Bitcoin Forum
December 07, 2016, 08:44:27 AM *
News: Latest stable version of Bitcoin Core: 0.13.1  [Torrent].
 
   Home   Help Search Donate Login Register  
Pages: « 1 [2]  All
  Print  
Author Topic: NEW: Bitcoin Fractional Reserve Bank  (Read 6553 times)
sortedmush
Full Member
***
Offline Offline

Activity: 126


The geek shall inherit the earth.


View Profile
March 24, 2011, 07:57:05 PM
 #21


Unless the state can convince a critical mass of people that terrorists can transport explosives digitally.

Then we're doomed. DOOMED i tells ya!

They can pay for the money to buy them digitally so they're going to say that's basically the same thing.

Good point!
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1481100267
Hero Member
*
Offline Offline

Posts: 1481100267

View Profile Personal Message (Offline)

Ignore
1481100267
Reply with quote  #2

1481100267
Report to moderator
1481100267
Hero Member
*
Offline Offline

Posts: 1481100267

View Profile Personal Message (Offline)

Ignore
1481100267
Reply with quote  #2

1481100267
Report to moderator
1481100267
Hero Member
*
Offline Offline

Posts: 1481100267

View Profile Personal Message (Offline)

Ignore
1481100267
Reply with quote  #2

1481100267
Report to moderator
Jered Kenna (TradeHill)
Sr. Member
****
Offline Offline

Activity: 420



View Profile WWW
March 24, 2011, 10:44:25 PM
 #22


Unless the state can convince a critical mass of people that terrorists can transport explosives digitally.

Then we're doomed. DOOMED i tells ya!

They can pay for the money to buy them digitally so they're going to say that's basically the same thing.

Good point!

Yeah I'm honestly a little worried what's going to happen when it gets big enough that people want to hurt it and it gets used for something really bad. ie terrorism, organ trafficking or terrorism.

The sensational headlines are going to get a lot of people convinced it's pure evil. Of course the publicity is going to be huge.
I wonder what peoples response will be when you say "so, isn't that what cash is used for now?" 

moneyandtech.com
@moneyandtech @jeredkenna
sortedmush
Full Member
***
Offline Offline

Activity: 126


The geek shall inherit the earth.


View Profile
March 25, 2011, 08:53:32 AM
 #23

Yeah I'm honestly a little worried what's going to happen when it gets big enough that people want to hurt it and it gets used for something really bad. ie terrorism, organ trafficking or terrorism.

The sensational headlines are going to get a lot of people convinced it's pure evil. Of course the publicity is going to be huge.
I wonder what peoples response will be when you say "so, isn't that what cash is used for now?" 

Yeah. People could barter for those things anyway. Or use government sanctioned pieces of paper for it. Any argument they use against BitCoin goes for all property.
Jered Kenna (TradeHill)
Sr. Member
****
Offline Offline

Activity: 420



View Profile WWW
March 25, 2011, 12:10:50 PM
 #24

Yeah I'm honestly a little worried what's going to happen when it gets big enough that people want to hurt it and it gets used for something really bad. ie terrorism, organ trafficking or terrorism.

The sensational headlines are going to get a lot of people convinced it's pure evil. Of course the publicity is going to be huge.
I wonder what peoples response will be when you say "so, isn't that what cash is used for now?" 

Yeah. People could barter for those things anyway. Or use government sanctioned pieces of paper for it. Any argument they use against BitCoin goes for all property.

Oh I agree for sure but that won't stop the claims and arguments. These markets already exist and they're paid in cash / diamonds / gold or whatever else. BTC could just make it easier is all. But so do atm cards, western union and 1000 other inventions. 
I assume we don't have $1000 USD notes for 2 reasons. More efficient to counterfeit and easier to transport large amounts of cash.
One of BTC's real advantage (or disadvantage from the other side) is that you can move a hell of a lot more cash than you could fit in a brief case or duffel bag anywhere in the world. Just makes using cash easier is all.

moneyandtech.com
@moneyandtech @jeredkenna
nanotube
Hero Member
*****
Offline Offline

Activity: 485


View Profile WWW
March 25, 2011, 10:00:16 PM
 #25


-Let's say Black deposits 100BTC at Bitcoin Bank A.
-Bank A gives Black access to an on-demand deposit account with 100 BTC maintained on Bank A's database.
-Brown wants to start a business and needs capital.
-Bank A 'lends' 100BTC to Brown by creating a second on-demand deposit account controlled by Brown with 100 BTC.
-Bank A thus keeps 100 BTC on reserve for 200 BTC of on-demand deposit accounts (50% reserve).
you seem to have an incorrect understanding of fractional reserve, more specifically, of what the 'reserve' percentage means.
in the case you describe, having 100btc deposit, and lending out all 100btc, you end up with 0% reserve, not 50%. A bank cannot lend out more btc than it actually has.

please consult the following for more details:
http://en.wikipedia.org/wiki/Fractional-reserve_banking

