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Author Topic: Discussion, establishment of a Bitcoin Credit Union  (Read 2328 times)
Ilikeham
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September 11, 2012, 03:30:52 PM
 #1

First off, not up for trolling in this thread, keep it related to the topic at hand, leave your Mathew, Pirate, GLBSE etc discussions  some place else. Seriously. I ask moderation in advance to enforce local rules in the thread and I ask participants to call for moderation of the trolls. That doesn't mean you can't or shouldn't post strong opinions for or against the concept, those are learning tools. Just stay on topic. Please. Thank you.

I think the community has changed a bit recently and while many are still attracted to the wild west ways of BTC finances I think it's gotten to the point where some people would give up their "total quasi anonymity" (yeah I know) for a safe, secure suite of BTC related financial services issued under one roof. To this end, I've been doing some groundwork on what might be involved in establishing a Credit Union for Bitcoin users.

Why a Credit Union and not a bank? Well it comes down to how and what a Credit Union is and who it's controlled by.

Quote
From Wikipedia
http://en.wikipedia.org/wiki/Credit_union

A credit union is a member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members.[1][2][3]

Many credit unions also provide services intended to support community development[4] or sustainable international development on a local level,[5] and could be considered community development financial institutions.

Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size,[6] ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members.[7]

Generally a Credit Union can be legitimately governed by a board elected by members. Each member gets one vote, period, whether they are a large or small depositor. Everyone buys one voting share.

Basically, I'm a retired CxO type IT guy from the financial services sector here in Canada. I've worked as VP and SVP at merchant banking organizations that moved and loaned billions of dollars annually in Canada, the US and UK. That isn't the entire world and yes I'm aware of my blind spots. This is why these discussions need to be open to an entire community , a pool of minds. So far I've called in as favours discussions with Chartered Accountants , CPAs and lawyers from my previous business contacts in the US and Canada who specialize in the financial services sector (merchant banking and personal banking) . These have been fruitful and I've had many "AHA" moments. I've also realized as a result this isn't a small undertaking.

Essentially what I propose is that we start building an Open Source documentation set that can be used in development of Credit Unions for the BTC community. To this end I'm looking for volunteers to form a steering committee that can start flushing out a project plan for getting the first Unions established in Canada and the US as true legal entities.

So, I'm looking for people with backgrounds in finance and systems relating to personal banking who are willing to put in the kind of effort it would take to build a transparent and open source documentation set for the foundation of a Credit Union.

When things are set up and rolling with people in place on the steering committee (and a reliable non thieving treasurer - in fact I have a Chartered Accountant who would do this job for the fun of it and has no issue disclosing their contact details, this is what they do) I'd like to head to out to the community and see if we can get some interest in donations to get WRITTEN opinions regarding legality and accounting that can be published on a wiki for all to see. Written opinions by professional firms are expensive but in my opinion needed so that we may have something from which to refer when building this Credit Union structure.

Post what you know, your level of interest, how much time you could give to a venture like this and bit about what qualifications you bring to the table. My hope is then when we're finished "steering" we could turn this over to a new committee of "builders" and get it done. This is the ugly part of the process, like setting up a dance committee but let's get it done.  If it can't be done within the community as it now exists, this too can be published so that anyone in the future can see a better time for launching something like this.

Any coins garnered to this cause (when the time is right) will be accounted for by a real public accountant with full open records. Documents and meeting minutes will be published. This whole thing needs to be super transparent to capture as much knowledge as possible. I really hope we can build a template that can be used in most jurisdictions for building BTC Credit Unions.

Let's make a little history that doesn't have "hacked" or "scammed" built into it.
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September 11, 2012, 03:34:40 PM
 #2

Seems interesting, will it be bitcoin lending or money printed out of thin air backed by pseudo bitcoin lending??

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September 11, 2012, 03:38:11 PM
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I like where this is going. I have no professional experience as you're looking for but will watch the thread and help if I can see a place my other skills might fit.

Thanks for the effort.
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September 11, 2012, 03:41:07 PM
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I am a person with a background in finance and systems related to personal finance, and I am looking to give a lot of my time to a Bitcoin related project.
I have also looked into establishing a credit union years ago (obviously didn't have the funds, but looked into what it takes).

That being said, what would be the purpose? A well organized document detailing what, in our opinion, should be involved in establishing a reputable credit union? A think tank that can come up with innovative ideas for applying Bitcoin technology in ways not possible for a bank? An actual business that will compete with other Bitcoin banks and wallet services by providing unique services not found elsewhere?

