I invision a future that online wallet services will be bonded, insured and interconnected; and thus be able to provide for near-instant transfers to 98+% of the bitcoin users regardless of which wallet service that they use.  I don't regard this to be equal to wallet services becoming banks, even though this kind of interconnected distance transfer service is a large part of what we commonly think of what a bank does today.  That is not to say that wallet services cannot become true banks, or that a bank cannot offer a wallet service, but they are not equivilant.  I honestly don't have any idea if, or how much, a future user of wallet services would be willing to pay as a monthly service fee for this kind of service, which isn't much of an upgrade from what the client can already do.  The only way I can foresee such pay-to-play services becoming common among bitcoin users is if the transaction traffic were to increase to such a degree that a standard blockchain transaction were to become so expensive as to justify a parrallel/overlay network of major wallet service users that can save users' money by avoiding blockchain transactions altogether.  Such a parrallel/overlay netowrk is not simply likley, it's already occuring, as that is what Stratum does.  But again, Stratum is a free client that anyone can use, so I don't know how profitable such wallet services could ever realisticly become.

While I agree that honesty in banking would go a long way to resolving this issue, it would not put an end to bank runs on poorly managed banks, nor should it.


Yes, I'm still waiting form my bitcoincards.  I've got five kids, and I'd have at least one per kid in the first run.

That would be an undesirable 'trick' indeed.  The free market requires failures to actually fail in order to progress.  That is part of why we are stuck in an economic rut these days, because TPTB are making mistakes similar to 1933 when they should be doing the things their predicessors did int 1920. 


On-demand accounts are, for all practial purposes, entirely useless within the Bitcoin economy.  That's one of the functions that your bitcoin client provides for you at the cost of processor time.  No bank could compete with that, nor can any payment settlement system (think Western Union or SWIFT) compete with the Bitcoin network's cost effectiveness and speed in this catagory, either.  The only function that a traditional bank could offer the Bitcoin economy would be interest bearing accounts in return for investment lending. 

The greatest impediment to widespread Bitcoin adoption is the idea that credit cards are faster.  They are not, and any online vendor would be able to tell you it can take up to 40 days for such transfer to "settle".  Bitcoin transfers are usually settled within an hour.  Transfers among users of the same online wallet, so long as both users were trading using their online wallet account to trade, occur as fast as Paypal and for the same reasons.

This is a tired topic for me, but I will once again offer a quick response to the OP.

1) Bitcoin does not provide for fractional reserve banking (what you really mean by 'credit' here), because it's designed to be a rigid monetary base, just like gold was prior to 1900.  This does not mean that fractional reserve banking is impossible.  If Google or Amazon decided to jump on the Bitcoin bandwagon, and offer deposit accounts in bitcoin, they could rationally loan out more than they actually had because there would be at least some people willing to accept the word of Amazon as being functionally as secure as if Amazon provided the actual bitcoin transfer.  However, this would also mean that the ratio would be more rationally limited.  Instead of a 9:1 lending ratio, as is the current limit for FedReserve member banks in the USA; Bitcoin banks would not be limited by law, but by the threat of competitors forcing a run.  This would likely result in a ratio closer to 2:1 for healthy banks, and unhealthy banks would go bankrupt when a competitor forced a run.  Such runs would also destroy the value of deposits.  This is how banks worked prior to 1913.

2) Credit is not what you understand it to be.  Capital is not credit, that is mathmatically impossible.  Capital must always exist, so if credit is not sufficiently backed (i.e. not capitalized) then it will eventually collapse upon itself.  Capital isn't money.  Capital is productive goods and the knowledge to use them in order to produce.  For example, a tractor is capital to a farmer, and a tractor can be valued in monetary units, but that amount of money is not the captial.  To just create money to be used as credit for capital goods does not create more capital goods, it simply inflates the nominal unit price of such goods.  The tractor must exist.  Expansion of credit for the purpose of "stimulating" capital production is a useless endeavor.  It's akin to taking buckets of water from one end of the pool and pouring into the other end.  All you do is alter the flow of the water, not alter the amount or distribution of water in the pool.

3) When and if investment banks are necessary for the growth or health of the bitcoin economy, the market will provide such.

...there was much discussion on this forum about how many bitcoin users there were, and many doubters questioned whether there were, or would ever be, more than 10K people who used or cared about bitcoin at all.

At this time, this forum alone has over 68K registered members.  While that's certainly a far cry from a 'critical mass' of users, the number of people discovering Bitcoin each day is rising exponetially.

http://phys.org/news/2012-01-people-socially.html

I've got to grant this one.

Guys you are just talking past each other.  Whether or not it can support full USB specs or not, 500mAmps per port is still only 4 amps for the entire hub.  I doubt 4 amps is enough to support 8 asic miners working full tilt, even if the power adapter was capable of putting out more than 1.6 amps.

That may be true, but make certain.


Not for Mt.Gox.  Whether they create a transaction to empty the address or not, the risk is with you, not them.  If you put funds into Mt.Gox via a compromised private key, and then that address gets raped, it's you who loses money, not MT.Gox.  Sure you can get funds in fast in order to make a quick trade, but you can't also get the dollars out within an hour.

Perhaps you need the wisdom not to bite?

Yeah, even I have to admit that the external security threat issue has long been hashed out, with historical examples to support it.  Even in the absence of defense companies, militias form readily when the society is under an external threat.  During and prior to the American Revolutionary War, militia companies formed by electing their captian from amongst their own membership, and had the right to withdraw from any militia company at any time before hostilities have already commenced.  They would agree in advance that once the shooting starts, anyone among the group who then turns 'yellow' under fire is endangering his peers due to lack of commitment.  This rarely happened during the Revolutionary War, but those that did this ever more rarely lived to see a trial of any sort.