Join #bitcoin-market on freenode for real-time market updates.
Join #bitcoin-otc - an over-the-counter trading market. http://bitcoin-otc.com
OTC web of trust: http://bitcoin-otc.com/trust.php
My trust rating: http://bitcoin-otc.com/viewratingdetail.php?nick=nanotube
MoonShadow
Legendary
*
Offline Offline

Activity: 1666



View Profile
March 25, 2011, 10:03:32 PM
 #26


-Let's say Black deposits 100BTC at Bitcoin Bank A.
-Bank A gives Black access to an on-demand deposit account with 100 BTC maintained on Bank A's database.
-Brown wants to start a business and needs capital.
-Bank A 'lends' 100BTC to Brown by creating a second on-demand deposit account controlled by Brown with 100 BTC.
-Bank A thus keeps 100 BTC on reserve for 200 BTC of on-demand deposit accounts (50% reserve).
you seem to have an incorrect understanding of fractional reserve, more specifically, of what the 'reserve' percentage means.
in the case you describe, having 100btc deposit, and lending out all 100btc, you end up with 0% reserve, not 50%. A bank cannot lend out more btc than it actually has.

please consult the following for more details:
http://en.wikipedia.org/wiki/Fractional-reserve_banking

I think that you are both arguing on the same side, but from different perspectives.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
xc
Jr. Member
*
Offline Offline

Activity: 40


View Profile
March 25, 2011, 10:49:17 PM
 #27

you seem to have an incorrect understanding of fractional reserve, more specifically, of what the 'reserve' percentage means.
in the case you describe, having 100btc deposit, and lending out all 100btc, you end up with 0% reserve, not 50%. A bank cannot lend out more btc than it actually has.

Not really.  My example just simplifies a little bit.  When looked at from the perspective of the banking 'system,' the end result is the same.  This thread seems to touch on the difference: http://mises.org/Community/forums/t/22490.aspx . Banks don't have to lend out the hard reserves - particularly when all the banks form one system.  Khan Academy describes the difference between 'modern' (banks working as one system) and 'primitive' (single bank's perspective) fractional reserve banking: http://www.youtube.com/watch?v=ZyyaE3DIxhc (3 to 6 minute mark)

My argument, though, is that it will be difficult to sustain a fractional bitcoin banking system because:
a) Any given bitcoin bank's on-demand deposits (what you see on the bank's database) will not circulate as equivalent to or as widely as hard BTC (what you see through Bitcoin software)
b) The decentralized nature of the protocol prevents cartelization of bitcoin 'banks'
c) Nobody can act as a central bank to 'inject' artificially created BTC to prop-up liquidity

End result: runs cannot be prevented or forestalled.  Bitcoin banks will have to be honest to depositors that their funds cannot be both on-demand and lent out.

1Ff7AUN7bQkqfSjLaMLi54tWLnWTqvrhwA
em3rgentOrdr
Sr. Member
****
Offline Offline

Activity: 434


youtube.com/ericfontainejazz now accepts bitcoin


View Profile WWW
March 31, 2011, 06:18:06 AM
 #28

A Fractional Reserve Bitcoin Bank.  Its inevitable that someone will create it someday.  But at least it will be disciplined by the relentless and unforgiving forces of mathematics and reality.

"We will not find a solution to political problems in cryptography, but we can win a major battle in the arms race and gain a new territory of freedom for several years.

Governments are good at cutting off the heads of a centrally controlled networks, but pure P2P networks are holding their own."
matonis
Sr. Member
****
Offline Offline

Activity: 301



View Profile WWW
April 03, 2011, 10:40:09 AM
 #29

Intriguing thoughts from @webisteme on Bitcoin and Fractional Reserve Banking:
http://www.webisteme.com/blog/?p=192

...and, my comment to his blog post:
This is an interesting thesis. At this point in bitcoin’s evolution, I still see any bitcoin ‘reserves’ as similar to gold (or silver) reserves with the primary difference being that bitcoin does not suffer the same portability, divisibility, and security issues which gave rise to the gold reserve note in the first place. Back to the demand side of money, why would a user accept a bitcoin reserve note when the actual bitcoin has better overall transactional properties than its derivative?

Having said that, in the absence of a parallel bitcoin fork or parallel cryptocurrency, I do not believe that the bitcoin economy will support fractional reserve banking. I disagree with Gavin Andresen on this point. Lending will indeed exist through timed deposit instruments rather than ‘on-demand’ current accounts. This would not be unlike the gold leasing arrangements that exist today for the world’s above-ground gold reserves (of, course, I’m referring to the non-fraudulent ones). Being highly divisible, fungible, nearly real-time, and already decentralized, bitcoin negates the conditional criteria that gave rise to fractional reserve free banking in the pre-bitcoin era.

Founding Director, Bitcoin Foundation
I also cover the bitcoin economy for Forbes, American Banker, PaymentsSource, and CoinDesk.
Pages: « 1 [2]  All
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!