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September 11, 2012, 03:54:38 PM
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Seems interesting, will it be bitcoin lending or money printed out of thin air backed by pseudo bitcoin lending??

Well, they can't actually distribute more actual funds then they have on deposit.  They can credit accounts with more, but the overage can't be all withdrawn at the same time.

This is sorta how fractional reserve got started.  Goldsmiths noticed that their depositors rarely asked for their gold back, so they could lend it out.  And eventually they noticed that the people they lent it to also left it in the warehouse and just traded the receipts, so their practical limit for lending wasn't the amount they had on deposit, but the amount likely to be asked for all at once.

And we never learn, so that could totally work still today with bitcoins.  What I think will save us is that hauling physical gold around is a chore, but hauling bitcoins around is not.  Thus, hopefully banks will lend out only a fraction of what they have on deposit, rather than a multiple.

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Ilikeham
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September 11, 2012, 04:28:10 PM
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I am a person with a background in finance and systems related to personal finance (see link), and I am looking to give a lot of my time to a Bitcoin related project.
I have also looked into establishing a credit union years ago (obviously didn't have the funds, but looked into what it takes).

That being said, what would be the purpose? A well organized document detailing what, in our opinion, should be involved in establishing a reputable credit union? A think tank that can come up with innovative ideas for applying Bitcoin technology in ways not possible for a bank? An actual business that will compete with other Bitcoin banks and wallet services by providing unique services not found elsewhere?

The purpose is; the purpose of a Credit Union. I'm not being misleading, the services offered by your current credit union could be extended to Bitcoins. This is a real institution with full financial services we're talking about so everything is on the table for the steering committee to discuss. Mortgages, Credit Cards, LOC, metals, multi currency handling (fiat and BTC), insurance etc. Acting as an online wallet is basically what online banking does now, that's just a by product. Another thing I like, I currently have a multi currency banking system. If I want to transfer funds between currencies I can at the push of a button as long as I accept the fees charged. I can pay my bills online and so on. There's no reason these things cannot be conducted with BTC as the primary currency and the Credit Union acting as a bridge to other local financial/banking systems.

So yes, how do we bring these services together in once place under a member controlled Credit Union that can be built, operated and integrated into a countries financial system.

In terms of lending vs deposits, different countries have different rules around this matter, Canada is considered to be TIGHT, US far less so, UK I don't know at the moment, but I think they are in a little tough at the moment.

Anyhow, right now these services are appearing a piece at a time in the community with large margins needed to launch and maintain. I think a Credit Union would be a better low cost way to go and this is why people established them in the first place.
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September 11, 2012, 04:29:23 PM
 #7

Seems interesting, will it be bitcoin lending or money printed out of thin air backed by pseudo bitcoin lending??

Well, they can't actually distribute more actual funds then they have on deposit.  They can credit accounts with more, but the overage can't be all withdrawn at the same time.

This is sorta how fractional reserve got started.  Goldsmiths noticed that their depositors rarely asked for their gold back, so they could lend it out.  And eventually they noticed that the people they lent it to also left it in the warehouse and just traded the receipts, so their practical limit for lending wasn't the amount they had on deposit, but the amount likely to be asked for all at once.

And we never learn, so that could totally work still today with bitcoins.  What I think will save us is that hauling physical gold around is a chore, but hauling bitcoins around is not.  Thus, hopefully banks will lend out only a fraction of what they have on deposit, rather than a multiple.

You totally got my point here. If this project is direct bitcoin lending I'm totally in. If it is going to be "bitcoin dept note" like, I am not.

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September 11, 2012, 04:35:14 PM
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I am a person with a background in finance and systems related to personal finance (see link), and I am looking to give a lot of my time to a Bitcoin related project.
I have also looked into establishing a credit union years ago (obviously didn't have the funds, but looked into what it takes).

That being said, what would be the purpose? A well organized document detailing what, in our opinion, should be involved in establishing a reputable credit union? A think tank that can come up with innovative ideas for applying Bitcoin technology in ways not possible for a bank? An actual business that will compete with other Bitcoin banks and wallet services by providing unique services not found elsewhere?

The purpose is; the purpose of a Credit Union. I'm not being misleading, the services offered by your current credit union could be extended to Bitcoins. This is a real institution with full financial services we're talking about so everything is on the table for the steering committee to discuss. Mortgages, Credit Cards, LOC, metals, multi currency handling (fiat and BTC), insurance etc. Acting as an online wallet is basically what online banking does now, that's just a by product. Another thing I like, I currently have a multi currency banking system. If I want to transfer funds between currencies I can at the push of a button as long as I accept the fees charged. I can pay my bills online and so on. There's no reason these things cannot be conducted with BTC as the primary currency and the Credit Union acting as a bridge to other local financial/banking systems.

