Why Bitcoin is ultimately doomed to fail (not today or tomorrow)

[anth0ny]

Yeah, I doubt they have people who know how to track coins. And if you mined then sold bitcoin face-to-face, the IRS wouldn't know.

Until you get arrested for running a money services business without a license. Like Michel Espinoza and Pascal Reid.

[sawani]

A store of value would not be that if it were to lose its purchasing power, by definition. It has to gain through time, or at least remain stable in near term. Bitcoin has deflationary nature by itself, though its volatility through low volume of trades doesn't currently make it a good store of value either. If it persists though, this might change gradually...

[deisik]

Well yeah, of course.

But we wouldn't have any bank runs, right?

Wrong. That's why I'm telling you that even 100% reserve banking won't help you. If we take as a basis the definition that you've given, then bank runs could still happen (i.e. the depositors trying to withdraw their funds immediately), but since there is no loaning (the money is in the money warehouse all the time), there will be no significant negative effects, if any, on the economy and no bankruptcies...

Well, you're right that it's theoretically possible, but it'd eliminate the vast majority of bank runs, would it not?

Remember, part of the definition is "fearing that their bank will be unable to repay their deposits in full and on time". You agree with that definition, right?

Sorry, didn't notice your answer in time

Actually, it is you who are theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money is there, it still may not prevent from the crowd going wild...

Yes, I like this definition, especially that part about people trying to withdraw deposits immediately. It hits the nail on the head and correlates perfectly with the part about fear!

[deisik]

I didn't realize you were guessing. Thanks.

guess : to suppose or think (something)

You deprived me of the ability to think or make assumptions about something?

Now look up the definition of the noun.

"an attempt to give an opinion or answer about something when you do not know much about it or are not sure about it"

I followed from logic that individuals won't be holding much in checking accounts, since they are paid very little as interest (in comparison with term deposits). This I said explicitly. But it may very well depend on a myriad of other things, and in some specific bank the situation might be different (which I also mentioned)...

Yes, I can't be sure for all banks (I thought it had been made clear)

[anth0ny]

Well yeah, of course.

But we wouldn't have any bank runs, right?

Wrong. That's why I'm telling you that even 100% reserve banking won't help you. If we take as a basis the definition that you've given, then bank runs could still happen (i.e. the depositors trying to withdraw their funds immediately), but since there is no loaning (the money is in the money warehouse all the time), there will be no significant negative effects, if any, on the economy and no bankruptcies...

Well, you're right that it's theoretically possible, but it'd eliminate the vast majority of bank runs, would it not?

Remember, part of the definition is "fearing that their bank will be unable to repay their deposits in full and on time". You agree with that definition, right?

Sorry, didn't notice your answer in time

Actually, it is you who are theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money is there, it still may not prevent from the crowd going wild...

Well, in the case of Bitcoin, when the warehouses are properly implemented using split keys, because it can be proven that it's still there.

Anyway, how about some bank runs. Do you agree that full reserve banking would prevent some bank runs?

I mean, I already disagree with you, but I just wonder how much. You agree that at least some bank runs are caused by actual rational fears, right?

Yes, I like this definition, especially that part about people trying to withdraw deposits immediately. It hits the nail on the head and correlates perfectly with the part about fear!

Great.

[MICRO]

And yeah one suggestion , ur thread should not state "Why Bitcoin is ultimately doomed to fail" it should be "Is Bitcoin ultimately doomed to fail?" . It is just not doomed to fail . It will do much better than we think.
Also take a look on my news thread. https://bitcointalk.org/index.php?topic=475397.0

[deisik]

Sorry, didn't notice your answer in time

Actually, it is you who are theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money is there, it still may not prevent from the crowd going wild...

Well, in the case of Bitcoin, when the warehouses are properly implemented using split keys, because it can be proven that it's still there.

Anyway, how about some bank runs. Do you agree that full reserve banking would prevent some bank runs?

I mean, I already disagree with you, but I just wonder how much. You agree that at least some bank runs are caused by actual rational fears, right?

You may disagree as much as you like, but you just can't deny the simple fact that even 100% reserve banking (or warehouse banking) can't guarantee you that a bank does actually have the money depositors trusted it with, lol...

[anth0ny]

Sorry, didn't notice your answer in time

Actually, it is you who are theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money is there, it still may not prevent from the crowd going wild...

Well, in the case of Bitcoin, when the warehouses are properly implemented using split keys, because it can be proven that it's still there.

Anyway, how about some bank runs. Do you agree that full reserve banking would prevent some bank runs?

I mean, I already disagree with you, but I just wonder how much. You agree that at least some bank runs are caused by actual rational fears, right?

