If the lender has access to enough assets of the irresponsible borrower to cover the value of the loan then this isn't a situation where "Lend once, wait for repayment, lend again" would crash. The lender simply takes control of the borrowers assets and exchanges them for enough currency to cover repayment.
You were specifically referencing a situation where your "Lend once, wait for repayment, lend again" crashes. That only happens if the lender is irresponsible and has lent more money to someone than they KNOW they can recover.
It is not necessary for the lender to protect the assets of the borrower, but it absolutely necessary for the lender to protect their own assets.
Uh, right. That's called a secured loan, which is the vast majority of major loans. The banks do this. That's why some banks didn't really care if you could pay back, because they knew that their loans were tied to an asset that would cover the lost capital. Do you really think banks would make a loan that wasn't 99% likely to be repaid either by the borrower or through the repossession of the asset being borrowed for? The vast majority of the time the bank's assets are more than protected. It's the borrower that isn't, and rightly so. (rightly except for the few banks that purposely added malicious terms to their loans so discretely that even most bankers didn't know what was going on) Ok, so if we are in agreement about secured loans, then explain what you meant by this statement: "Also, it only crashes because of A) dishonest or idiotic individuals taking out more than they KNOW they can pay back"What crashes? Why does it crash? Okay, you're right, I phrased that sentence entirely wrong. It should have read "The system only fails when many individuals default on loans that were more than they could reasonably pay almost instantaneously and the bank is left with the majority of its net worth in illiquid assets at which point a large population of the bank's depositors withdraw." Better? |
|
|
|
If the lender has access to enough assets of the irresponsible borrower to cover the value of the loan then this isn't a situation where "Lend once, wait for repayment, lend again" would crash. The lender simply takes control of the borrowers assets and exchanges them for enough currency to cover repayment.
You were specifically referencing a situation where your "Lend once, wait for repayment, lend again" crashes. That only happens if the lender is irresponsible and has lent more money to someone than they KNOW they can recover.
It is not necessary for the lender to protect the assets of the borrower, but it absolutely necessary for the lender to protect their own assets.
Uh, right. That's called a secured loan, which is the vast majority of major loans. The banks do this. That's why some banks didn't really care if you could pay back, because they knew that their loans were tied to an asset that would cover the lost capital. Do you really think banks would make a loan that wasn't 99% likely to be repaid either by the borrower or through the repossession of the asset being borrowed for? The vast majority of the time the bank's assets are more than protected. It's the borrower that isn't, and rightly so. (rightly except for the few banks that purposely added malicious terms to their loans so discretely that even most bankers didn't know what was going on) |
|
|
|
FTFY
Why would it be the responsibility of the lender to protect the assets of the irresponsible?
FTF Y |
|
|
|
Yes it is like a lending consortium. It is not profitable under the current circumstances. A fractional reserve bank is always more profitable, since it can essentially lend the money multiple times. Until it crashes of course, but that is no problem for the depositors nor the investors. Benny and the Jets come to the rescue. A lending consortium would be possible if fractional reserve banking is outlawed, or when the banks and depositors are not bailed out by the public.
Money can't be lent multiple times. It is lent once until it is paid back. Why is this so hard for you two to understand? Once money leaves the bank in the form of a loan, it is gone. HOWEVER, if somebody's money is lent out and then that person demands their deposit back, the bank must find another individual's funds to then cover that loan. Lend once, wait for repayment, lend again. Also, it only crashes because of A) dishonest or idiotic individuals taking out more than they KNOW they can pay back, or B) unusual circumstances leave many, many, many, MANY people unable to repay loans. Being bailed out by the public is an off-topic subject, in what I'm analyzing. This is the function of a regular bank discussion, not a central bank. |
|
|
|
If you take out the fractional reserve method, there is no bank lending. There is no bank lending, because there's no capital to do it with, since you have to have 100% on hand at all times. Good luck buying a car. In order to finance any sort of credit or loan we now resort to finding loan sharks who like to break kneecaps if you're a dollar late on your payment instead of paying a little extra.
