How Bitcoin Makes Banks Obsolete

[BitProdigy]

Banks are only necessary if people need to deposit their money in them. With bitcoin there is really no reason to keep your bitcoins in a bank.

However, it is foreseeable that people may want to keep their bitcoins safe by keeping them in a bank that they trust. Even if this occurs, bitcoin allows for PROOF OF SOLVENCY which means that everyone can verify that the bank is actually storing their bitcoins for them.

This effectively eliminates the possibility of Fractional Reserve Banking. Who in their right mind is going to give their bitcoins to a bank that turns our around and lends them to other people and makes bets in the stock market with them? Nobody.

Only those banks that embrace PROOF OF SOLVENCY will survive with bitcoin. Those banks that try to hide what they are doing with people's money or try to give some reason why people should allow them to keep only 3% of deposits in reserve and lend the rest out, will not survive. Nobody will use these when there are PROVEN SOLVENT banks now in existence.

What you think?

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[melisande]

Banks and bitcoin are two different things but we could as well have banks for bitcoin or cryptos because the conventional banks only services fiat currencies but they are not limited to deposit alone but you can as well with funds from it.

[countryfree]

As long as there will be people looking for credit, to buy a house, or a car, they will be plenty of business for banks. And no company in the first world would be able to live without a substantial credit line. What if some customers pay late? This happens everyday...

[misterycoins]

Banks, in particular, provide many services that someone will still have to provide even if old currencies were to be totally replaced by bitcoins. People will still need to borrow money, for example and other people will want to lend it.

[odolvlobo]

Banks are only necessary if people need to deposit their money in them. With bitcoin there is really no reason to keep your bitcoins in a bank.

However, it is foreseeable that people may want to keep their bitcoins safe by keeping them in a bank that they trust. Even if this occurs, bitcoin allows for PROOF OF SOLVENCY which means that everyone can verify that the bank is actually storing their bitcoins for them.

This effectively eliminates the possibility of Fractional Reserve Banking. Who in their right mind is going to give their bitcoins to a bank that turns our around and lends them to other people and makes bets in the stock market with them? Nobody.

Only those banks that embrace PROOF OF SOLVENCY will survive with bitcoin. Those banks that try to hide what they are doing with people's money or try to give some reason why people should allow them to keep only 3% of deposits in reserve and lend the rest out, will not survive. Nobody will use these when there are PROVEN SOLVENT banks now in existence.

What you think?

I think you are ignoring reality.

If people deposit money in banks and don't care about FRB, why would they care more with bitcoins? People deposit bitcoins in Coinbase, and Coinbase does not do proof of solvency. Most people just don't care about FRB as long as they are told (and believe) that they will get their deposit back.

[BIT-Sharon]

Digital currency will accepted as payment methods, which is agreed by lots of companies on internet. This is a new challenge for the industry. Traditional currency will disappear and bitcoin is legal foundation of digital economy.

[BitProdigy]

I think you are ignoring reality.

People deposit money in banks and don't care about FRB, why would they care more with bitcoins? People deposit bitcoins in Coinbase, and Coinbase does not do proof of solvency. Most people just don't care about FRB as long as they believe that they will get their deposit back.

After Mt. Gox people should care!

I think the people in Cyprus and in Greece care about Fractional Reserve Banking a little more than we do right now, but I think it may become a little more important to us in the future. 

The beauty of bitcoin is that people who don't want to use banks or services like Coinbase don't have to. But those that want to now have the choice to only do business who do Proof of Solvency, such as Vault of Satoshi:

"At Vault of Satoshi we have always tried to embody the mantra of being an open, honest and transparent exchange. We feel it's our duty to do so when you make the decision to place your funds in our hands.

For this reason we have long sought after a way to prove our reserves to the public in a safe and reliable manner, while most exchanges issue a third-party audit, we felt that simply wasn't open enough – so today at Vault of Satoshi we are proud to announce full proof of solvency and the publication of our cold wallet."

http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

Bitstamp has followed suit:

https://www.cryptocoinsnews.com/bitstamp-provides-proof-bitcoin-solvency-first-step-towards-real-financial-audit/

As well as Bitfinex:

https://www.cryptocoinsnews.com/bitfinex-passes-stefan-thomass-proof-solvency-audit/

But Vault of Satoshi is the only one currently that allows for full proof of solvency. I think this trend will eventually extend to all exchanges and places that people trust to hold their bitcoins. This is just yet another extension of how Bitcoin allows for innovation in finance.

[BitProdigy]

As long as there will be people looking for credit, to buy a house, or a car, they will be plenty of business for banks. And no company in the first world would be able to live without a substantial credit line. What if some customers pay late? This happens everyday...

There will always be people that want to borrow money, and there will always be people who are willing to lend money for a fee. What will not continue is Fractional Reserve Lending because it is predicated upon the necessity of people having no choice but to deposit their funds in banks and the impracticality of proof of solvency.

