either ... perhaps some more time in the reading room before grandiose pontificating?

It will be in the economic interest for some banks to adopt bitcoin as just another currency they can act as an intermediary on (not enough people trust bitcoin to roll-their-own right now but if an early adopter trusted/regulated bank was offering bitcoin-based products they would be wildly successful for reasons too numerous to mention here) .... after the first one does it, it is all gravy from there on.

And it doesn't really have to be an actual bank to start the trend.  If Wal-mart starts accepting Bitcoins, even just for their site-to-store purchases, then every one of their compeitors is going to have to follow suit quickly.  If Target does it first, Wal-mart might be able to resist for a while longer.  But once any major retailer such as these try it, resistance from the banking industry would be counter productive for their continued existance.

http://www.youtube.com/watch?v=WZEJ4OJTgg8

we are botcoin .... you will be assimilated .... RESISTANCE IS FUTILE .... your life as it has been is OVER



hahahahahaha!

This is a peer to peer currency, is it too disruptive to think of a world without banks ?

The basic nature of a bank is bound to change somewhat, but the core concept of a bank as an institution that lends deposits out for interest is unlikely to change.

Today nature of banks migrated more to a services model : payrroll accounts, atm's, electronic banking.
All of that can be covered easily with btc, peer to peer lending included.  ;)

You'll just be able to go to the bitcoin ATM on the corner, put in cash, and get bitcoins. Or, meet your local dealer f2f and pay cash.

True, but Mybitcoin.com is almost a bank already.  There will still be a role for bitcoin banks.

Keep in mind that there is no lender of last resort for Bitcoins. If a Bitcoin bank practices fractional reserve banking, and there is a run on that bank, they will have to either borrow reserves from their peers, or go out of business. There can be no federal reserve to create more coins to cover their liabilities. I think any potential banks supporting Bitcoins will be acutely aware of this fact.

just like the gold standard days. Free market banking is back!

There is zero chance governments are going to tolerate this once it grows beyond a certain scale.  Their power to tax and control your lives rests upon their iron grip on money and banking. Their squeals about "criminals" using this system divert your attention from the fact that tax resisters are also "criminals" in their mind.  Bitcoins, and other variations of this theme give people a chance to store value and transact business outside the government's control.  Governments will hate this and do everything they can to crush this.

Therefore this is a great idea.  Give Uncle Sam (and his inbred kin folk) all over the world, a big fat middle finger and keep on truckin'.  Crash the $, crash other fiat money, and maybe, just maybe, you'll achieve liberation.

Thank you all for the replies to my post. I am rather new here, so I probably have mis understood some things. I come from a background in finance, and so am probably lacking some of the technical knowledge of Bitcoin. But I have read a bit on the idea, and find it very interesting. I hope that I may be able to bring some perspective from that industry to the community.

OK - let me respond to your posts!


My thinking is that it will be in the collective interest of all banks not to support Bitcoin. Even if some perhaps smaller banks would gain more from FX, the big players will act politically to seal them off from the global banking system if they make serious moves to adopt Bitcoins as part of their business models.


Governments are very strict on regulation of the financial services industry. My thoughts are that they would have a problem with a retailer accepting bank deposits. Some key unanswered questions: Why would Walmart accept Bitcoins if none of their consumers use them? And why would consumers use them if they don't have a bank which they can use to obtain them? And how is Walmart going to convert the BTCs they receive into hard currency without mainstream banks?



I am sure anything is possible. We only have to see what has happened in the last few years with the credit crunch, Lehman etc.
However, my thinking is that there has to be a logical route for it to happen.


This would rely on widespread adoption of Bitcoin



I am not saying that you will not be able to meet a local dealer and exchange. But for widespread adoption, you need a mainstream dealer.



Bitcoin has some real advantages over existing currencies. I seems in essence to be a better business model for a currency. But there are many 'better business models' that never became reality because of politics.


Yes I can't help thinking this is true as well. Governments rely on control of the banking system for their income, which allows them to exercise control over society. Whilst governments would probably be able to tax in Bitcoin, I think that the negatives for government combined with pressure from the banking system would over-ride any positive arguements for Bitcoin's adoption.

Please let me know your thoughts on the above. It is probable that I am being too negative. I await your comments!

Not so much negative as willingly close-minded perhaps. If you are a product of the current dysfunctional, weak, financial system then anything new will be a threat I suppose.

I can't see it being anything less than a crap-fight for the ages ... choose your side wisely is my only advice to those who are part of the current failed financial order, who have been raping it off the top for way too long, I might add.

E.g, clamping down on Joe Couch playing poker in his pyjamas is not winning any friends in the hearts and minds battle.