Non fractional reserve bank lending: If the bank lends out the money, but restricts the depositor to only redraw the money when the loan is repaid, there is no money creation. With hundreds of depositors and hundreds of borrowers, this could be quite flexible. The lending would oil the wheels of commerce, but money is not created. The depositor would not feel that he still had the money in his posession, only he would know that he had the right to get the money back. This is different from now, where the deposit is at your disposal immediately, even when it is lent out. That basically entails a money-market account. And if that were the optimal way to do things that everybody wanted, why doesn't everybody do it? And in terms of "greasing the wheels of commerce", I would be willing to bet that the net economic benefit of this system is less than half of the benefit of fractional reserve since finding people that are willing to essentially loan their funds out by depositing it in the bank and not having the "guarantee" that they will get the funds back is less than (actually, much less than) half of the people with money to deposit. Just speculation there, but please, prove me wrong. |
|
|
|
If bank lending causes the money supply to grow... then are loans really someone else's money? Obviously they can't be.
Obviously it can be and is true. This is exactly what fractional reserve banking is. This is how regular banks "create" money. The depositor still believes that the full amount of their deposit is sitting in their bank account while someone who has a loan out thinks they have that money. The overlap is "new money" because they obviously both can't own the same exact funds, yet theoretically that is exactly what is happening. Those "created" dollars never actually come into existence, though, they only exist on paper. This is why runs on banks is such bad news. If everyone runs and withdraws all of their money at once from a bank, the bank doesn't have all of those funds because a very large portion is out on loan at any given time. Runs on the bank are only bad news because of rules that banks impose on themselves. Lending and "banking" could be two totally separate institutions but they aren't because of the convoluted self imposed rules banks put on themselves to masquerade the fact that they essentially create money from nothing and charge interest on it. If person A's money is lent to person B... and person B's money is lent to C... and person C's money is lent to D and so on... and the money supply expands.... and they can all essentially "demand deposit" and spend their money at will... then is person A's money really being lent? IF a = b and b =c and c = d then a = d. So person D's money is actually person A's.. And person C's money is also A's. ANd person B's money is also A's. If money is lent out multiple times and the total net effect of this is a growth in the money supply which means......... that if there is more money after a loan is created, then new money had to have been created. New money cannot also be older money. Someone's deposit is used as a basis for making another loan.. but the total net effect of what is going on is essentially new money is being created. Some of these self imposed rules I am talking about are reserves themselves. The one redeeming value they have is that they are essentially one way the banks use to control the money supply itself. But they are a self imposed rule. If banks didn't have a reserve ratio then they would never have "bank runs" because meeting demands could be done without any problem. With the flick of a pen (or keystroke). If the banking system was honest it wouldn't be as convoluted as it is. There wouldn't be reserves or reserve ratios. As soon as the Federal reserve deposits money and creates reserves at member banks you can calculate from that deposit how much theoretical money can be created knowing the theoretical maximum reserve ratios. So you don't need reserves to constrain the money supply. You could do the same thing through a more direct method. Here is how an honest banking system would work: For the public sector (the government), Instead of delegating the power to create money to some cabal (like the Federal reserve) instead you keep the power and create it yourself. You don't need to pay interest to yourself #1. #2...... you tax back what you create. If you tax back what you create then inflation is impossible. That's it. Compared to what we have now that is incredibly simple............ and honest. Politicians, however, would not like the idea of only being able to spend what they can directly tax since right now they spend so so much through inflationary (hidden) means. For the private sector... if people were free to chose then they would pick something honest over something dishonest automatically. Which is probably why bitcoin would win. Or a fully backed currency with no "fractional reserve" part. But... many people ascribe our system of credit to be something worthwhile. Maybe it's not but here is how an honest credit system would work that could possibly compete with bitcoin or a fully backed currency. If you design a debt based credit system then money is created through loans. What keeps loans from being inflationary is mostly that they are paid back. When money is paid back , the principal is destroyed and the interest is taken as a service fee. An honest system would take a service fee as a service fee. Also..... The amount of total money can be directly controlled. The question on inflation in such a system is important... and the more important question than "how much money " should be created is the length of loans themselves. A 1 minute loan ... is not inflationary at all. A 1 million year loan is entirely inflationary. To limit inflation in such a system you don't need to charge interest on loans. You need to give shorter loans. Congratulations, in a very long post you have convinced me that you have no idea what you're talking about, and that I'll probably never believe otherwise. If you take out the fractional reserve method, there is no bank lending. There is no bank lending, because there's no capital to do it with, since you have to have 100% on hand at all times. Good luck buying a car. In order to finance any sort of credit or loan we now resort to finding loan sharks who like to break kneecaps if you're a dollar late on your payment instead of paying a little extra. Are you insane? Do you even know what the word economics is? Inflation.. Impossible? This conversation should end right here. More people are added to the system every day, without increasing the money supply ever you actually would create deflation as the available money supply gets spread thinner and thinner among an ever increasing population. Deflation is also bad. You also don't understand how lending works. Theoretical new money is created through lending, not actual new money. If person A, B, C, and D are the only depositors at a bank, and they all have loans out for the total value of the bank, then if they were to all demand their deposited money without paying off any of the loans then the bank would have a negative net worth of the entire bank. The bank lends people's money out to others while still acknowledging that the money lent mostly belongs to others. If the depositors of a bank demand their money, they are contractually and legally obligated to provide it by all means necessary including liquidating the bank and all real assets it holds. As long as loans are out, and everyone isn't demanding their money at the same time, there is extra money in the system only on paper because it is double counted by both the person who received a loan, and the person who's funds were used to fund the loan. Person A's money above the reserve amount is not lent out multiple times. It is lent out once. A bank can not lend more than it currently has above reserves (unless it borrows this money from other banks). It cannot lend the same funds out once. Also, when a person takes out a loan, that is not THEIR money. It is the bank's money, and by extension the depositor's money. Your entire theory of economics and finance is wrong, not only is it wrong but it is bad, and you should feel bad. Take a class. P.S. money and banking will ALWAYS be convoluted. No matter how honest it is. Just look around you, even bitcoin has its issues when it comes to security, processing, dishonest individuals, unpaid loans, etc. |
|
|
|
If bank lending causes the money supply to grow... then are loans really someone else's money? Obviously they can't be.
Obviously it can be and is true. This is exactly what fractional reserve banking is. This is how regular banks "create" money. The depositor still believes that the full amount of their deposit is sitting in their bank account while someone who has a loan out thinks they have that money. The overlap is "new money" because they obviously both can't own the same exact funds, yet theoretically that is exactly what is happening. Those "created" dollars never actually come into existence, though, they only exist on paper. This is why runs on banks is such bad news. If everyone runs and withdraws all of their money at once from a bank, the bank doesn't have all of those funds because a very large portion is out on loan at any given time. |
|
|
|
|
Are they transferable? If so, I believe I've got like 450 sitting around.
|
|
|
|
Avalon,
If you are watching... might I make a suggestion.. It would be nice if you would limit the orders to 1 per customer for like the first hour or two when batch 2 opens up... If there are still units outstanding in the batch after everyone who wants one has ordered, then go ahead and open the gates for multiple units...
Regards,
Sigg
He said in OP, Avalon has always been a Build To Order operation. Meaning that there will be exactly as many units produced in batch 2 as there are orders, regardless of how many each person orders. |
|
|
|
|
I've actually been debating offering BTC/difficult options and futures recently. I wasn't aware of any other source for them until now, so thanks. I'll be researching these later.
|
|
|
|
I have the ability to make this happen, what I don't have is the coins to back the ETF or the funds to go through all the proper red-tape that is necessary to get it to where the general populace can easily access it. Believe you me, if I had the resources it would be done in a heartbeat.