You may disagree as much as you like, but you just can't deny the simple fact that even 100% reserve banking (or warehouse banking) can guarantee you that a bank does actually have the money depositors trusted it with, lol...

Sure I can.

But that's not what I was talking about anyway.

[deisik]

And yeah one suggestion , ur thread should not state "Why Bitcoin is ultimately doomed to fail" it should be "Is Bitcoin ultimately doomed to fail?" . It is just not doomed to fail . It will do much better than we think.
Also take a look on my news thread. https://bitcointalk.org/index.php?topic=475397.0

Well, it may fail even faster than that (looking at all those closing exchanges and their owners running away with the traders' money)...

[deisik]

Sorry, didn't notice your answer in time

Actually, it is you who are theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money is there, it still may not prevent from the crowd going wild...

Well, in the case of Bitcoin, when the warehouses are properly implemented using split keys, because it can be proven that it's still there.

Anyway, how about some bank runs. Do you agree that full reserve banking would prevent some bank runs?

I mean, I already disagree with you, but I just wonder how much. You agree that at least some bank runs are caused by actual rational fears, right?

You may disagree as much as you like, but you just can't deny the simple fact that even 100% reserve banking (or warehouse banking) can guarantee you that a bank does actually have the money depositors trusted it with, lol...

Sure I can.

But that's not what I was talking about anyway.

You are talking about full reserve banking preventing at least some of the bank runs. The definition you've provided says that the cause for bank runs is based on the fear of losing depositors' money. I don't actually see how this type of banking can extinguish such fears from arising... When you store something at a warehouse (not necessarily money, lol), your stored items can still be stolen, damaged and whatnot...

[anth0ny]

Sorry, didn't notice your answer in time

Actually, it is you who are theoretically right (in assumption that 100% reserve banking prevents most bank runs). But lol, you don't know human psychology. Even if all the money is said to be there (in the money warehouse), why should they, depositors, believe it in the first place, and not try to withdraw their money as soon as possible in the second, e.g. in the case there is "fearing that their bank warehouse will be unable to repay their deposits in full and on time"? Holy crap, even if the money is there, it still may not prevent from the crowd going wild...

Well, in the case of Bitcoin, when the warehouses are properly implemented using split keys, because it can be proven that it's still there.

Anyway, how about some bank runs. Do you agree that full reserve banking would prevent some bank runs?

I mean, I already disagree with you, but I just wonder how much. You agree that at least some bank runs are caused by actual rational fears, right?

You may disagree as much as you like, but you just can't deny the simple fact that even 100% reserve banking (or warehouse banking) can guarantee you that a bank does actually have the money depositors trusted it with, lol...

Sure I can.

But that's not what I was talking about anyway.

You are talking about full reserve banking preventing at least some of the bank runs. The definition you've provided says that the cause for bank runs is based on the fear of losing depositors' money. I don't actually see how this type of banking can extinguish such fears from arising... When you store something at a warehouse (not necessarily money, lol), your stored items can still be stolen, damaged and whatnot...

I'm surprised you don't see it. Skeptical, even.

[deisik]

You are talking about full reserve banking preventing at least some of the bank runs. The definition you've provided says that the cause for bank runs is based on the fear of losing depositors' money. I don't actually see how this type of banking can extinguish such fears from arising... When you store something at a warehouse (not necessarily money, lol), your stored items can still be stolen, damaged and whatnot...

I'm surprised you don't see it. Skeptical, even.

Indeed, you could try to get away with saying that those reserves are not stored in the bank itself (since those reserves are usually held as deposits in the bank's accounts at the central bank), but could we call this system banking in the first place (even warehouse banking) when all depositors' money is actually held at the central bank?

What is left of a bank in a bank then?

[anth0ny]

You are talking about full reserve banking preventing at least some of the bank runs. The definition you've provided says that the cause for bank runs is based on the fear of losing depositors' money. I don't actually see how this type of banking can extinguish such fears from arising... When you store something at a warehouse (not necessarily money, lol), your stored items can still be stolen, damaged and whatnot...

I'm surprised you don't see it. Skeptical, even.

Indeed, you could try to get away with saying that those reserves are not stored in the bank itself (since those reserves are usually held as deposits in the bank's accounts at the central bank), but could we call this system banking in the first place (even warehouse banking) when all depositors' money is actually held at the central bank?

I'm not sure what you're saying.

I just think it's obvious that people are going to be more trusting that their bank is going to be able to give them back their deposits if the bank actually has those deposits.

But whatever. This conversation has drifted quite far from anything that matters. We apparently disagree. So what? Let's move on. Please.

