Cryptobank Idea

[OriginTrain]

There's a lot of projects/ICOs that hail themselves as blockchain banks etc, but until now there hasn't been anything resembling a real crypto-bank with fractional reserve rules etc that are self-implemented. The reason for this is quite clear: crypto is the antithesis of traditional finance. But in saying that, why couldn't there be even 1 real cryptobank?

Let's put regulations aside for a minute, and assume a crypto-bank would operate in an offshore jurisdiction that was sympathetic to autonomy of Internet tokens. The crypto-bank would never handle real-life fiat in any way, only BTC and other crypto-currencies.

It would work like this:
1) People can "deposit" BTC/ETH etc into the bank with insurance limits. Eg: Every depositor will have a 50% insurance guarantee on their total deposit.
2) Fractional reserve banking would be allowed but with a twist (I'm against FR personally but just for the idea of the project, we would allow it). The twist is this: At least 50% of deposited crypto must be kept in cold storage and cannot be touched. Compare this to traditional banks which only need to keep 20% or so. We would require a higher safety reserve due to the unpredictable and high-risk nature of crypto investments. The other 50% may be used by the crypto-bank and used for speculative but hopefully low risk investments that are based on the blockchain (well researched ICOs, trading strategies, loans etc). Again, no money is ever converted to USD or any other fiat in order to avoid financial regulations.
3) People may access their accounts and withdraw up to their full balance at any time. In the event of "Bank runs", client funds would be protected by the 50% insurance guarantee whereby 50% of all deposits are in cold storage. The cold storage will only be accessed for client withdrawal, nothing else. Obviously this is a risk to depositors, like with normal banks.
4) People holding their crypto in the crypto-bank would receive the following benefits:
- A base interest rate paid in BTC p/a, such as 5%. This could be paid monthly and have no time withdrawal restrictions. This is to pay for the risk the depositor makes that a bank run may occur and they only receive 50% of their funds. Since the risk of this would be theoretically low if the crypto-bank is reputable, only low interest is offered. Nevertheless the risk is higher than with a traditional bank, and that is why the amount is also higher.
- A time-locked savings interest contract. Like with normal banks, depositors may time-lock their deposit for a specific period of time, such as 6 months or up to 5 years. Interest here may vary between 5.1% - 50% p/a. It may reach as high as 50% p/a depending upon market conditions, such as the crypto-boom of 2017. Here it would make sense for the crypto-bank to offer a 50% interest rate p/a for a 1 year term when x10 returns were common.
- If possible, integration with International bills payment and other automatic payment services that could integrate with the crypto-bank, if the crypto-bank became large enough.
5) The crypto-bank would serve as a convenient alternative to traditional banking by offering a fully anonymous system. Unlike Swiss banking or other offshore jurisdictions which are commonly compromised, since the bank will never deal in fiat and only in crypto, no identity checks ever need to be made. The crypto-bank itself would of course be fully legal and regulated within its jurisdiction, but the jurisdiction would be chosen such that it would allow the bank to legally operate in an anonymous manner. This would be achievable by never, ever dealing with fiat directly in any way which would trigger various laws.

So what's the point of it for depositors? For people on BCT, the bank would be pointless. We're all too advanced to need it. But for regular mom and pop investors, it could be sound. Here is why:
- Most regular crypto investors store all their coins on hot wallets or exchanges, both of which are susceptible to hacking. The procedures involved with cold storage are often too complex for them, even when using hardware wallets. By allowing them to store their coins in a familiar bank environment they would feel more secure.
- Depositors would never need to deal with private keys. Once the deposit is made, they can be verified by either a secret key & pin + 2FA, or if they so choose (purely optionally) personal identity data.
- Depositors would receive regular interest on their BTC holdings with insurance. This is something that doesn't currently exist anywhere (ie: just by holding BTC you receive interest, along with insurance that protects against some of it).

The exact %'s etc mentioned above could of course be changed, but just as a general idea, I think a real crypto-bank could do quite well. Not talking about crypto-projects that want to apply for banking licenses and run a real bank, or projects that issue debit-cards that you can use your balance to pay for things, but a real traditional banking structure applied exclusively to the blockchain with fractional reserve rules and subsequent interest payouts.

I think something like this should come to fruition one day, but why not sooner?

[eyebags1994]

My idea about about this cryptobank. Will be like this I think its about banking our money from crypto currency since its not yet happening to have cryptobank in this bitcoin industry  well its better to have I think because its just like we are investing our money . banking still have an interest of your money. Cryptobanking are for those people or bitcoin users who don't want to spend their money immediately and Better bank those.