Not to be a dick, but how exactly do you have the ability based on what you just said? Someone can have the ability to be the best baseball player in the world, but be without a bat and a mitt, can't he? Having ability != Having resources. |
|
|
|
I think whoever has the foresight and resources to create a bitcoin-backed ETF will open the floodgates for traditional investors, will see bitcoin rise in value 10x to 100x, and will become very wealthy in a short amount of time.
Now, who do we know who both believes in bitcoin and has the money/contacts to get such a thing up and running?
One of the very early adopters with 10k+ bitcoins sitting in cold storage would be a good candidate...
I have the ability to make this happen, what I don't have is the coins to back the ETF or the funds to go through all the proper red-tape that is necessary to get it to where the general populace can easily access it. Believe you me, if I had the resources it would be done in a heartbeat. |
|
|
|
|
So I hope I'm not the only one that finds it funny that my US Tax refund will be going almost 100% into Bitcoins for "savings".
This decision got me to thinking, how many other people were planning to do the same?
At that rate, if there are a lot of us, that would mean that there will be a rather large inflow of funds and a lot of liquidity over the next few months. Or there'll be next to nothing, so maybe this poll will help to shed some light on the subject.
Feel free to share your musings. This is just a general curiosity/amusement poll.
|
|
|
|
Cue an ad for BIP38 (Password-Protected Paper Wallets).
If I were to create password-protected paper wallets, and put copies in two separate safety deposit boxes at two different banks, and then memorize the passphrase as well as share it with one or two trusted individuals, that's a whole lot better than shoving cash under the mattress.
Point conceded, good sir. But that's quite a bit of extra work and you're still putting trust in other individuals. Not to mention the cost of the safety deposit boxes which, on an annual basis could (I'm not saying they would, but they could) exceed the cost of the insurance itself. Would it not be beneficial in some people's eyes to have the easier access, with less hassle, of the insurance based model than the paper wallet model? As I'm sure there are plenty of people that would not divorce themselves from their paper wallets, and others who would never bring themselves to adopt them. You could argue that the extra risk associated with trusting a third party insurer creates an extra "risk cost" as opposed to your trusted individuals, but the different costs and risks associated may very well balance each other out to be rather equal in the end, assuming that an extremely trustworthy insurance entity came to be. Then my argument would shift to the idea that having the client-insurance based model would lead to more opportunities for extra utility as opposed to the paper wallet. |
|
|
|
Sure. Excellent writeup of why Price drives Difficulty. Originally written for BTC, the applies to LTC. 3 Month chart of LTC price, in USD & BTC. The BTC reward half happened right at the slight bump you see in the middle, but it quickly corrected itself. Litecoinpool has a Litecoin Difficulty Chart, but only goes back 2 weeks. You can still see the up-down-up-down in the difficulty. It's been like this since the reward half almost 2 months ago, but has leveled out some. These are immensely helpful resources. Thanks! |
|
|
|
well creating fear by telling new people their stash is not safe in their own hands and they require an insurance is not good for bitcoin either. people know they cant hold bitcoins in their hand and have to rely on computers. but telling them they cant rely on their own computer or paper wallet... thats just silly.
the whole point of bitcoin is that no other entity owns or controls your funds. by using the insurance company idea's you have suggested you are saying for people to input their stash into a insurer controlled 'bank' and if anything goes missing they will repay it. plus ontop you have to pay them a monthly premium to keep your coins safe.
i have a mega load of coins now.. i have no fear of funds being stolen. and i wouldnt pay a third party to look after them for me. but good luck.
teach people about paper wallets and data backup
We aren't creating fear, the fear is already there. People are free to do as they'd like, but I know people that would willingly pay in order to ensure they won't be worth nothing tomorrow. Also, it wouldn't be putting their coins into a "bank" it would be using a client developed by someone else, which people already willingly do without the added benefit of having the insurance. And you're right, paper wallets and data backup are a great, pretty secure way to keep your funds. However, they are no different than shoving your dollars under the mattress and hoping nobody gets ahold of them there. Not everybody likes that notion. |
|
|
|
Excuse me? He said exactly what I would have said. Am I supposed to retype the exact same thing, for the ultimate exercise in futility just to please you?