Internal security is a different issue, but is also well hashed out.  There are numerous examples today of private security companies with varying degrees of competancy able to take over the work of public police forces at any time.  Most likely, the private security companies would also be the defense companies, but since collective defense is a much rarer risk it's possible that one defense company could be sub-contracted by a large number of smaller private security agencies.  This is similar to how "constables" function in my own city.  The Louisville Police Department draws it's legal authority from the county sherriff's office, but there are also two constables' offices in the county that also have similar legal authorities, but are not paid by the government in any meaningful way.  The constables' offices are technically elected positions, but are (in practice) simply held by some joint-owner of a pair of private security firms that hire the city cops for off duty gigs, such as for major event security at the convention center or bank branch security with full police powers.  If those two companies can't keep one of their own in the constable's seat, then they can't honor their contracts because city cops cannot be hired directly (with their full police powers intact) without the government title because the constables themselves are usually not cops themselves, but businessmen, and the police union would get sideways with the private companies if they didn't have some kind of "official" government title to cling to.

It should be obvious that, should the sherriff's office ever cease to exist, either one of these two companies woudl be both willing & able to step into the gap without skipping a beat.  There is already a smaller city (Jeffersontown) that "contracts out" their entire police force in a similar manner within the county itself, and there are numerous examples of smaller class cities doing similar things rather than directly hire a couple of their own for each of three shifts, seven days directly.

What is an "after eight" anyway?

Thanks for my Horseless Headless Horseman's Axe!

That is entirely not necessary for bitcoin.  Certainly once a week is more than enough.  I use Time Machine and don't even have to think about it, but if you're doing manual backups of the wallet.dat file the standard client creates 100 private keys.  So if you backup right after starting up, setting up, and shutting down the client for the first time; the client can completely recover from a catastrophic event as long as you have not exceeded 100 transactions since last backup.  You can also force the client to create more, and have mine set to 2000; which makes for a huge wallet.dat file but my disk drive is fat.

The issue is that (generally speaking) online wallets keep the private keys on the server.  Even if the operator of the site (and all his employees) are trustworthy, if the server is hacked you could stand to lose everything that you have in the online wallet.  Online wallets certainly have their place, think of them as mini-Paypals, but would you keep your life's savings in Paypal even if you trusted them?  There is a precident as well, two major online wallet services have been hacked, and also Mt.Gox has been compromised once.  The more money that they concentrate, the tastier the hack target that they become.  What sum that you may have in your personally operated client wallet generally isn't worth the efforts, if they know that you have anything at all.  Mind you, some of them have learned their lesson, and have become relatively hard targets, but that doesn't mean it's impossible.  It is impossible to steal your bitcoins from your not running, not online and encrypted wallet.dat file.

That said, I don't entirely take my own advice here, as I have the majority of my funds in a BitcoinSpinner account attached to my android cell phone.  But the cavet there is that BitcoinSpinner uses a 'split wallet' design that keeps the actual private keys on my cell phone.  The risk for me, then, is the loss or destruction of my cell phone/memory card.

Really, the matter comes down to risk versus convience.  If your only dealing with a couple hundred dollars worth of bitcoins, and can afford to risk it, then an online wallet service is very fast and convient; like modern banking.  Often easier than Paypal.  But if you start to accumulate a very large value in that online account, perhaps a more secure 'savings account' is justified.  Either way, if something bad happens to the online service and you lose your shirt, don't blame bitcoin.

While it's true that Mt.Gox doesn't wait for confirms, the risk isn't with nor against Mt.Gox.  The risk of handling private keys is that the person you bought it from has retained a copy.  If you have the foresight to buy a private key in order to import it into Mt.Gox rapidly, then you have the foresight to simply send BTC to Mt.Gox at least an hour prior to a trade.  Mt.Gox imports private keys mostly so that people who have recieved a physical bitcoin can use it immediately with them, but that destroys the physical bitcoin.

It's also not a security vulnerability for Mt.Gox, it's a security concern for you.

Yeah, there is no legitimate reason to sell private keys online and a great many risks in trusting someone else to create your keys for you.  Those physical bitcoins are really just metal tokens with a hidden private key, so in person you have to trade private keys & you have to trust that the guys who makes those physical bitcoins is honest; but there is no reason to do something similar online. 

Start offering bitcoins for cash in your city, for example, on Craigslist.  I've been trying to buy bitcoins for some time now, as I'm running out.  But I've never bought them on an exchange, wouldn't know how to do it, and don't care to involve myself in the whole international banking regulation thing.  If you live in my city, I'd be willing to pay cash for them in person if the exchange rate was reasonable.

Without a doubt, the best way to get bitcoins is to start offering an online service or good for sale.  And don't tell me that you have nothing to sell, because that's bs.  That Iphone 1 that you replaced with that Iphone4S, that you would otherwise probably give to your niece to use as a mp3 player; literally anything that you might consider putting up on Ebay.  Anything that you might put up on Etsy.  Extra tradable items for popular video games such as Team Fortress 2, Portal 2, Assasin's Creed, etc.  Bitcoin is rooted in Austrian economic theory, and as such, bitcoins are just a medium of exchange.  Products are paid for with other products, in the grand scheme of the economy, and we want to encourage people to engage in trade directly as well as become producers as much as they are consumers. 

Just yesterday, I bought a Horseless Headless Horseman's axe for TF2.

I understand freedom very well, young man.  And insulting me does not constitute an argument.  Normally I'd just delete your bs for violating civility, but instead I'm going to leave it here so everyone can see your stupidity.

Proof enough that this is not a simple or settled problem.

No, it's a semi-auto Marlin.