There is a need for a Bitcoin Bank

[Golph]

Yes we need a bank that can create out of thin air unlimited amounts of bitcoins each month 

The problem is you can't do that with Bitcoins, same with gold

[1715126030]

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[coinft]

A fractional reserve bitcoin bank is quite impossible, because no one would be able to insure deposits given the tremendous upward potential. 

An uninsured fractional reserve bank is just another risky investment vehicle, and doesn't provide the benefits you are aiming for.

A full reserve bank is possible, but has no way to make a profit or pay interest from this banking business.

That leaves various forms of accidental bitcoin account/wallet providers, who make a profit by being exchanges, advertising or gambling. Exactly what we already have.

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A fractional reserve bitcoin bank is quite impossible, because no one would be able to insure deposits given the tremendous upward potential.  

An uninsured fractional reserve bank is just another risky investment vehicle, and doesn't provide the benefits you are aiming for.

A full reserve bank is possible, but has no way to make a profit or pay interest from this banking business.

That leaves various forms of accidental bitcoin account/wallet providers, who make a profit by being exchanges, advertising or gambling. Exactly what we already have.

"Do we need bitcoin banking" is a difficult question, but "do we have fractional reserve banking?" is ridiculously simple:
Uninsured fractional reserve banking did, does & will continue to exist in bitcoin.

Think back to Pirateat40 Savings & Loan.  Think of the various "insured" passthroughs (Patrick/Starfish).  Fast-forward to all of the Ukyo stuff.
Fractional reserve lending is profitable, that's how it came into being & that's why it exists.
Enlightened self-interest, free market & the invisible hand worked in consort to establish it as the central pillar of the modern financial system.
Enjoy

[coinft]

A fractional reserve bitcoin bank is quite impossible, because no one would be able to insure deposits given the tremendous upward potential.  

An uninsured fractional reserve bank is just another risky investment vehicle, and doesn't provide the benefits you are aiming for.

A full reserve bank is possible, but has no way to make a profit or pay interest from this banking business.

That leaves various forms of accidental bitcoin account/wallet providers, who make a profit by being exchanges, advertising or gambling. Exactly what we already have.

"Do we need bitcoin banking" is a difficult question, but "do we have fractional reserve banking?" is ridiculously simple:
Uninsured fractional reserve banking did, does & will continue to exist in bitcoin.

Think back to Pirateat40 Savings & Loan.  Think of the various "insured" passthroughs (Patrick/Starfish).  Fast-forward to all of the Ukyo stuff.
Fractional reserve lending is profitable, that's how it came into being & that's why it exists.
Enlightened self-interest, free market & the invisible hand worked in consort to establish it as the central pillar of the modern financial system.
Enjoy

My point is that the insurance schemes of the past did not work. People should have learned it never will with bitcoin, at least not while still growing exponentially. Some of your examples are ludicrous, no one has ever checked or just seen the collateral pirateat40 or Patrick was supposed to have. That's not insurance, that's just plain lies to get people on a ponzi.

In the so called modern financial world central banks have the ability to insure arbitrary losses by just printing new money. This is the reason people still trust banks with their (small) deposits despite the constant news.

This is not possible with bitcoin. Hence a deposit in a fractional reserve bitcoin bank must be seen as high risk investment, in particular more risky than just holding bitcoin. That's not what most people wish for when asking for banking services. And that's why I dispute calling them banks at all, and claim traditional banks are not viable with bitcoins yet. This may change when the market saturation is much higher.

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A fractional reserve bitcoin bank is quite impossible, because no one would be able to insure deposits given the tremendous upward potential.  

An uninsured fractional reserve bank is just another risky investment vehicle, and doesn't provide the benefits you are aiming for.

A full reserve bank is possible, but has no way to make a profit or pay interest from this banking business.

That leaves various forms of accidental bitcoin account/wallet providers, who make a profit by being exchanges, advertising or gambling. Exactly what we already have.

"Do we need bitcoin banking" is a difficult question, but "do we have fractional reserve banking?" is ridiculously simple:
Uninsured fractional reserve banking did, does & will continue to exist in bitcoin.