[deisik]

You are talking about full reserve banking preventing at least some of the bank runs. The definition you've provided says that the cause for bank runs is based on the fear of losing depositors' money. I don't actually see how this type of banking can extinguish such fears from arising... When you store something at a warehouse (not necessarily money, lol), your stored items can still be stolen, damaged and whatnot...

I'm surprised you don't see it. Skeptical, even.

Indeed, you could try to get away with saying that those reserves are not stored in the bank itself (since those reserves are usually held as deposits in the bank's accounts at the central bank), but could we call this system banking in the first place (even warehouse banking) when all depositors' money is actually held at the central bank?

I'm not sure what you're saying.

I just think it's obvious that people are going to be more trusting that their bank is going to be able to give them back their deposits if the bank actually has those deposits

In this case, the problem (or fear) is still there (as you say yourself), i.e. does the bank actually have those deposits? Full reserve banking doesn't change a thing here (it is all psychology, lol)...

[anth0ny]

You are talking about full reserve banking preventing at least some of the bank runs. The definition you've provided says that the cause for bank runs is based on the fear of losing depositors' money. I don't actually see how this type of banking can extinguish such fears from arising... When you store something at a warehouse (not necessarily money, lol), your stored items can still be stolen, damaged and whatnot...

I'm surprised you don't see it. Skeptical, even.

Indeed, you could try to get away with saying that those reserves are not stored in the bank itself (since those reserves are usually held as deposits in the bank's accounts at the central bank), but could we call this system banking in the first place (even warehouse banking) when all depositors' money is actually held at the central bank?

I'm not sure what you're saying.

I just think it's obvious that people are going to be more trusting that their bank is going to be able to give them back their deposits if the bank actually has those deposits

In this case, the problem (or fear) is still there (as you say yourself), i.e. does the bank actually have those deposits? Full reserve banking doesn't change a thing here (it is all psychology, lol)...

So you say.

Are there many runs on public storage facilities?

[deisik]

In this case, the problem (or fear) is still there (as you say yourself), i.e. does the bank actually have those deposits? Full reserve banking doesn't change a thing here (it is all psychology, lol)...

So you say.

Are there many runs on public storage facilities?

What do you mean by public storage facilities? Just can't fancy one...

[anth0ny]

In this case, the problem (or fear) is still there (as you say yourself), i.e. does the bank actually have those deposits? Full reserve banking doesn't change a thing here (it is all psychology, lol)...

So you say.

Are there many runs on public storage facilities?

What do you mean by public storage facilities?

https://en.wikipedia.org/wiki/Self-storage

[deisik]

In this case, the problem (or fear) is still there (as you say yourself), i.e. does the bank actually have those deposits? Full reserve banking doesn't change a thing here (it is all psychology, lol)...

So you say.

Are there many runs on public storage facilities?

What do you mean by public storage facilities?

https://en.wikipedia.org/wiki/Self-storage

According to the article on Wikipedia, "the rented spaces are secured by the tenant's own lock and key". Your analogy is lame at best...

What does it have to do with banking? The only thing which comes to my mind is renting deposit boxes (though the analogy is also lame). And yes, Bank of America (if I'm not mistaken) has been caught secretly and unlawfully drilling open the deposit boxes of their clients. A good reason for a deposit box run, lol...

[anth0ny]

In this case, the problem (or fear) is still there (as you say yourself), i.e. does the bank actually have those deposits? Full reserve banking doesn't change a thing here (it is all psychology, lol)...

So you say.

Are there many runs on public storage facilities?

What do you mean by public storage facilities?

https://en.wikipedia.org/wiki/Self-storage

What does it have to do with banking? The only thing which comes to my mind is renting deposit boxes. And yes, Bank of America (if I'm not mistaken) has been caught secretly and unlawfully opening the deposit boxes of their clients. Good reason for a deposit box run, lol..

According to the article on Wikipedia, "the rented spaces are secured by the tenant's own lock and key". Your analogy is lame at best...

 

[bitbouillion]

I think that nothing life-changing is actually going to happen. We have already been there. And by there I mean a time period in the 19th century, commonly referred to as a Free Banking Era, when banks could issue bank notes against specie (gold and silver coins). It was during those times when the term inflation began entering into widespread usage and emerging in literature, though not as a reference to price changes but as something pointing to disproportions between paper representing money and the amount of specie actually available in the bank.

There were both deflationary and inflationary cycles then, but it worked quite well for the US economy. The US made the transition from an agrarian to an industrial economy. I think it's a big mistake to try to control the deflationary and inflationary cycles through a central bank with fiat, which in fact never worked out, but just artificially delaying the cycles and making the impacts much bigger.