With bitcoin there is no need to deposit your bitcoins in a bank and even if you do, you now have the choice to only deposit your bitcoins in a bank that allow for full Proof of Solvency so you know for sure that your bitcoins are safe in sound and not being lent to low income borrowers with no job no credit or bad credit, and not being gambled on bad bets in the stock market.

This does not mean that there will be no more loans. Just look on this very forum there are people offering loans. Loans will still exist they will only exist in a more honest fashion, which is to say that lenders will be those who have excess capitol they are able to lend, instead of promising to keep your money safe and turning around and lending your money to people. Lenders will will have to be those who lend their own money, not those who lend other people's money. And I think that is a more honest system for the economy to be based on.

[coinpr0n]

As long as there will be people looking for credit, to buy a house, or a car, they will be plenty of business for banks. And no company in the first world would be able to live without a substantial credit line. What if some customers pay late? This happens everyday...

There will always be people that want to borrow money, and there will always be people who are willing to lend money for a fee. What will not continue is Fractional Reserve Lending because it is predicated upon the necessity of people having no choice but to deposit their funds in banks and the impracticality of proof of solvency.

With bitcoin there is no need to deposit your bitcoins in a bank and even if you do, you now have the choice to only deposit your bitcoins in a bank that allow for full Proof of Solvency so you know for sure that your bitcoins are safe in sound and not being lent to low income borrowers with no job no credit or bad credit, and not being gambled on bad bets in the stock market.

This does not mean that there will be no more loans. Just look on this very forum there are people offering loans. Loans will still exist they will only exist in a more honest fashion, which is to say that lenders will be those who have excess capitol they are able to lend, instead of promising to keep your money safe and turning around and lending your money to people. Lenders will will have to be those who lend their own money, not those who lend other people's money. And I think that is a more honest system for the economy to be based on.

What kind of legal measures could someone take if the borrower defaults on a loan? And if there are none why would people lend?

[Moonpig]

This effectively eliminates the possibility of Fractional Reserve Banking. Who in their right mind is going to give their bitcoins to a bank that turns our around and lends them to other people and makes bets in the stock market with them? Nobody.

What you think?

I think you under estimate the apathy of the general public. They don't care what the banks do to them or their money, just like they don't care what their government does with their taxes.

[TibanneCat]

I think you under estimate the apathy of the general public. They don't care what the banks do to them or their money, just like they don't care what their government does with their taxes.

Not necessarily apathy, the general public is simply pretty ignorant about concepts such as Fractional Reserve Banking
Your average Joe doesn't even realize that the Federal Reserve is as federal as Federal Express

for those who are still bemused by the banking system, here is a humorous half-hour cartoon explaining it
https://www.youtube.com/watch?v=mII9NZ8MMVM

What kind of legal measures could someone take if the borrower defaults on a loan?

Services like btcjam and BLC use Net-Arb which is useless in many cases
Bitcoin needs wider adoption and recognition in order for governments to create the legal framework needed for btc lending to truly scale
However the current lending model based on reputation has been working better than most expected

[Miracal]

Banks are only necessary if people need to deposit their money in them. With bitcoin there is really no reason to keep your bitcoins in a bank.

However, it is foreseeable that people may want to keep their bitcoins safe by keeping them in a bank that they trust. Even if this occurs, bitcoin allows for PROOF OF SOLVENCY which means that everyone can verify that the bank is actually storing their bitcoins for them.

This effectively eliminates the possibility of Fractional Reserve Banking. Who in their right mind is going to give their bitcoins to a bank that turns our around and lends them to other people and makes bets in the stock market with them? Nobody.

Only those banks that embrace PROOF OF SOLVENCY will survive with bitcoin. Those banks that try to hide what they are doing with people's money or try to give some reason why people should allow them to keep only 3% of deposits in reserve and lend the rest out, will not survive. Nobody will use these when there are PROVEN SOLVENT banks now in existence.

What you think?

Why would anyone keep bitcoins in a bank? The whole concept of bitcoin revolves around using peer-to-peer technology to operate with no central authority or banks. It eliminates the nasty charges and unnecessary money sucking procedures that banks carry out in the name of providing you a storage for your money. You're giving banks power and underestimating bitcoins if you're keeping them with banks. Disgrace!

[botany]

Why would anyone keep bitcoins in a bank? The whole concept of bitcoin revolves around using peer-to-peer technology to operate with no central authority or banks. It eliminates the nasty charges and unnecessary money sucking procedures that banks carry out in the name of providing you a storage for your money. You're giving banks power and underestimating bitcoins if you're keeping them with banks. Disgrace!

One word - Interest.
Right now, there are no avenues for me to safely invest my bitcoins. If a bank started accepting bitcoin deposits and pays interest on them, I would be ready to give them a chance.

[HarHarHar9965]

Why would anyone keep bitcoins in a bank? The whole concept of bitcoin revolves around using peer-to-peer technology to operate with no central authority or banks. It eliminates the nasty charges and unnecessary money sucking procedures that banks carry out in the name of providing you a storage for your money. You're giving banks power and underestimating bitcoins if you're keeping them with banks. Disgrace!

