Bitcoin bank accounts - maybe sooner than we think?

[Kouye]

Paypal has been hinting that they may add xbt to their list of currencies in the future (they already allow users to hold funds in a large number of different currencies and exchange between them).

Paypal would instantly become the largest bitcoin wallet, bank, merchant service and exchange in the world by several orders of magnitude with 200+ million users in almost 200 countries.

Paypal, if even alive at this time, will crawl and beg for bitcoin users to consider them as a possible gateway.
Bitcoin users will then decide if paypal must live or die.
And it will die.

[StarfishPrime]

Paypal has been hinting that they may add xbt to their list of currencies in the future (they already allow users to hold funds in a large number of different currencies and exchange between them).

Paypal would instantly become the largest bitcoin wallet, bank, merchant service and exchange in the world by several orders of magnitude with 200+ million users in almost 200 countries.

Paypal, if even alive at this time, will crawl and beg for bitcoin users to consider them as a possible gateway.
Bitcoin users will then decide if paypal must live or die.
And it will die.

I'd like to believe that could happen, but there's just too much smart money behind paypal/ebay for that to ever play out. I suspect we may see something sooner rather than later, and if it does happen, all bets are off regarding btc/usd rates.

[Kouye]

[...] smart money [...]

That's the point. With BTC, money is as smart as the people who "own" it. Period. 

[pedrog]

Two words, Neo & Bee

This ^

[DannyHamilton]

There are already several bitcoin banks and they are all already quite popular (inputs.io, mtgox.com, bitstamp.com, etc)  Or are you talking about insured, regulated accounts?

[CIYAM]

Wow - quite a few replies - and some good points.

Where I see *banks* fitting in is simply giving you the convenience to transfer funds in and out of BTC via online banking and in insuring your BTC asset (something that I think might be important to those less tech savvy than many of the members of this forum).

[justusranvier]

Many people will think that giving their bitcoins to a third party to hold for them is a good idea.

They'll learn their lesson, sooner or later.

[ar9]

I really do not see the need or purpose of a Bitcoin bank.
I would employ anyone who thinks they need this service to look into Bitcoin security measures for themselves.

Once banks get involved, Bitcoin's ultimate purpose is undermined to a rather extensive degree.

[hayek]

You would trust your entire Bitcoin safekeeping to China?

Don't have to. I'm my own bank

[CIYAM]

The point that is being missed is insurance - if you're computer gets hacked and you lose all your BTC then it's simply "tough luck".

Devices like the Trezor may get us there without the need of a 3rd party but I think given the option quite a few people (especially the elderly and non-technically minded) would rather trust a bank than themselves.

[justusranvier]

The point that is being missed is insurance - if you're computer gets hacked and you lose all your BTC then it's simply "tough luck".

You're assuming that it's possible to create workable deposit insurance for BTC.

Central banks get away with it by using the printing press and taxation, when they choose to protect depositors at all.

[CIYAM]

The point that is being missed is insurance - if you're computer gets hacked and you lose all your BTC then it's simply "tough luck".

You're assuming that it's possible to create workable deposit insurance for BTC.

Insurance would most likely only be in the form of fiat - but I would rather get back 90% of the current fiat value of my BTC than to lose it all to a hacker.

[Shallow]

I doubt bankers would initiate mass adoption.

[LiteCoinGuy]

dont think so but for normal people it would be a nice idea. the normal guy who isnt tech savy dont want (or should) have his money on a computer.

maybe some day, the Fidor Bank in germany will do it. until now they work together with the biggest german exchange bitcoin.de

[romerun]

if paypal add btc, we'll laugh at dwolla to throw their lead away

[bluemeanie1]

You would trust your entire Bitcoin safekeeping to China?

If there would be interest on balance AND deposit insurance I would try.

I show how it can be done with Confidence Chains : https://bitcointalk.org/index.php?topic=324106.0

You can get FDIC insurance by simply opening a real bank account and then basing the asset on the deposits in that bank account.  Thus you have a crypto-security that is FDIC insured(more or less).

Given what's been happening in the banking world I think the stronghold of FDIC might even come under question at some point in the future.

People can design any kind of investment device they want with the Bond Auction system, you can loan money out to your friends and your interest comes from their successes.  To build more stability create a fund and a pool of loans.  Sounds more like something Bitcoin people could appreciate.  Remember when you open a savings account with Wells Fargo, your money is going to all the people who are consistently reviled on this list.

[RoadToHell]

I don't know how it would be implemented but it is quite possible that private wallet insurance might emerge.  It might be offered as a an option with a trezor-like or other physical wallet product.

[bluemeanie1]

The point that is being missed is insurance - if you're computer gets hacked and you lose all your BTC then it's simply "tough luck".

Devices like the Trezor may get us there without the need of a 3rd party but I think given the option quite a few people (especially the elderly and non-technically minded) would rather trust a bank than themselves.

I tend to think that people would develop better personal security systems if there was a need for them.  You could rig up some kind of system using very cheap commodity hardware, smart cards, etc. to make a crypto-bank account possible on a PC with open source software and less possibility of misplacing your credentials.  I just dont think there is much of a need at this point, Bitcoin is only used for a few classes of transactions.  At one point they tried to work SmartCard readers into Mozilla.

here's a USB Smart Card Reader for $15.99  http://www.staples.com/office/supplies/StaplesProductDisplay?storeId=10001&catalogIdentifier=2&partNumber=IM1RH9702&langid=-1&cid=PS:GooglePLAs:IM1RH9702&srccode=cii_17588969&cpncode=33-197953902-2

[Heutenamos]

You're assuming that it's possible to create workable deposit insurance for BTC.

It is as long as bank has physical assets (these can be sold off to buy stolen BTC back)

[justusranvier]

I don't know how it would be implemented but it is quite possible that private wallet insurance might emerge.

I'll believe it as soon as someone presents a pricing scheme for it that is both affordable and actuarially sound.

Insurance isn't magic pixie dust - doing it correctly means having the ability to accurately calculate the risk of insured losses, and for that risk to be low enough that customers are willing to pay for it (either directly via premiums, or indirectly via opportunity cost).