[ANN][DGC][FBD] Free Bank of Digitalcoin ~ Risk Averse DGC Investments

[SistaFista]

This is awesome

[1714871384]

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[r32godzilla]

I don't think you gave a website address where this bank of digitalcoin is located?

Yeah I'm sure Baritus will announce it all in good time Very excited about this. Could be a real game changer. Price protection for your dgc. Brilliant concept.

[Mr.V]

For digital currency to be worthwhile and to gain adoption, it would need to provide a benefit. Profit is a universal benefit.

You'll have a better idea of the concept once you see it live.

Sounds great! I don't why ppl don't understand this concept. Some ppl are slower I guess...Basically all the DGC purchased will be backed by the initial investment. He wont spend it guys

[boogerthe2nd]

Will have to see the actual fees that will be charged for this, and whether it's scalable to larger volumes.

[Kumala]

I love the idea,  but when going through the different market development scenarios I couldn't quite figure out how you will handle the rise in price of a coin.

Let me put together how I understood this to work:
a) You start the bank with lets say 1000 DGC
b) User 1 comes and buys 1000DGC for 1BTC with an expiry date of 3 months in the future, hence bank deposit = 1BTC, bank DGC balance=0

Now we have two scenarios: 1) price drops, 2) price rises

1) Price drops:
User sells back the 1000 DGC for 1 BTC,  bank deposit  = 0BTC, bank DGC balance = 1000
   Result: Bank earns transaction fees
2) Price rises:
User withdraws the coins and sells them on another exchange. Bank keeps the deposit,  Bank balance = 1 BTC,  0 DGC
  Result: Bank has no more DGC and needs to purchase DGC of the market, the 1 BTC deposit will not buy 1000 DGC anymore but less due to the increase in price.

Case 1) is obviously not an issue, but case 2) is. The bank will run out of funds and thus liquidity becomes a challenge unless you stop the business once you run out of DGC.

[r32godzilla]

I love the idea,  but when going through the different market development scenarios I couldn't quite figure out how you will handle the rise in price of a coin.

Let me put together how I understood this to work:
a) You start the bank with lets say 1000 DGC
b) User 1 comes and buys 1000DGC for 1BTC with an expiry date of 3 months in the future, hence bank deposit = 1BTC, bank DGC balance=0

Now we have two scenarios: 1) price drops, 2) price rises

1) Price drops:
User sells back the 1000 DGC for 1 BTC,  bank deposit  = 0BTC, bank DGC balance = 1000
   Result: Bank earns transaction fees
2) Price rises:
User withdraws the coins and sells them on another exchange. Bank keeps the deposit,  Bank balance = 1 BTC,  0 DGC
  Result: Bank has no more DGC and needs to purchase DGC of the market, the 1 BTC deposit will not buy 1000 DGC anymore but less due to the increase in price.

Case 1) is obviously not an issue, but case 2) is. The bank will run out of funds and thus liquidity becomes a challenge unless you stop the business once you run out of DGC.

My guess is that the bank will start with a large pool of dgc and from then on the fees earned by the bank on transactions will be more than enough to cover any difference in costs to purchase more dgc if need be. I guess Baritus can give us a definitive answer on that scenario tho

[SNAZ31]

Seems like a good idea actually...

There is one guy in here implying (it seems to me) that baritus is doing something underhanded by always making a profit! God forbit he would want to make a profit! lol...

But it seems to me that this is mutually beneficial, the invester would always make a profit too. Well okay maybe it is not guaranteed for the investor but they have a very good chance...

If the price goes up = profit for invester

If the price goes down then sell back and buy back in at the cheaper rate, you could obviously buy back more coins than you originally had, then wait = profit

I would defo use this service and I think it would most certainly offer DGC some stability!

I can see many services like this springing up!

Look forward to the garnd opening, though if I invest will depend on the fee!

[baritus]

The bank retains liquidity in the following ways:

1. Shareholder involvement: Shareholder investments into the bank will be the primary source of capital. Shareholders will be repaid through monthly dividends resulting from the issuing of options and the trading of them.

2. Fees: The secondary source of liquidity will be fees from the issuing and trading of options. A percentage of fees(voted on by shareholders), will be set aside.

3. Loans: Since the bank is fully backed by equal assets at all times, it can take DGC loans and repay an interest rate equal to a percentage of fees generated from issuing options. This bank has no risk of default.

[bnogal]

How u can think about loans.... can i ask a loan? and disappear? In my country corruption is this high that it is easy to stay away from the law.

Or you are thinking about something like the "jak bank"

[peonminer]

Centralized banking for a free and open coin? hmmm...

[baritus]

Centralized banking for a free and open coin? hmmm...

Decentralized banking using a decentralized currency where anyone can become a shareholder and use the services.

How u can think about loans.... can i ask a loan? and disappear? In my country corruption is this high that it is easy to stay away from the law.

Or you are thinking about something like the "jak bank"

There are no loans, the bank can itself borrow money but does not lend. It will start with the focus on providing the services listed in the first post.

[peonminer]

Centralized banking for a free and open coin? hmmm...

Decentralized banking using a decentralized currency where anyone can become a shareholder and use the services.

Now this, I like Thx for clearing that up! Sounds much less malicious now Carry on~!

[r32godzilla]

Thanks for explaining how this service is going to work in more detail Baritus. Can't wait to become a shareholder, and see it up and running

[SNAZ31]

Sorry if this has been mentioned, I did read the whole thread but can't remember reading anything about it.... What if you have DGC already? Can you deposit them in the bank? How would that work? Would you still be guaranteed a price etc?

[bahamapascal]

Great news for all of those how invested in ARG:)
Also news on the DGC bank;)

Hey guys,

Good news. The bank that baritus is creating will have ARG options besides DGC. The bank also has been granted 100k for funding of initial options, so the bank will back your ARG and DGC for real assets.

Thanks for your support so far..

[broken_pixel]

 

[fenican]

This does not work.  The bank will get crushed if DGC falls in value.

Simply put, the bank is guaranteeing a counter-party a profit while assuming all of the downside risk.  If DGC falls, the bank will end up holding the same quantity of an asset that is now much less valuable.

[e521]

This does not work.  The bank will get crushed if DGC falls in value.

Simply put, the bank is guaranteeing a counter-party a profit while assuming all of the downside risk.  If DGC falls, the bank will end up holding the same quantity of an asset that is now much less valuable.

it is still the same amount in dgc so there is no "loss"

[fenican]

This does not work.  The bank will get crushed if DGC falls in value.

Simply put, the bank is guaranteeing a counter-party a profit while assuming all of the downside risk.  If DGC falls, the bank will end up holding the same quantity of an asset that is now much less valuable.

it is still the same amount in dgc so there is no "loss"

Any value DGC has at this point in time is relative to its BTC or USD exchange rate.  Believe me if you buy $10k worth of DGC on Cryptsy for too high of a price and it falls 90% in value, you just lost your shirt.

If the bank buys back $10k of DGC worth $1k in market value, it just lost its shirt

[fenican]

Look guys I hate to burst the bubble on this but it is just simple economics.

Consider the case of a pawn shop owner who gets the great idea that he can sell more physical gold if he guarantees to always buy it back for the purchase price ...

Oops.  Welcome to bankruptcy, Mr. Pawn Shop owner.