[Hydrogen]

5) The crypto-bank would serve as a convenient alternative to traditional banking by offering a fully anonymous system. Unlike Swiss banking or other offshore jurisdictions which are commonly compromised, since the bank will never deal in fiat and only in crypto, no identity checks ever need to be made. The crypto-bank itself would of course be fully legal and regulated within its jurisdiction, but the jurisdiction would be chosen such that it would allow the bank to legally operate in an anonymous manner. This would be achievable by never, ever dealing with fiat directly in any way which would trigger various laws.

Good well thought out post.

On a side note, if a "crypto-bank" were to offer services for cars, real estate, business or personal loans that aspect likely couldn't be fully autonomous and would require some type of identity check.

I think something like this should come to fruition one day, but why not sooner?

There may be no real advantage in offering a crypto bank format over normal trading exchanges. Crypto with its trust less systems can do many of the same jobs banks do without paying for a physical brick and mortar based location or hiring many employees to carry out transactions, process deposits or withdrawals. Adding a bank infrastructure on top of the existing crypto abstraction layers may not provide enough positive tangible gains to be feasible.

Suggesting a crypto bank could be similar to suggesting that amazon open a chain of retail stores across the united states. Their business model and profitability are based upon not paying the additional cost of having physical stores and leveraging that advantage to provide cheaper goods to customers with greater efficiency.

Its an interesting question you're asking. Wish more people would chime in and share their views. There isn't much interesting discussion here of late.

[Pintasak]

There's a lot of projects/ICOs that hail themselves as blockchain banks etc, but until now there hasn't been anything resembling a real crypto-bank with fractional reserve rules etc that are self-implemented. The reason for this is quite clear: crypto is the antithesis of traditional finance. But in saying that, why couldn't there be even 1 real cryptobank?

Let's put regulations aside for a minute, and assume a crypto-bank would operate in an offshore jurisdiction that was sympathetic to autonomy of Internet tokens. The crypto-bank would never handle real-life fiat in any way, only BTC and other crypto-currencies.

It would work like this:
1) People can "deposit" BTC/ETH etc into the bank with insurance limits. Eg: Every depositor will have a 50% insurance guarantee on their total deposit.
2) Fractional reserve banking would be allowed but with a twist (I'm against FR personally but just for the idea of the project, we would allow it). The twist is this: At least 50% of deposited crypto must be kept in cold storage and cannot be touched. Compare this to traditional banks which only need to keep 20% or so. We would require a higher safety reserve due to the unpredictable and high-risk nature of crypto investments. The other 50% may be used by the crypto-bank and used for speculative but hopefully low risk investments that are based on the blockchain (well researched ICOs, trading strategies, loans etc). Again, no money is ever converted to USD or any other fiat in order to avoid financial regulations.
3) People may access their accounts and withdraw up to their full balance at any time. In the event of "Bank runs", client funds would be protected by the 50% insurance guarantee whereby 50% of all deposits are in cold storage. The cold storage will only be accessed for client withdrawal, nothing else. Obviously this is a risk to depositors, like with normal banks.
4) People holding their crypto in the crypto-bank would receive the following benefits:
- A base interest rate paid in BTC p/a, such as 5%. This could be paid monthly and have no time withdrawal restrictions. This is to pay for the risk the depositor makes that a bank run may occur and they only receive 50% of their funds. Since the risk of this would be theoretically low if the crypto-bank is reputable, only low interest is offered. Nevertheless the risk is higher than with a traditional bank, and that is why the amount is also higher.
- A time-locked savings interest contract. Like with normal banks, depositors may time-lock their deposit for a specific period of time, such as 6 months or up to 5 years. Interest here may vary between 5.1% - 50% p/a. It may reach as high as 50% p/a depending upon market conditions, such as the crypto-boom of 2017. Here it would make sense for the crypto-bank to offer a 50% interest rate p/a for a 1 year term when x10 returns were common.
- If possible, integration with International bills payment and other automatic payment services that could integrate with the crypto-bank, if the crypto-bank became large enough.
5) The crypto-bank would serve as a convenient alternative to traditional banking by offering a fully anonymous system. Unlike Swiss banking or other offshore jurisdictions which are commonly compromised, since the bank will never deal in fiat and only in crypto, no identity checks ever need to be made. The crypto-bank itself would of course be fully legal and regulated within its jurisdiction, but the jurisdiction would be chosen such that it would allow the bank to legally operate in an anonymous manner. This would be achievable by never, ever dealing with fiat directly in any way which would trigger various laws.

So what's the point of it for depositors? For people on BCT, the bank would be pointless. We're all too advanced to need it. But for regular mom and pop investors, it could be sound. Here is why:
- Most regular crypto investors store all their coins on hot wallets or exchanges, both of which are susceptible to hacking. The procedures involved with cold storage are often too complex for them, even when using hardware wallets. By allowing them to store their coins in a familiar bank environment they would feel more secure.
- Depositors would never need to deal with private keys. Once the deposit is made, they can be verified by either a secret key & pin + 2FA, or if they so choose (purely optionally) personal identity data.
- Depositors would receive regular interest on their BTC holdings with insurance. This is something that doesn't currently exist anywhere (ie: just by holding BTC you receive interest, along with insurance that protects against some of it).