Really! You would have said the same thing? You have to be careful agreeing with me around here. The OP was not a slam against PoS and I'm glad you got that. Competition is the core of capitalism and Bitcoin embraces that notion fearlessly. Hahahah, I'll be careful when I'm dead. I'm a banking person, so I catch flak all the time for defending the notion that banks used to be, and may yet return to being ethical and useful practices within society. We all fall off the wagon at one time or another. I think Bitcoin is a huge opportunity for everyone, including banks, because as you said, it embraces the notion of competition fearlessly. It worked once, and it will work again. Banks provide necessary services to the community involving risks that need to be taken when nobody else will take them. They will operate ethically again, and Bitcoin is a major opportunity for them to do just that. They have no reason to fight Bitcoin, and every reason in the world to support it and get in as early as possible. Note that I'm not including central banks in this discussion, because I don't view them as actual banks to begin with. |
|
|
|
Disclaimer: I am not a registered CPA or CFP, any analysis/forecast I do for you does not constitute an official statement of your personal financial situation and therefore cannot be used as such. Utilization of my services means you agree to this statement, and that I am not liable for any unauthorized uses of supplied documents.--------------------------------------- I’m offering to help you take charge of your personal finances, and supply any detailed analysis / forecast / budget / schedule that you could possibly want. For a basic idea of what this entails, please see the links below that I constructed for a friend who wanted to forecast his cash flow for the next six months along with an amortized schedule of his car loan. Cash Flow Analysis/Forecast: https://docs.google.com/file/d/0B6z_dNwlUPoMSFM1S3diblhUeDA/editCar Loan Amort. Schedule: https://docs.google.com/file/d/0B6z_dNwlUPoMcmZlUFhCNjV4YXc/edit(Zoom in to make them not blurry) These are very simple examples, but I find that they are plenty for most people with the addition/subtraction of a few items particular to each individual. I understand that many people are uncomfortable sharing this sort of information with others; but I believe this may be the best way of getting help. By utilizing my services, I don’t even ever have to know your real name, much less any other personal details that are required by other firms. This could be a very cut and dry process that will help you make major strides to controlling your own situation better without sharing personal details with those that may actually know you and share those details. Why would you want this service?An important question, people that keep constant tags on their financial situation tend to do a much better job of budgeting/saving/investing and therefore end up with a better financial future. Perhaps you want to analyze just how quickly you can add BTC to your net worth over time (how much you can afford to buy at regular intervals or when to buy). Perhaps you are in a period of transition and would like to know what you can expect in the near future and how best to handle it. For the first 10 people that reply in thread and then pm me with all the details they want included: I will produce a forecast just like the one in the document(s) linked above (out to a year at most) for 1.00 BTCAfter the first ten, the price will certainly go up, but I am unsure by how much. This depends on demand. However, I assure you that this will always be the cheapest service that you’ll find for this sort of thing. The goal of this thread/service is two-fold. 1. I want to help people take control of their finances, the people I have helped before that have stuck to their budgets and whatnot still thank me to this day, as they have been able to enjoy their money infinitely more after getting it in order. 2. I’m new to the forum (though not necessarily to bitcoin) and want to start building a transactional reputation because I am very business oriented and want to provide more services/goods in the future. Having high post counts and all that jazz doesn't account for much as compared to actually conducting successful transactions and providing a genuine service to the community. As such, you know that I will strive to do right by you and provide as much service as you request, since it would be damaging to me in the long run to provide half-assed work. Requests for service above-and-beyond the type of work I have shown in the above documents (including budgeting advice, savings plans, etc.) will always be quoted on a case-by-case basis and are open to negotiation. I want to help you as much as I can, but need to utilize my time effectively meaning it may require a higher pricetag. You can see additional financial services that I provide/will be providing in my signature below. Services that I want to provide: (if any of these appeals to you, let me know!)3rd party Bitcoin business financial reporting - For management use and also for verifying details of companies who want to seek investors 3rd party lender due diligence - I research and verify information from people seeking loans for a small fee Bitcoin investment analysis - If you are looking to invest in specific bitcoin business/securities, I will do the due diligence for you. If you have any questions or suggestions for financial services that you would like to see, please don’t hesitate to reply in thread or pm me! Best, -MJ Price estimates:Forecast/Budget similar to linked: 1.00 BTC (First ten only)General budgeting & saving advice/plan: approx 2.00 BTC/hr subject to increase based on complexity Discounted Cash Flow Analysis: 5.00 BTC (this one is for funsies, if you want to see what a business would value you at as a takeover target) Note: This thread is for personal finances only. If you want this type of service for your bitcoin business / website / whatever other financial entity you may have, please pm me or visit the appropriate thread in my signature (threads currently pending demand).