Yes.  And that will persist for as long as they can maintain it.  However, Bitcoin is regulation resistent, and international by design.  There is really no way to effectively enforce any regulations that the market would deem to be oppressive or unneccesary.
Some of their consumers already do use them.
For the same reason that Walmart's have tax, finance and money transfer services inside the store.  Because Walmart is only a small step from being the bank itself.  Walmart can still accept cash in person, but walmart's online and international presence are no small part of their business model.
I know that Sears functions as it's own bank.  I'd say that Walmart is more than big enough to do the same if they wish.  Walmart is certainly large enough that they don't need a bank to stand in for them to do currency conversions.

read this:  http://docs.google.com/viewer?a=v&q=cache:Z1aK2cAnWl0J:siteresources.worldbank.org/AFRICAEXT/Resources/258643-1271798012256/M-PESA_Kenya.pdf+m+pesa+in+kenya&hl=en&gl=us&pid=bl&srcid=ADGEESgK0nQlLli7vxzi-IYwiVHQCR1cUKh-tciYKhqVGfJbrxwKC-DBDc8odwykJCw992IoPfeb20FWvmOP3pgJwR77vH-nNXLGsyjrEQyNquQG0OICPLPKNRURYyXwFXK-sHhywgLC&sig=AHIEtbQSonmhImIIxylKfUzWNTF6jqQkCA&pli=1

in Kenya, the banks, credit card industry have been effectively shut out of the majority of tx's in the country by M Pesa.  whodathunk it possible?  BTC brings this concept to the rest of the world.

And transactions are far less expensive in Bitcoin than MPesa.

Bitcoin will decimate the banking industry for the same reason that the internet decimated the travel agent industry.



Yes, they are good at securely handling currency, but only with big overheads.

It won't stop being a valuable service, but securely handling BTC is a lot cheaper and less labour intensive than securely handling USD or EUR.

A bitcoin vault service run by computer security experts would probably only need need 1/10th of the employees as an equivalent sized bank, and it would probably offer superiour security at that.

But they won't have the experience jumping through all the banking system regulatory hoops, or experience dealing with currencies other than bitcoin.

I expect lots of successful bitcoin vault services, and I expect one or more of them to be purchased by one or more banks and made a part of the banks' money services business.  If they see bitcoin vault services making big profits, they'll want to own one.

My predictions are frequently wrong, though.  Maybe US banks will fight bitcoin tooth-and-nail, or maybe the legal issues will be too unclear for any bank to risk getting involved.

I think this is a very reasonable projection.

I expect that at least one vault will cut and run with all the money that's inside it

In addition, I expect that one or two vaults will lose the money due to hacking or incompetence or a software error.

Eventually, rock-solid vaults will emerge, and will fiercely guard their good repuation.

Then, some years later, governments will regulate Bitcoin vaults, and the providers will do just the minimum required to maintain their registration, meanwhile enjoying the protection from competition that you get with a regulated industry sector.

Then, some years later, there will be a crash because it turns out that the regulated vaults were using their Bitcoin deposits on unsustainable collateralized debt obligations. The government will say that it happened because there wasn't enough regulation.

Rinse, lather, repeat.

I just hope the Sultanate of Kinakuta gets their data haven up and running soon

The main way banks make money is not via "fees", it's through their *monopoly on the creation of money*. When you sign a loan, they create the money from nothing, and then *charge you interest on it*.

One of the reasons the British were hopping mad at their American colonies was that the colonies started to use their own currency. This meant no need for loans (in British pounds), hence no interest! Moreover, no transaction fees either...not using British Banks or pounds as an intermediary for exchange of goods.

Bitcoin is therefore like sunlight to money sucking vampire banks...it sidesteps them and their whole model completely. If bitcoin takes off, I predict governments (read banks) are gonna start pulling all sort of BS out of their **sses to regulate the hell out of it.

You got it ... it's gonna be crap fight for the ages ... we haven't had a good upstart money to rival the banksters monopoly since the American Revolution ... I'm serious, this is gonna a be big battle, choose sides carefully, history is not kind to losers.

Quote: "maybe banks would be the only ones that actually were running the software and we all just had interfaces to it and they still had some transaction fees, although much smaller."

This might be an interesting model for various alternate block chain variants/clones of Bitcoin to try.

I suspect that if existing government-licensed banks did this, they would do it with their own blockchain or blockchains.

Think peer to peer where peers are highly privileged folks not just any old tom dick or hairy.

The model might work well for example as an international currency if national hashing power happens to compare similarly to other types of national power. If the current top five or seven or ten or twenty or whatever finance-nations or groups (e.g Euro nations as a group) turn out to also be the top five or seven or ten or twenty of whatever in hashing power, maybe moving to a blockchain-based reserve currency could work well for them.

It might be a useful startup configuration for various alternative bitcoin-like currencies because limiting the "peers" doping the actual "mining" part of the system - in particular, the actual "minting" of the coins - allows various different models of how to initially distribute the coins to be implemented.