The exact %'s etc mentioned above could of course be changed, but just as a general idea, I think a real crypto-bank could do quite well. Not talking about crypto-projects that want to apply for banking licenses and run a real bank, or projects that issue debit-cards that you can use your balance to pay for things, but a real traditional banking structure applied exclusively to the blockchain with fractional reserve rules and subsequent interest payouts.

I think something like this should come to fruition one day, but why not sooner?

Crypterium is a cryptobank creating the future today integrated service that encompasses the best ideas from the entire community of the worlds best blockchains enthusiast

[CHENIEN]

This question is not new for me, a month ago, I was already saw this kind of question in the forum. If we talk about cryptobanking system, for me, it is not easy to build or establish, because crypto business is not directly endorse by the government, and if we build a structures that accepts depositors of crypto it is already done by the approval of government with a building permit by government, if we try to analyze the conflict is there, crypto business is something anonymous and mysterious people around these particular business. So, it is hard to build a bank of crypto because of the total conflict, the only thing that I believe today is only some banks accepts cryptocurrency transactions.

[joms07]

Crypterium's goal is to provide a complete vertically integrated service that encompasses the best ideas from the entire community of the world's best blockchain enthusiasts.

[jtipt]

In theory I like this idea, but can it really be made possible? Probably not.
Other than that as you mentioned it will be useless for a more seasoned BTC user, well mostly anyone with significant amount of BTC does his research and becomes a seasoned user. So only people left with will be people with small fraction of BTC, is it really worth the effort for them to store that small amount in a bank? No.

[jademaxsuy]

I don't like the idea of cryptobanking. Meaning there will be a third party that will ensure the holding of these digital currency and what its effect? Will more charging fee to get the coins, charging fee in storing coins, and any other related cryptobank transactions. As for me I would rather to maintain what bitcoin has now that coins are stored in digital wallet though these wallets claims that they are not working like bank but still could store this coins. All you to do is secure your wallet information and zip it in a folder that no once could access it except you. Digital wallet has proven it already that is why there is no need for us to implement cryptobanking. However, if the bitcoin admins will pursue on this kind of project then it would be better to support it since as we all know that before they adopted a project it is being carefuly studied before implementing the project.

[pinkflower]

It would work like this:
1) People can "deposit" BTC/ETH etc into the bank with insurance limits. Eg: Every depositor will have a 50% insurance guarantee on their total deposit.
2) Fractional reserve banking would be allowed but with a twist (I'm against FR personally but just for the idea of the project, we would allow it). The twist is this: At least 50% of deposited crypto must be kept in cold storage and cannot be touched. Compare this to traditional banks which only need to keep 20% or so. We would require a higher safety reserve due to the unpredictable and high-risk nature of crypto investments. The other 50% may be used by the crypto-bank and used for speculative but hopefully low risk investments that are based on the blockchain (well researched ICOs, trading strategies, loans etc). Again, no money is ever converted to USD or any other fiat in order to avoid financial regulations.
3) People may access their accounts and withdraw up to their full balance at any time. In the event of "Bank runs", client funds would be protected by the 50% insurance guarantee whereby 50% of all deposits are in cold storage. The cold storage will only be accessed for client withdrawal, nothing else. Obviously this is a risk to depositors, like with normal banks.
4) People holding their crypto in the crypto-bank would receive the following benefits:
- A base interest rate paid in BTC p/a, such as 5%. This could be paid monthly and have no time withdrawal restrictions. This is to pay for the risk the depositor makes that a bank run may occur and they only receive 50% of their funds. Since the risk of this would be theoretically low if the crypto-bank is reputable, only low interest is offered. Nevertheless the risk is higher than with a traditional bank, and that is why the amount is also higher.
- A time-locked savings interest contract. Like with normal banks, depositors may time-lock their deposit for a specific period of time, such as 6 months or up to 5 years. Interest here may vary between 5.1% - 50% p/a. It may reach as high as 50% p/a depending upon market conditions, such as the crypto-boom of 2017. Here it would make sense for the crypto-bank to offer a 50% interest rate p/a for a 1 year term when x10 returns were common.
- If possible, integration with International bills payment and other automatic payment services that could integrate with the crypto-bank, if the crypto-bank became large enough.
5) The crypto-bank would serve as a convenient alternative to traditional banking by offering a fully anonymous system. Unlike Swiss banking or other offshore jurisdictions which are commonly compromised, since the bank will never deal in fiat and only in crypto, no identity checks ever need to be made. The crypto-bank itself would of course be fully legal and regulated within its jurisdiction, but the jurisdiction would be chosen such that it would allow the bank to legally operate in an anonymous manner. This would be achievable by never, ever dealing with fiat directly in any way which would trigger various laws.