So yes, how do we bring these services together in once place under a member controlled Credit Union that can be built, operated and integrated into a countries financial system.

In terms of lending vs deposits, different countries have different rules around this matter, Canada is considered to be TIGHT, US far less so, UK I don't know at the moment, but I think they are in a little tough at the moment.

Anyhow, right now these services are appearing a piece at a time in the community with large margins needed to launch and maintain. I think a Credit Union would be a better low cost way to go and this is why people established them in the first place.

If I'm getting right what you said, you want to create a classical financial institution and introduce bitcoin in it?
Can you elaborate what will be all the purposes of bitcoin in this institution?

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September 11, 2012, 04:50:40 PM
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If I'm getting right what you said, you want to create a classical financial institution and introduce bitcoin in it?
Can you elaborate what will be all the purposes of bitcoin in this institution?

Bitcoin is just another currency or asset (albeit the primary one) in this model. A Credit Union obviously strongly overlaps with the functions of a bank, one key difference being policy and governance are membership directed. So if the US BTC Credit Union only wants to loan what is available via locked in GIC's that members hold, then that's what they do.

There are many examples; at the moment, I can't pay my truck lease with BTC except by jumping through hoops to get the cash sent to my bank account. That's just the reality of the world right now. Until such time as I can send BTC from my wallet to Chrysler Credit or whomever, a Credit Union could fill this role and many others.

The big thing here is safety, as a "classical" institution, access to things like deposit insurance and public accounting of what's going on are mandatory in most places. Don't get me wrong, there will always be a place for Johns Bank of Dosh or whatever, just like there will always be loan sharks, but I think there's room for an above board public approach now or in the near future.
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September 11, 2012, 07:44:53 PM
 #10

I think it might be a tad bit early for a credit union. Without a widespread demand for bitcoins, they are going to have to play an awfully tough game of managing USD vs. BTC assets. If people want to spend BTC, presumably the CU would convert BTC to USD (a debit card?) which will put a lot of pressure on to make sure there is ample USD. They won't be able to loan BTC so there won't be any interest on that. Converting BTC to USD for loans is going to have to require using Mt.Gox and paying exchange fees and risk volatility. And, at least in the States, CUs are only allowed to operate in a very regional basis, so you limit your customer base quite significantly.

Ilikeham
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September 11, 2012, 07:54:32 PM
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I think it might be a tad bit early for a credit union. Without a widespread demand for bitcoins, they are going to have to play an awfully tough game of managing USD vs. BTC assets. If people want to spend BTC, presumably the CU would convert BTC to USD (a debit card?) which will put a lot of pressure on to make sure there is ample USD. They won't be able to loan BTC so there won't be any interest on that. Converting BTC to USD for loans is going to have to require using Mt.Gox and paying exchange fees and risk volatility. And, at least in the States, CUs are only allowed to operate in a very regional basis, so you limit your customer base quite significantly.

The regional issue isn't quite true thanks to the online world, but I appreciate the thinking there. As to the rest, that's a lot of IF's based on what services and how you personally see them falling out. Nothing wrong with that at all, just not where the process is at. In terms of managing fiat and BTC balances, it's an actual multi currency CU, nothing would stop anyone from making a fiat deposit or withdrawal meaning management of multiple currencies is always an issue. With adequate fiat balances there might be no need to run to exchanges very often. Again, too early for this part of it I think. Yes there's volatility in BTC, likely will be for some time to come so that's just part of the same challenge other countries with volatile currencies face.

It's manageable I think.
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September 11, 2012, 08:04:18 PM
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This is just another scam.
No, I am not trolling. Get me banned if you want, I don't give a fuck.

Ichthyo
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September 11, 2012, 09:10:41 PM
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This is just another scam.

Would a scammer first create an Open Source documentation of the "scamming master plan"?

Would a scammer operate member controlled?
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September 11, 2012, 09:13:59 PM
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This is just another scam.

Would a scammer first create an Open Source documentation of the "scamming master plan"?

Would a scammer operate member controlled?
Would a scammer meet with his victims in person in Las Vegas?
Would a scammer do all the things Pirate did?

But hey, don't listen to me. After all, I'm just a troll. I spread unnecessary FUD and if this fails, I'm the one to blame.

