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Author Topic: Bitcoin Bank  (Read 20304 times)
Sultan
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January 17, 2011, 08:42:55 PM
 #61

I don't understand how that would be useful. Once a coin is spent, it cannot be re-spent, right?

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January 17, 2011, 09:24:37 PM
 #62

They could let you upload a wallet file and spend from that. Then you could lock away your own copy as your own backup so you don't have to trust them solely.

I don't understand how that would be useful. Once a coin is spent, it cannot be re-spent, right?

While the bank would have access to the funds, they couldn't move them without you being able to know that they did.  With eWallet providers today there's no way to audit that they really do have your bitcoins ("all of their deposits") held in reserve:
  https://en.bitcoin.it/wiki/EWallet

Having a local copy of that same wallet gives you only a little more control because if at any time you want to spend that wallet, you aren't dependent on that service and they cannot stop you from sending your bitcoins from your wallet under their control to somewhere else.

But you are correct -- having a local copy of your wallet won't help you whatsover if they disappear overnight after transferring the funds from all the customer wallets all at once

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January 17, 2011, 10:02:32 PM
 #63

This is what I'd like BitcoinBank to do:

Services:
People deposit their bitcoins into accounts (login by username and maybe software token, if possible - even hardware).
Tax should be something 1% per year but i have no idea how to prevent people to add just 100 BTC when they open the account (tax 1BTC) and then add the next day another 10.000 BTC. One option could be to tax 1% per added bulk.
The wallet.dat holds all clients' bitcoins and the database hold sthe amount each is entitled to.
24-7 online banking for adding and withdrawing funds and payment intermediary.
Selling gold, silver, USD, EUR, GBP and other currencies on demand.
Selling virtual credit cards from multiple banks, in multiple currencies.
Escrow services.
Wallet-lock options. Allows transfer of less than the amount set up by the user per day/week etc. Also one idea i have is a amount-protected lock, you can't move funds from your account to another bitcoin address unless you remember the passsum, ie: 255.78 BTC (might be useful for paranoids that need more layers of security)
Credits, based on trust. Dunno how to implement this yet.
Investment fund. Dunno if to implement this and how.
Also I dream of having the bank physically, with safe deposit boxes, maybe even microcip cards and all Cheesy


At least two servers on different, secure, locations. Encryption in case of theft.
IDS and IPS with good sysadmins
Tor and I2P anonimity.
Gold, silver, bitcoin, USD, EUR and GBP reserve (might add chinese Yuan too)
at least these bitcoinbank domains: .eu, .com. org, .net, .biz to avoid scams
SSL certificate and GnuPGP keys

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Sultan
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January 17, 2011, 10:47:40 PM
 #64

This is what I'd like BitcoinBank to do:

Services:
People deposit their bitcoins into accounts (login by username and maybe software token, if possible - even hardware).
Tax should be something 1% per year but i have no idea how to prevent people to add just 100 BTC when they open the account (tax 1BTC) and then add the next day another 10.000 BTC. One option could be to tax 1% per added bulk.
The wallet.dat holds all clients' bitcoins and the database hold sthe amount each is entitled to.
24-7 online banking for adding and withdrawing funds and payment intermediary.
Selling gold, silver, USD, EUR, GBP and other currencies on demand.
Selling virtual credit cards from multiple banks, in multiple currencies.
Escrow services.
Wallet-lock options. Allows transfer of less than the amount set up by the user per day/week etc. Also one idea i have is a amount-protected lock, you can't move funds from your account to another bitcoin address unless you remember the passsum, ie: 255.78 BTC (might be useful for paranoids that need more layers of security)
Credits, based on trust. Dunno how to implement this yet.
Investment fund. Dunno if to implement this and how.
Also I dream of having the bank physically, with safe deposit boxes, maybe even microcip cards and all Cheesy


At least two servers on different, secure, locations. Encryption in case of theft.
IDS and IPS with good sysadmins
Tor and I2P anonimity.
Gold, silver, bitcoin, USD, EUR and GBP reserve (might add chinese Yuan too)
at least these bitcoinbank domains: .eu, .com. org, .net, .biz to avoid scams
SSL certificate and GnuPGP keys


This sounds like an interesting idea. I still don't believe a charge should be incurred on the depositor as I believe the cost of securing BitCoins is almost negligible, or at least something that can be recompensed with AdSense or something.

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January 17, 2011, 11:21:10 PM
 #65

I don't understand how that would be useful. Once a coin is spent, it cannot be re-spent, right?

My suggestion was not to act as a backup but to have old address that you have set up (a static donation address, permanently associated with accounts etc) go automatically to the bitcoinbank. Plus if you lost contact with the site you could use your copy of the wallet to spend.

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March 01, 2011, 08:14:05 PM
 #66

I don't understand how that would be useful. Once a coin is spent, it cannot be re-spent, right?

A BitCoin Bank would be a very simple concept. It would be a Safety Deposit Box system for the .dat file accounts. The bank won't know who the customers are or how much are in the deposit boxes. They just charge a fee for keeping the .dat files safe. A good bank would have mirrored backed up boxes across the world and even possible physical .dat files in the form of printed binary for emergency recovery. (ie. EMP pulse takes out all the electronics world wide or something of that nature). You could recover your physical printed binary file and start typing the data in anew to recover. It would be a pain but hey if there is a million buck in there I will type for you.