One word - Interest.
Right now, there are no avenues for me to safely invest my bitcoins. If a bank started accepting bitcoin deposits and pays interest on them, I would be ready to give them a chance.

well then you should check out platforms which lend btc, there are many websites for that which can even provide you quick interest over your bitcoins. Some examples of such website would be btclend, btcpop, etc. Check them out, maybe you can check out and browse some deals, it is a profitable opportunity for businessmen and private investors. An example of a btc lending post: https://bitlendingclub.com/loan/browse/lid/17584/30-btc-for-30-days-3-64

[odolvlobo]

Why would anyone keep bitcoins in a bank?

Regardless of your vision of bitcoin, people would (and do) keep bitcoins in a bank for security, convenience, and interest.

[RustyNomad]

My coins are already with a bitcoin bank and I'm very happy with the level of service thus far.
They offer very good security but their interest rate on deposits suck big time but guess that's the price you pay to have full control over your own funds.
The bank has nice business hours, they are open 24/7/365 and their support desk is not bad either.
Their internet banking is excellent and you can do banking directly from your mobile at no additional cost.
Opening new accounts are so quick its almost instantaneous and there is no paperwork required.
The best however is the low fees. There is no monthly account maintenance fees and the other fees on transfers etc.. are ridiculously low.
International transfers used to take anything up to 5 or 7 days, my bank now does a complete secure transaction in under an hour.

Need I go on? Anybody interested?

The bank is called Trezor  

[RealBitcoin]

Yep but there is a distinction between commercial banks and investment banks.

While commercial banks may become obsolete, they can just switch themselves into investment banks, and continue their existence but with bitcoin.

As a broker or investment/liquidity provider in various bitcoin investment.


That is of course a decentralized investment platform doesnt come out, then the banks are really in big trouble.

[botany]

Why would anyone keep bitcoins in a bank? The whole concept of bitcoin revolves around using peer-to-peer technology to operate with no central authority or banks. It eliminates the nasty charges and unnecessary money sucking procedures that banks carry out in the name of providing you a storage for your money. You're giving banks power and underestimating bitcoins if you're keeping them with banks. Disgrace!

One word - Interest.
Right now, there are no avenues for me to safely invest my bitcoins. If a bank started accepting bitcoin deposits and pays interest on them, I would be ready to give them a chance.

well then you should check out platforms which lend btc, there are many websites for that which can even provide you quick interest over your bitcoins. Some examples of such website would be btclend, btcpop, etc. Check them out, maybe you can check out and browse some deals, it is a profitable opportunity for businessmen and private investors. An example of a btc lending post: https://bitlendingclub.com/loan/browse/lid/17584/30-btc-for-30-days-3-64

You can't compare bank deposits with lending platforms such as btclend.
My expertise is not in determining creditworthiness of borrowers - that is why I outsource it to a bank.
Plus with my bank I know that my deposits (to some extent) are covered by insurance.

[Amph]

Why would anyone keep bitcoins in a bank?

Regardless of your vision of bitcoin, people would (and do) keep bitcoins in a bank for security, convenience, and interest.

would not be the same as keeping them on a exchnge? they can't offer a better security, especially if we are talking about exchange that offer full offline storage like xapo

interest also will be very low like they are now for fiat...

[HarHarHar9965]

Why would anyone keep bitcoins in a bank? The whole concept of bitcoin revolves around using peer-to-peer technology to operate with no central authority or banks. It eliminates the nasty charges and unnecessary money sucking procedures that banks carry out in the name of providing you a storage for your money. You're giving banks power and underestimating bitcoins if you're keeping them with banks. Disgrace!

One word - Interest.
Right now, there are no avenues for me to safely invest my bitcoins. If a bank started accepting bitcoin deposits and pays interest on them, I would be ready to give them a chance.

well then you should check out platforms which lend btc, there are many websites for that which can even provide you quick interest over your bitcoins. Some examples of such website would be btclend, btcpop, etc. Check them out, maybe you can check out and browse some deals, it is a profitable opportunity for businessmen and private investors. An example of a btc lending post: https://bitlendingclub.com/loan/browse/lid/17584/30-btc-for-30-days-3-64

You can't compare bank deposits with lending platforms such as btclend.
My expertise is not in determining creditworthiness of borrowers - that is why I outsource it to a bank.
Plus with my bank I know that my deposits (to some extent) are covered by insurance.

I think that it is easy to determine the credibility of borrowers, just simplify it with factors like how much popular they are, if they are popular in the community it is obviously because they have always returned their money on time along with interest. Such people with trust points are a better investment, I keep investing and also borrow. It has helped me tremendously and it actually is beneficial, don't be too pessimistic about it. Its a little risky, but there are thousands of people using such services everyday, they profit. You can too, sir