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theonewhowaskazu (OP)
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November 02, 2013, 08:14:36 PM |
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First off, note how I didn't say central bank. When I say that a Bitcoin Bank may be needed, I'm simply saying it may be best for the currency if somebody started one. I'm not implying that the actual Bitcoin protocol should change, except perhaps where necessary to allow greater transparency. Again, Bitcoin itself should remain entirely neutral, otherwise it will be destroyed. I'm im simply implying that business that make use of Bitcoin could perhaps improve the currency - and thus their business - by forming such a bank.
By Bitcoin bank, I mean an institution, controlling a range of primarily debt-based assets, whose purpose is to provide liquidity while ensuring greater stability, both in exchange rates, and interest rates. One problem with Bitcoin at the present is that, although clearly it has time value, it is extremely difficult to invest said Bitcoins without taking on a huge amount of risk. The reason for this is largely due to an inefficient Bitcoin credit market. Bitfinex is a great example of something that, with a little work, could become such a bank.
The first step is creating an actual margin credit market. Bitfinex's margin credit market is problematic since the debt is not transferable. In a true margin credit market, new margin loans would not be any different than existing ones. When somebody wishes to borrow Bitcoins, they would simply issue a security backed by the value in their account. The security would have an amount, limit, and time-span attached to it, and should be sold, just as it is now, on a free market. The important improvement would be that these securities could then be re-sold, on the same market, to new buyers, indistinguishable from freshly-issued securities. This allows much greater liquidity in general since buyers can opt for early withdrawl of their money by re-selling their security.
The second step would be to make borrowed funds indistinguishable from other funds (except obviously for the purpose of restricting withdraws form the account). This means that those that borrow USD, to leveraged-buy Bitcoin, can then re-lend those Bitcoin for a lesser period, earning some interest, and improving the credit market as a whole by providing more demand & supply on both sides.
With the resulting improvements to liquidity, many of the inefficiencies associated with the actual Bitcoin exchange market would be resolved as well. Suddenly, arbitrage is no longer as big an issue with the time delay associated with moving money from exchange to exchange because, in the interim, leverage can be employed to maintain a net-0 exposure to fiat (or BTC) value. This makes exchange rate less dependent on any given exchange, improving stability. Not to mention the fact that people would actually be able to generate a stable return by lending BTC at minimal risk, which would increase demand for Bitcoin.
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The grue lurks in the darkest places of the earth. Its favorite diet is adventurers, but its insatiable appetite is tempered by its fear of light. No grue has ever been seen by the light of day, and few have survived its fearsome jaws to tell the tale.
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gaston909
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November 02, 2013, 08:57:24 PM |
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I would agree with the idea of a bitcoin bank.
Yes banks are evil, but for wider adoption, people don't want the responsibilities that banks take care of. Security being a big one for many.
Hopefully bitcoin will create a good about of competition in the banking sector and not be responsible for creating monsters like we have with the current banks.
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EccLipSe
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Activity: 168
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November 02, 2013, 10:12:00 PM |
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Bitcoin is not a currency. It is money on your wallet. Bitcoin bank is not suits its nature. There is no gold bank or no diamond bank.
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icem3lter
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November 02, 2013, 10:16:41 PM |
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I wonder if input.io can be considered a Bitcoin Bank when it does offchain Transactions
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theonewhowaskazu (OP)
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November 02, 2013, 10:20:11 PM |
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Bitcoin is not a currency. It is money on your wallet. Bitcoin bank is not suits its nature. There is no gold bank or no diamond bank.
There were & are plenty of gold banks. There is no diamond bank because diamonds aren't used as money. |
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Shallow
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SmartFi - EARN, LEND & TRADE
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November 02, 2013, 11:52:09 PM |
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No no no. Banks go against the very nature of bitcoin.
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gweedo
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November 02, 2013, 11:55:40 PM |
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Bitcoin is inherently a bank.
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EccLipSe
Member
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November 03, 2013, 12:12:06 AM |
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Bitcoin is inherently a bank.
+1 |
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RealT
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November 03, 2013, 02:13:32 AM |
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If people with large amounts of BTC want to lend, then they will be in a very powerful position to set borrowing rates and influence the economy (much like the central banks do now). Will we be making global regulations to control the rates and policies that the large holders of BTC (essentially a new central bank) can apply to the economy?
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Radelderth
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November 03, 2013, 02:40:40 AM |
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Yes, we need a bitcoin bank... is mcxNow consider a bank since its giving interest?  |
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Thenen
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November 03, 2013, 03:45:31 AM |
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Even if bank do accept Bitcoin, they will treat it like Gold and they just act as a middle man like BTC-e.com
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Rupture
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November 03, 2013, 04:47:29 AM |
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Sounds iffy, especially when it comes to fractional reserve methods.
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theonewhowaskazu (OP)
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November 03, 2013, 06:27:05 AM |
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If people with large amounts of BTC want to lend, then they will be in a very powerful position to set borrowing rates and influence the economy (much like the central banks do now). Will we be making global regulations to control the rates and policies that the large holders of BTC (essentially a new central bank) can apply to the economy?
No. The free market will do that for you. |
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alexeft
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November 03, 2013, 08:12:25 AM |
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No bank for me, thank you!
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freedomno1
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Learning the troll avoidance button :)
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November 03, 2013, 08:14:24 AM |
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MMM well if a bank is an eventuality, we may as well try and restructure them to be more decentralized but still be banks  |
Believing in Bitcoins and it's ability to change the world
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gweedo
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November 03, 2013, 08:30:40 AM |
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MMM well if a bank is an eventuality, we may as well try and restructure them to be more decentralized but still be banks Yeah we can call it, I don't know, maybe use a computer term in the beginning and add coin to it. ByteCoin? |
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freedomno1
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Learning the troll avoidance button :)
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November 03, 2013, 08:33:52 AM |
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MMM well if a bank is an eventuality, we may as well try and restructure them to be more decentralized but still be banks Yeah we can call it, I don't know, maybe use a computer term in the beginning and add coin to it. ByteCoin? I was thinking more like a cold wallet server room, with a hot wallet for daily usage and the rest locked in cold storage inside a mainframe I would call the place Reboot (With Bob as the Guardian) |
Believing in Bitcoins and it's ability to change the world
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argov
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November 03, 2013, 11:24:34 AM |
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I think a sort of bitcoinbank isn't usefull. Why you need someone who "holds" your money (something you can yourself via a wallet) and steals money for their clients and others?
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Greetings
1JBwWnqwxGTtqchacyHuhdjWZhYYonBuDf and 19KXWjUZnNPatoMZoRiFMzJFWA7mxBRPX5
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gamer4156
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November 03, 2013, 01:34:08 PM |
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What bitcoin needs is some brick and mortar locations. A place where I can go and drop off $100,000 in cash and get my bitcoins before I leave. Require multiple forms of ID maybe even a handprint. Require more informoration than banks and follow all the rules. Give them zero reason to shut it down. I have been thinking about this for a bit now and reading up on the financial rules and regulations. This would be the moment bitcoin hits mainstream. Right now it is too hard to get bitcoins for USD. I have been trying for about 8 days now just to get a few coins. If people could fly into a major city and deposit cash and walk out with their coins, bitcoins would take off in price.
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