The second service provided would be a type of holding house. You pay for something, they take your money, tell seller to send product, when you receive it, they clear the transaction to the seller.  Trusted Man in the middle. A lawyer-less Escrow account in away. Of course a level of anonymity would be stripped for this to work. PGP keys could work for this. But the Keys Servers could be attacked to disrupt transactions. Unless a system of PGP P2P Keys for sending messages is accepted. The "Bank" would have to have the Public Keys for each transaction and be able to generate messages to each party involved. I guess the the "Bank" could set up its own on account opening and provide a unique private(sort of sense it would need to be given out) key to each account holder for communications.


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Sultan
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March 01, 2011, 08:33:06 PM
 #67

Your idea of actually physically printing the value is quite a good one, actually. But rather than have the binary string, wouldn't it be better to have it in hex? Less space?

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Anonymous
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March 01, 2011, 08:39:59 PM
 #68

Your idea of actually physically printing the value is quite a good one, actually. But rather than have the binary string, wouldn't it be better to have it in hex? Less space?

http://bitcointalk.org/index.php?topic=3941.0

The idea has been discussed since day one. You can put private keys in QR codes.
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March 02, 2011, 01:43:50 PM
 #69

Quote
sounds like a fractional reserve system, one of the fiat money pitfall bitcoin claims it can avoid.

Quote
...both which introduce the evils of Fractional Reserve Banking.

There is nothing inherently wrong with fractional reserve banking, provided the parties who enter into such an agreement understand the agreement, and assume the risk.

The problem is a state-sponsored fractional reserve system where bank notes are enforceable legal tender, deposits are insured by the Government, and banks are not allowed to fail. This creates all kinds of moral hazard, market distortions as well as inflation.

Fractional reserve banking as occurred during the decentralised "Free Banking" era in the US (1837 - 1864) - i.e. subject to proper competition and where the risks are assumed by those entering into contracts with each other, not third parties - is healthy and desirable. During the Free Banking era, bank notes were not enforceable tender, and often traded at a discount against Federal notes the further they traveled from the issuing bank.

One of the major benefits of FRB of this kind is the supply of credit not being limited by the available supply of money. If people are willing to accept a Bitcoin bank's "money" as payment it can also issue credit, which can fuel investment in the bitcoin economy. The important point is that banks which issue credit (e.g. money) improperly by lending to untrustworthy parties, businesses which aren't viable, or into property bubbles, go bust. This imposes discipline on the banks.

If bitcoin is successful this will almost certainly happen, and it will be beneficial for a number of reasons as stated by Hal and others.
myrkul
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March 02, 2011, 05:58:38 PM
 #70

Fractional reserve banking would be MUCH harder to do with bitcoins than physical currency, unless banks were allowed to print paper money "backed" by bitcoins. A bitcoin note system would work much like the old gold-backed bills. You could turn in a note for bitcoins at the bank, but if everyone did that all at once... Someone's getting stiffed.

Transactions within the bank would also be possible with "fake" bitcoins, especially if all the bitcoins are held in the bank's wallet, and accounts simply have balances.

The problems start hitting hard when you try to send actual bitcoins. If the bank extends itself far enough, and has enough clients, it may be possible wipe out it's coffers with a transaction or two from each client.

Bottom line, you CAN do fractional reserve banking with bitcoin, but it requires that every other bank and customer agree that your paper or digital notes are as good as the bitcoins they represent, in order to pull it off without any hitches. That requires state backing, and I doubt bitcoin's going to get that.

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March 02, 2011, 06:11:01 PM
 #71

Quote from: myrkul
Fractional reserve banking would be MUCH harder to do with bitcoins than physical currency, unless banks were allowed to print paper money "backed" by bitcoins.

I don't understand the need for actual paper. If what you mean by "print paper money" is issue an electronic token representing a bitcoin, I don't think that's difficult to do. It's what mybitcoin.com does now - it is essentially a full-reserve bank with its own "money."

Quote from: myrkul
Transactions within the bank would also be possible with "fake" bitcoins, especially if all the bitcoins are held in the bank's wallet, and accounts simply have balances.

There are no "fake" bitcoins. There are just bank credits, redeemable for bitcoins by the bank on certain terms, or which can be used for payment or sold to third parties.

A bank could create as much credit as it wanted, or its depositors were prepared to tolerate, but it would quickly go bust if it abused this privilege.

Quote from: myrkul
The problems start hitting hard when you try to send actual bitcoins. If the bank extends itself far enough, and has enough clients, it may be possible wipe out it's coffers with a transaction or two from each client.

True, but that is precisely why successful banks will need to be prudent. The problem with the banking system today is that the risk of failure is mitigated by government support, which creates moral hazard and reckless lending.

Quote from: myrkul
Bottom line, you CAN do fractional reserve banking with bitcoin, but it requires that every other bank and customer agree that your paper or digital notes are as good as the bitcoins they represent, in order to pull it off without any hitches.

It doesn't require that everybody accept the banks' notes, just that there is enough demand for those notes.

They don't have to be "as good as bitcoins" - there's nothing to stop third parties buying up bank notes at a discount to their face value. The risk of the bank collapsing would be priced in.

I agree with you that it's risky - but the market will impose discipline on the banks, to stop them taking excessive risks, remove ones which do, and reward those that don't. Meanwhile depositors will be able to earn interest on their savings, and secure their wallets from theft.
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March 02, 2011, 06:47:01 PM
 #72


Not disputing anything above. That said:

Meanwhile depositors will be able to earn interest on their savings, and secure their wallets from theft.

You can run a bank that will provide interest on savings and secure wallets from theft with a full reserve. I detailed this elsewhere, and it turns out I was reinventing the wheel.

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Need Dispute resolution? Public Key ID: 0x11D341CF
No person has the right to initiate force, threat of force, or fraud against another person or their property. VIM VI REPELLERE LICET
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