|
|
|
|
insurance for coins.. i see alot of fraudulent claims happening
EG set up 2 addresses, send funds to yourself and claim the receiving address is a scammer (show a shady website you designed and the 2nd address listed on it and u want to claim a loss of income.)
EG put a load of coins in the address and then claim that you lost the private key due to a computer wipe/virus. (showing the windows directory time stamp (after using properties plus to change the info) to show its a recent install and u want to claim a loss of income.)
EG u set up 2 aliases on BTCJAM the second alias requests a loan. you then loan yourself the money and claim they did not repay. (showing stats, blah blah as proof. and you want to claim a theft)
These are all subject to what the terms of the insurance are. If the insurance is strictly "insured against malicious attack and seizure of funds" then the first two are null and void, if you go buy what I suggested earlier with an offline private key item. I.E a physical stick that doesn't connect to the internet that you need in order to generate a temporary key. That way, if the algorithms were to ever be compromised the insurer would know. The insurance agreement would have to be that only funds which are NOT sent out using your private key (and therefore unauthorized, also not including if you lost your keygen and somebody found it and used it). Investment insurance against lending is an entirely different thing, and I don't see THAT happening unless the lending goes through the insurer who approves the lendee.
followed by a scam thread where the insurer does not always pay out due to obvious false claims.
EG "Insurer A wont pay me, he thinks i falsified evidence to get free coins, what a scam"
EG "Insurer A asked for evidence which i dont have and wont pay out, what a scam"
EG "Insurer A wont pay me" (never subscribed to the service just want to call them a scam)
Yeah, there's really no way around this unless the insurer is genuinely a stand up person and has enough business behind them that HAVE had their loses reimbursed for legitimate claims. if you want to be a hoarder. dont trust second parties to look after your stash
here is a big secret to insurance. LOOK AFTER YOUR OWN MONEY and you never have to worry about insurance.
now instead of thinking up idea's how to stir the community pot of cash amungst itself. how about thinking up idea's to expand outside the community and get new legit businesses onboard. instead of new ways to sway money between peter and paul within the community.
You don't seem to understand the implications of having a bona-fide insurance program behind insuring your coins. Because no matter what, people WILL get to your wallet, I firmly believe that. People are pretty smart when they have malicious intent. Instead, think of the implications having a safety net for your wallet would have in terms of people adopting bitcoin. I'm sure one of the main reasons people are opposed to bitcoin is because of the security implications, and the hoops you have to jump through to "secure" your wallet. By calming people's fears in this part of the game, it would knock down a major barrier to entry in the form of people's own security concerns/hesitations. |
|
|
|
I welcome the days when banks again operate under a code of ethics, even if it means they are subject to the same competition in the market all working people experience. Banks will need to compete for bitcoin loans based not only on their lending practices, but also their choices of payment processing rates. Supernodes and banks will compete for exchange rates in diversified investments. The fear that someday one supernode will monopolize the Bitcoin network is as real as gold or any other commodity will be cornered. It is an irrational assumption as all markets operate in complex systems with ever scaling margins of error.
+1 |
|
|
|
|
Show Posts