Instead of any tom dick or hairy grabbing a copy of the software and linking (possibly even anonymously) into the network, various groups can issue their own variants each featuring their own ideas of how to "back" the "value" of "their" coins and how to initially distribute coins.

As a start toward a kind of experiment or simulation of this kind of thing, a "resource mining" game has been set up at http://galaxies.mygamesonline.org/ to provide a kind of substitute for or simulation of "mining", allowing players to "mine" or "synthesise" three different "resources" (metal, crystal and deuterium) which are themselves then used to construct "mining" and "synthesising" facilities and various support infrastructure such as transportation, storage, defense and so on.

This provides a backdrop against which various factions groups or individuals can try to establish "value" in any currencies they care to implement, whether new blockchains invented by themselves or any of the ones supported by my IRC bots or any existing currencies or even simple balances of how much of which resource someone is claimed to have "on deposit" at some storage facility or facilities featuring various shipping costs to transport the deposited resources to and from such repositories.

Establishing quick and easy conversion between any number of currencies based on bitcoin type blockchains can thus maybe be started within games as a kind of t4estbed to play with it all and maybe to some extent even "simulate".

As a player, will you seek to establish one or more currencies yourself, or trade via currencies set up by others, or stick to bitcoins and paypal and pecunix and liberty reserve, or maybe even just do barter of one resource for another without bothering with "currencies" at all?

It could be interesting to see what choices people make and the outcomes of them...

-MarkM-

The largest insurer in the world, that insures both retired military and active military is USAA. What people don't talk about is the reality that USAA created a "cryptocurrency wallet" for all their customers. Once the bitcoin comes into the account, it may be converted to fiat then transferred over to the customer's checking account where FDIC is obliged to protect it with its insurance.

And APPLE accepts credit cards, echecks, PayPal, Square and six (6) different cryptocurrencies and they'll accept more as time goes by.

Goes to prove that the established "banking world" cannot continue fighting innovation. When the electric car came on the scene, Detroit bought it and shelved it for 50 years. And the first "ChargaPlates" fought off credit cards competitors with a vengeance. When Paypal came on the scene, Western Union lost its footing and paid half a billion trying to take it down. It failed and now PayPal is part of our daily financial world. Banks, cards and sometimes PayPal fought off "Square."

And if Wells Fargo had used cryptocurrency and blockchain throughout their banking systems, they could have avoided this travesty they're dealing with today.

Wells Fargo Execs smugly paid the $185 Million dollar fine because they were keenly aware that when a customer opens an account, the fine print forbids customers from suing the bank for any reason. Bank Executives know the wording is in the fine print - but most customers did not notice.

5,300 bank employees were not fired "overnight."  5,300 employees is the number of employees fired from 2011 through 2016 for opening fake accounts using their customers DOB, Social Security numbers and all the other financial information in the customer files. The bank's brass wasn't satisfied with their current "6 products per customer" sales numbers. They wanted "8" products sold per customer.

That's why their hard line sales tactics with their staff was called "The GR-eight Sales." Supervisors that forced their underlings into creating fake accounts even won bonuses as a result since the fraudulent accounts helped them meet and beat their sales goals.

We must discuss the current day banking issues that affect us right now before we keep fighting about "if" cryptocurrency will be accepted by banks in the future. We should be preparing for "when" cryptocurrency is accepted because its acceptance is inevitable.

Cryptocurrency is needed RIGHT NOW...  Wells Fargo bank employees had no fear of the law because they knew their customers had no options. California State and Federal Courts have been throwing out cases suing Wells Fargo for years and the bank execs make their decisions confident that their customers can't do anything to defend themselves.

Bank employees whom are not even bonded have way too much access to all our information (I am speaking as a banking customer). I wrote my observations on my blog and added the link to the article I wrote about this problem below.

NOTE:  If it is unacceptable to post outside links here then I ask the moderators to feel free to remove the link so that I am in compliance with the terms of service of bitcointalk.org.

Cryptocurrency is the reason 30+ Iceland bankers are currently serving criminal sentences. Cryptocurrency could have identified the thefts immediately at Wells Fargo. The retroactive ability to identify theft and transactions is also the reason banks in general keep rejecting cryptocurrency. They realize it's similar to bringing a cop into an illegal poker game.

Cryptocurrency's very nature makes current transactions and future ones transparent. The fact that is also reveals quite a bit of banking activity retroactively is why banks keep rejecting it.

Who did Wells Fargo bank employees target anyway?  

Our society's "weakest links." Poor and defenseless Blacks, Hispanics and Senior Citizens http://snn.bz/bank-employees-robbed-customers/

Banks will start they own altcoin, will make all users eat their shit like they always do.

The other side of the coin is: Bitcoin price will increase and others alts too because more people will know about how it works.