Why dont we do away with all that and store and protect our coins by ourselves. If you still think that way, then I think you missed the whole point of cryptocurrencies.

Its not only about "money", its also about the liberation of the people from today's financial system that oppresses us.

Your proposal is opening a service almost the same as our present oppressors.

[Arz26]

To provide a complete vertically integrated service that encompasses the best ideas from the entire community of the country.The uniqueness of Cryptobank is that the project allows customers to get services, adapted to their needs. The best solution for people without credit history, to whom traditional banks cannot provide loan proposals, or for whom current offers on the market will cost much more.

[BossMacko]

- Most regular crypto investors store all their coins on hot wallets or exchanges, both of which are susceptible to hacking. The procedures involved with cold storage are often too complex for them, even when using hardware wallets. By allowing them to store their coins in a familiar bank environment they would feel more secure.

Your Bitcoin will be more secured if you will use a cold storage in a new bought or new formatted laptop or desktop. The only use of that gadget is for your Bitcoin. If ever we have a cryptobank the problem that i can think of are it can also get hack since its online and it has database and dev of that cryptobank have the possibility to run like other exchanges and last having a cryptobank means you need to give them your real name for them to function like the banks if that happens we are not anonymous anymore.

[BillCoin]

All nice and good, but why wouldn't I just keep my money as fiat in banks, with having a much lower chances of losing my funds to fraud/hack.
Af both cases I will get X amount of interest, and at both cases the bank manage the funds with fractional reserve.

Also, as bitcoin is really unstable, I would say that if the price drops /rises hard, the bank would go bankrupt really soon as more then 50% of the funds will be requested by users.

[sreecanvas]

Cryptobanks is a modern service for accessing different cryptocurrency exchange markets.Cryptobanks provide a comfortable, practical and profitable platform fueled by cryptocurrencies – suitable for both beginners and experienced traders.

[magneto]

The idea is interesting. I like the fact hat it does not deal with fiat at all during this process of depositing and investing the funds, and it is supposed to end up as an alternative to traditional banking/Swiss offshore accounts. But, it's not without flaws.

However, the main problems are that it's not perfectly trustless, it would most likely be unlicensed and is prone to getting restricted by governments, and it'll be hard to convince anyone to invest in these funds when it's not a regulated/licensed investment business and you don't even know where exactly the service is located. You have to trust them with your BTC investment after all, and also trust that they will actually keep 50% in reserve as well as paying it out.

I'd much rather just invest myself into ICOs or other crypto investments if that's how the cryptobank is profiting. I don't have any counterparty risk in that case.

[MonkeyGolden]

The idea of virtual currency bank? Why not, I fully support the establishment of virtual currency bank in the future, when the virtual currency is recognized and high value, also need a bank for storage and exchange, the establishment of banks Virtual currency will be inevitable in the future when virtual currency is gradually accepted

[Ehilamale]

The idea is good, but there is one point. If an ordinary Bank is closed for various reasons, the state returns the money to the depositors. Who will return bitcoins?

[nur rochid]

The idea of virtual currency bank? Why not, I fully support the establishment of virtual currency bank in the future, when the virtual currency is recognized and high value, also need a bank for storage and exchange, the establishment of banks Virtual currency will be inevitable in the future when virtual currency is gradually accepted

may be a conventional bank as it will also provide services for storage of cryptocurrency, especially if we keep ourselves usually a lot of hackers who want to steal it, with the bank cryptos i think will be more secure

[torch2121]

This is a good idea. A 5% to 50% per annum this is great compare to bank fiat. Compare to bank fiat the interest rate is 1% or 0.5% per annum. If the cryptobank can secure the depositors from hackers this is great. Hope that our interest for a given deposit does not decrease as market goes down. Besides from minning we have alternative, having a savings that gives us more benefit in return compare to bank fiat. If I'm planning to buy property all I have to do is exchange it in bank fiat for cash transaction as payment for real estate. Because here in the Philippines there is inhouse financing for people that have an issue in their status. This is a great project if it will be implemented.

[palle11]

The crypto bank idea will be a nice one because cryptocurrency and fiat are actually not in the same physical category even crypto is money. So having a separate bank for it will give it a recognition too.

Crypterium's goal is to provide a complete vertically integrated service that encompasses the best ideas from the entire community of the world's best blockchain enthusiasts.

I also heard of this cypherium. Any further information like bounty campaign going on yet? Is going to have a great impact on cryptocurrency.

[xanto]

Yes, an interesting idea. But the problem is that the cryptocurrency market is too active. Will people want to part with their assets for a long time? During the pamps, they will not be able to sell their cryptocurrencies