Ilikeham
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September 11, 2012, 09:28:33 PM
 #15

This is just another scam.

Would a scammer first create an Open Source documentation of the "scamming master plan"?

Would a scammer operate member controlled?
Would a scammer meet with his victims in person in Las Vegas?
Would a scammer do all the things Pirate did?

But hey, don't listen to me. After all, I'm just a troll. I spread unnecessary FUD and if this fails, I'm the one to blame.

Obviously there's no moderation on the forum anymore and general opinion seems to be sold to the highest bidder, but whatever.

I'm not interested and not going to run this, I'm retired you little bottom hole faggot. I'll offer what I learned and do some organizing, that's it.

All we're doing here is building the documents and doing the research needed so different areas of the world could build a credit union.

Not sure how we can scam your money if we're not taking it, but you seem to have the same IQ as the watermelon I ran over so I suppose it's to be expected.

Now fuck off back to the streets you came from and let mommy and daddy talk sonny boy.

goddam troll bitches
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September 11, 2012, 11:11:06 PM
 #16

Very interesting and I'd love to be part of this. I've got a good background in the financial industry and specifically in credit unions. I also understand the IT system that run them. Count me in!

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September 11, 2012, 11:32:59 PM
 #17

Hey,

If you have some more information put together and ideas that cover some of the obstacles to achieve this, please do get in touch!

I'm sure you've done your research, know who we are and the resources and connections to get this done.

Thanks!

Charlie


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September 12, 2012, 12:01:39 AM
 #18

When you start a Credit Union in Canada/anywhere they give you a charter you have to follow. Nowhere does it say 'and magical internet money can be substituted for CAD'. This is impossible for thousands of different reasons, from violating FDIC deposit insurance regulations to CDIC membership regulations.

Sounds like all you want to do is start a financial services business, run by a voting membership, that takes BTC deposits, issues interest (in BTC), lends it out and provides payment cards (converting to fiat). You can already do this, lot's of gold buillion trading companies in Canada do it. You can get IRL insurance for your digital items to protect deposits. Bonus is not having to hire a ton of ombudsmen, lawyers and regulation compliance officers, or have to open branches, pay security to transfer money, ect ect ect. Also you can operate outside the credit union prison since you're just running a regular financial business, and not something requiring extreme regulatory oversight.




Ilikeham
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September 12, 2012, 12:28:30 AM
 #19

I'm an old fashioned coin dealer who has been using various stores of wealth against the falling and failing monetary supplies for a while now. This means instead of keeping money around, I buy land that can grow food or host solar energy collectors, I buy gold and silver and I study things that help me stay diversified. A little while ago someone on a coin forum approached me about selling him a coin he wanted in exchange for Bitcoins and I looked into it... low and behold... it works (of course).

I admit I'm not going to risk a six figure coin sale for Bitcoins but I'm also of the mind that you have to get some skin in the game at some point. I'm pretty happy to conduct reasonable sales of collectible silver or modern collectors coins for payment in Bitcoins. We are a brick and mortar company with 20 years in the business. I've accepted almost everything for payment, even firewood so why not Bitcoins?

And? I've dealt coins my whole life even while I've worked in IT. You looking for some?
Ilikeham
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September 12, 2012, 12:42:12 AM
 #20

When you start a Credit Union in Canada/anywhere they give you a charter you have to follow. Nowhere does it say 'and magical internet money can be substituted for CAD'. This is impossible for thousands of different reasons, from violating FDIC deposit insurance regulations to CDIC membership regulations.

Sounds like all you want to do is start a financial services business, run by a voting membership, that takes BTC deposits, issues interest (in BTC), lends it out and provides payment cards (converting to fiat). You can already do this, lot's of gold buillion trading companies in Canada do it. You can get IRL insurance for your digital items to protect deposits. Bonus is not having to hire a ton of ombudsmen, lawyers and regulation compliance officers, or have to open branches, pay security to transfer money, ect ect ect. Also you can operate outside the credit union prison since you're just running a regular financial business, and not something requiring extreme regulatory oversight.

Actually, I'm thinking credit union. With all that implies, if others think differently, now is the time to get on board and change the thinking. I mean just because I've gone out and talked to people doesn't meant a thing, I don't envision this as my creation nor do I think anyone but membership should own it. People tend to trust their credit unions for a reason and one of things I'd like is a financial services corp I could count on not to be conveniently "hacked" so they can screw off to Jamaica and drink rum.
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