Well you can already do both those things. Bitcoin ATM's are located all over the world and if you want f2f dealing, just go onto localbitcoins and find a seller near you.

Well i really doubt they will make their own crypto coin, if they make they need to give something to their investors, some reward as the size of coins hold by each one, otherwise makes no sense to invest into something we know it will be controlled by bank, and maybe the altcoin wont change, with several restrictions as can be purchased only at bank and sold as well.

Bitcoin is not a competitor of Banks. Both have different target markets. Both have their own characteristic's. Each have their own down sides. Each have their own advantages. But its good to have both of them if you have enough money to store in Bitcoin wallet or Banks.

i think bitcoin and bank its two things that cant be mixed together, bank is centralize, it is controlled by government while bitcoin is decentralize which is control by the users, and i doubt bank will adapt bitcoin system because bitcoin main feature is anonymity and able to generate address as much as we want, and the bank will never accept this kind of things

Hey Op I don't think you need Banks to convert your BTC to Fiat Money, Yes it is one of the ways (through bank deposit) but it is not the only way. I am using a local btc wallet here in my country and they have a 2 in 1 Wallet for my BTC and my local currency in which I can convert it anytime of the day. They also have options aside from bank deposits are door-door delivery, and Western Union Pick Up to name a few. So Bitcoin will work even though without a support of any bank, btc wallets are run by real companies too.

But about your sentences, if that is referred into bitcoin? I don't think we can realise it, we always need the through of 3rd parties, and like someone is always need the another person in their life, but that is in my personally.

here in Australia, some of the big banks are actually working on ways that they can use the basis of BTC to develop their own private blockchain system. There's an interesting article about it at http://www.afr.com/technology/anz-backs-private-blockchain-but-wont-go-public-20160629-gpuf9z

For me though, I feel that running the blockchain through a major bank takes away a lot of the privacy associated with crypto currency though, so I'll stick to BTC myself!

Asked about the choice of a bank or a bitcoin, you can say yes, it's all different things and share them too it is impossible. Virtual finance and real even cashless still very linked. But there will also be one without the other is not.

If you ask what would I choose bitcoin or bank for me it should be bitcoin because bitcoin grows value time by time so if your money is small you can get your money big if the value if bitcoin increase. Also it is easy to create bitcoin wallet than creating bank accounts too many requirements needed. You can check also to your phone.  So it is safe.

Perhaps Australia is one of the first countries that come up with the times. Cryptocurrency they recognize, if not recognized and allowed to complete the course. But the banks can only connect to this action, although it seems to me that this was their initiative.

i think bitcoin will not compete with the bank, but it will help bank to integrate with crypto currency and will be bridge between bank, internet, and people and could reach more people to make transaction using bitcoin.

but maybe this plan will be apply after the bank read about bitcoin technology and make some research about how to integrate it with bitcoin. i think it will need some time before this could be apply.

The combination of this two will really give a big impact to many people. Imagine a high percentage of bank trustees also enjoying bitcoin. That could be a big blast.

but i think we cannot depend on bitcoin only. in present time as we most depend on banks the salary we receive through banks we pay utility bills using banks we do admission in colleges and universities using banks so the importance of banks cannot be ignore therefore i think we need both bitcoin, and banks for fiat currency.

At the moment I see no option how to avoid banks.
Most public services do not accept bitcoins (in my country every public service).
And I don't think bitcoin was developed to replace the banking system.
Bitcoin is an online payment method for shops and private people, and a source of income for miners.

Well atm bitcoin machine are not yet available here in my country we always togo store to buy bitcoin currency and its all free no fee it easy to buy bitcoin in store than human because sometimes you will be scammed or something and its too risky to buy bitcoin from human

bitcoin is growing. today bitcoin has been gaining acceptance in large enterprise companies. while for me to enter the world of banks, bitcoin should be a matter of time. perhaps the decade ahead bitcoin has become a financial power.

Yeah that is true, but there is not that many in the country I live in as Bitcoin is not very popular here. I think that if the banks support Bitcoin, more people would also support it.

that is right because many people still fear bitcoin may be scam or some meaningless numbers on their screens and something like this can help it a lot.

but the problem with this, is that banks and bitcoin doesn't work well together. when you use bitcoin you don't need any bank you only need a wallet and you can be your own bank.

Jeez do you guys even know how much fees there is with the bitcoin atms right now?
It takes a good slash on your bitcoins wallet everytime you withdraw bitcoins from those ATMs. So right now, it's not really recommended and one of the reason that it's not yet very popular.

I remember back in 1997 they used to say that about the Internet and treditional media. Not only did the Internet survived, every media station or news papar utilize the Internet for it's need. I belive this will be the case with bitcoin also.

Bitcoin - The Internet of money.

good point.
this is also why i have been saying banks will finally come to realize that they can not fight the advancement of technology and bitcoin. so they will eventually adopt it themselves.