Think back to Pirateat40 Savings & Loan.  Think of the various "insured" passthroughs (Patrick/Starfish).  Fast-forward to all of the Ukyo stuff.
Fractional reserve lending is profitable, that's how it came into being & that's why it exists.
Enlightened self-interest, free market & the invisible hand worked in consort to establish it as the central pillar of the modern financial system.
Enjoy

My point is that the insurance schemes of the past did not work. People should have learned it never will with bitcoin, at least not while still growing exponentially. Some of your examples are ludicrous, no one has ever checked or just seen the collateral pirateat40 or Patrick was supposed to have. That's not insurance, that's just plain lies to get people on a ponzi.

The passthroughs were billed as being secure, and people invested in them as such.  To be honest, i haven't bothered to check the financials of my bank before depositing money either, though most folks on this forum insist that fiat is a ponzi also.

In the so called modern financial world central banks have the ability to insure arbitrary losses by just printing new money. This is the reason people still trust banks with their (small) deposits despite the constant news.

This is not possible with bitcoin. Hence a deposit in a fractional reserve bitcoin bank must be seen as high risk investment, in particular more risky than just holding bitcoin. That's not what most people wish for when asking for banking services. And that's why I dispute calling them banks at all, and claim traditional banks are not viable with bitcoins yet. This may change when the market saturation is much higher.

I agree that it's riskier to invest money than to hold it, and technically the coin deposited in uninsured bitcoin banks is more accurately described as an investment rather than a deposit, but the distinction is pretty vague.  Insured banks are a relatively new development, and a central authority/entity/lender of last resort is not necessary for fractional reserve banking.  Bitcoin bankers could follow in the footsteps of conventional bankers, forming conglomerates/peer contracts/guild regulations to create a p2p insurance scheme.

The creepy thing is the very same schemes invented by mainstream bankers, the very ones which necessitated regulation, are being rediscovered/reanimated by bitcoin's new banker elite.  Both curious & disheartening to watch.

[theonewhowaskazu]

Its like nobody in this entire thread even bothered to read my OP.

Clearly "normal" banking (everybody trusts a central authority to hold their money, and then this central authority tries to effectively siphon off as much wealth as possible without anybody noticing) isn't necessary for Bitcoin because a wallet is a way of storing your coins without any counterparty risk.

That's now what banking has to be, and that's not what I was talking about. There are other purposes of banks, other than the above. Banks help markets run by providing liquidity and credit. In other words, there's banking as an investment, too, not just banking as a store of value. Bitcoin does need banking as an investment, because those investments do useful things for an economy, and help Bitcoin run smoothly. Bitcoin doesn't need banking as a store of value, because Bitcoin already is a store of value. Bitcoin might need banking as a easy way of transferring money in small quantities (offchain transactions).

You guys seem to entirely ignore all facets of Banking other than store of value, which clearly Bitcoin obsoletes, even though I didn't even mention that outdated form of banking in the OP and was specifically talking about banking as an investment to allow a real credit market to exist.

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You guys seem to entirely ignore all facets of Banking other than store of value, which clearly Bitcoin obsoletes, even though I didn't even mention that outdated form of banking in the OP and was specifically talking about banking as an investment to allow a real credit market to exist.

Have you read the four posts directly above yours?

[theonewhowaskazu]

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You guys seem to entirely ignore all facets of Banking other than store of value, which clearly Bitcoin obsoletes, even though I didn't even mention that outdated form of banking in the OP and was specifically talking about banking as an investment to allow a real credit market to exist.

Have you read the four posts directly above yours?

Indeed I have. They all focus on banking as a store of value - you say that uninsured bitcoin banks are risky and may lose value - rather than the fact that they could help set up a much needed credit market.

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You guys seem to entirely ignore all facets of Banking other than store of value, which clearly Bitcoin obsoletes, even though I didn't even mention that outdated form of banking in the OP and was specifically talking about banking as an investment to allow a real credit market to exist.

Have you read the four posts directly above yours?

Indeed I have. They all focus on banking as a store of value - you say that uninsured bitcoin banks are risky and may lose value - rather than the fact that they could help set up a much needed credit market.

Quite the contrary.  We're discussing banks as lending institutions, which have been with bitcoin for quite a while.  Pirateat40 presented his scheme as a bank, which, like all other banks, didn't simply "put coin in the vault for safekeeping," but *invested* the money or *loaned* it at a higher rate of interest.  Simple. Edit: Unless the bank does *something* with deposit money, it can't afford to pay interest now, can it?

So yeah, banks as sources of credit are addressed, and shown to be (thus far) sources of much moaning and gnashing of teeth in the world of bitcoin.  I even offered a plausible p2p fractional reserve lending insurance scheme  

Edit:  The Lending sub-forum, where usury and theft are pitted against each other in an eternal battle of greedz, is a fine example of banking every enterprising young fellow could do in his spare time.

