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Question: Will Bitcoin screw banks, like email screwed the post office. True or false?
true - 16 (34.8%)
some truth - 19 (41.3%)
mostly false - 7 (15.2%)
false - 1 (2.2%)
Your kidding me! what a stupid question!! - 3 (6.5%)
Total Voters: 46

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Author Topic: Bitcoin will do to the banks, what email did to the post office. True or false?  (Read 3574 times)
thefiniteidea
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March 21, 2013, 02:48:20 PM
 #41

Current ACH system (which is mainly Federal Reserve), probably yes.

Banks, probably not.


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gendal
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March 21, 2013, 04:58:00 PM
 #42

Current ACH system (which is mainly Federal Reserve), probably yes.

Banks, probably not.



But remember that there is more than just the USD.

Take the UK's hierarchical system:

We have CHAPS as the GBP RTGS, equivalent to Fedwire for the USD.

But we also have systems such as BACS, Faster Payments and other deferred net settlement systems (which I guess also includes Visa/MC settlement, etc) that do internal netting and then settle gross over CHAPS.  People use them because they're cheaper and offer other advantages (e.g. related to liquidity requirements or membership rules)

That is: in my mental model, I see BTC+Bitcoin Network as an analogue of USD+Fedwire or GBP+CHAPS.

The key question, thus, is:  do we see the Bitcoin network scaling to the point that the deferred net settlement systems (e.g. BACS) are not required?  Or do we expect this federated/hierarchical approach to emerge in the Bitcoin world too?

My prediction is that, just as BACS and Faster Payments in the UK would continue to exist, even if everybody was allowed to use CHAPS, I predict that net settlement systems for BTC will crop up, which internalise transactions where possible and settle gross amounts over the Bitcoin network as required.... even if Bitcoin network scalability is a non-issue or transaction charges don't become prohibitive for small transactions.

But I guess time will tell.

(and sorry...  I feel like I'm banging on about this on a thread that isn't really about payment systems, which wasn't my intention....)
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March 22, 2013, 04:56:05 AM
 #43

I think the wiki does a good job about the big picture scalability options:

https://en.bitcoin.it/wiki/Scalability

I think the user error problem will probably be solved with hardware wallets.

https://en.bitcoin.it/wiki/Hardware_wallet
Thank you for those links
Mike Christ
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March 22, 2013, 05:00:12 AM
 #44

Post office was not killed by email because it was subsidized by printed fiat money. Bitcoin will kill fiat, so the postal office won't be subsidized, so it would need either to shut down or provide a competitive service at higher prices. Since much less number of letters would be sent over for fair high prices, the total amount of paper mail will be greatly reduced. And digital contracts will replace the need to transfer paper certificates and ink signatures.

Sounds like a win-win to me.  Paper is going out the window; it takes too long to move around, and can get quite heavy if you have a lot of writing.  I can't remember the last time I mailed a letter...

At best, the postal office would stick around simply to deliver packages.  I'm okay with that, as long as it stops being subsidized.

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