[btceic]

Personally I think we need a bitcoin bank for the majority of people with little or no system security knowledge.

Bank as in safely secures my deposits and perhaps something like FDIC for deposits.

[smoothie]

I disagree.

Bitcoin "bank" implies centralization in my view. Centralization implies single-point of failure which implies regulation etc etc etc.

Bitcoin enables you to be your own central bank and to protect your own net worth without it being someone else's counter-party risk.

[btceic]

Personally I think we need a bitcoin bank for the majority of people with little or no system security knowledge.

Bank as in safely secures my deposits and perhaps something like FDIC for deposits.

FDIC on deposits? So basically just take your bitcoins, transfer them to FIAT, and you get those features today. Bank are not safe, they are just keep a very small amount of money in the vault and risk all your other savings by loaning or investing in stocks/ businesses. You can do the same thing for your self, put 90% in an online wallet, and invest it. Put 10% on a paper wallet. There you are now a bank.

Not good enough for 99% of the rest of world, you and I are IT people most are not and don't have the first clue about system security and wouldn't feel comfortable doing so anyway.

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I disagree.

Bitcoin "bank" implies centralization in my view. Centralization implies single-point of failure which implies regulation etc etc etc.

Bitcoin enables you to be your own central bank and to protect your own net worth without it being someone else's counter-party risk.

Central banks aren't intrinsic to banking.  There were once many independent banks, issuing their own currencies, loosely regulated by the states in US.  They existed in parallel with the Banks of the United States & printed their own paper.  Then the regulations were loosened up, and banks started failing.

OP has a valid point -- banks are needed to fund large projects like building ... really big things.  It's pretty inconvenient to have to crowd-source everything.  Having to solicit funds from the great unwashed stymies industry (which may or may not be a bad thing).
To raise capital without banks, one needs to be a great salesman on top of being a great builder/entrepreneur/warmonger etc., etc.

If you want, a bank is just a local loan shark -- who pays you interest when you lend him money, and lends out your money at a higher interest.
He's pretty much a bare-bones full-reserve bank.

[indianplayers]

There's a site called "co!nb@se.c0m" that does this already.

[freedomno1]

I disagree.

Bitcoin "bank" implies centralization in my view. Centralization implies single-point of failure which implies regulation etc etc etc.

Bitcoin enables you to be your own central bank and to protect your own net worth without it being someone else's counter-party risk.

The problem is that some people can't be bothered to protect their own wallet and want someone else to do it, for those people the idea of a bank may be a better idea, the solution is not that their should be a bank but how can we design one that isn't evil

[petersiddle98]

There is already a bank for Bitcoin, MCXNOW is one...

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Bank reeks of centralisation which is something we should be wary of

Trouble is BTC forces us to take personal responsibility - many of us are not used to that - takes us out of our comfort zones

Many of us are not used to digging ditches -- that's why we have ditch-diggers.
Many of us are not used to building cars -- that's why we have auto manufacturers.
Many of us are not used to doing surgery -- that's why we have surgeons.

Centralization starts kicking in as soon as life gets past single-cell organisms.  Man, for instance, has brain cells that do braining, lung cells that do the lunging, and ass cells that do assing.  All specialized, all centralized.  Every thing more complex than mold works that way.

[Kimowa]

You don't want bank to freeze your account if you are doing something illegal like gambling and stuff...

[theonewhowaskazu]

You don't want bank to freeze your account if you are doing something illegal like gambling and stuff...

Oh my god. I'm talking about a bank for use as a market maker in Bitcoin credit markets. How will the ability to exchange credit give them the ability to freeze your account. Its not like just because a Bitcoin bank exists suddenly wallets don't work.

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You don't want bank to freeze your account if you are doing something illegal like gambling and stuff...

Oh my god. I'm talking about a bank for use as a market maker in Bitcoin credit markets. How will the ability to exchange credit give them the ability to freeze your account. Its not like just because a Bitcoin bank exists suddenly wallets don't work.

Sorry about disagreeing with you before -- you were right.
I guess most people here do think that a bank is just a place that stores your money, lets you write checks, and pays you interest for the privilege of providing that service.
No wonder most here think that banks are a scam.  Banks like that *would* have to print money to be able to pay interest on deposits, pay rent & salaries -- where else would the money come from, amiright?