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Author Topic: can a bitcoin 'bank' exist?  (Read 2150 times)
sadpandatech
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January 02, 2012, 01:30:11 AM
 #21

Simple question - will I ever be able to store my bitcoin with an organisation who will provide secure storage for it, whilst at the same time allow me easy access to it (like a bank currently does with my cash)?

Not a simple answer.  Your cash is safe because the FDIC (Federal Deposit Insurance Corporation --> www.fdic.gov) insures your usd in a FDIC bank (which all of them are).  We don't have, and possibly don't want btc being insured by the FDIC.
While it is correct that all banks have some form of FDIC insurance. Not all accounts or depsoits qualify for fdic insurance..  There is a lot of fine print to read on it. Don't quote me on this but I believe the TL;DR on it is that noninterest-bearing accounts are coverd; legal max $250k with a few exceptions varying by bank. SOME Money Market deposit accounts are covered up to a standard max of $250k. Many interest-bearing accounts are NOT covered..
Here is a quick read of what is insured and not insured; http://www.fdic.gov/consumers/consumer/information/fdiciorn.html
Sadly, though you see the terms 'covered no matter what', there are some things that are NOT coverd, no matter what.
They are,
Treasury Certificates
Theft or Robberies
Stocks and Bonds
Annuities
Money Market Mutual Funds

I certainly agree we do not want the fdic to insure bitcoins. ;p

If you're not excited by the idea of being an early adopter 'now', then you should come back in three or four years and either tell us "Told you it'd never work!" or join what should, by then, be a much more stable and easier-to-use system. - GA
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January 02, 2012, 01:54:46 AM
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I would have thought there's no need to insure bitcoins so long as banks do genuinely 'hold' them and don't dig their own graves by loaning at an interest rate which would of course eventually mean that there were more loan repayments to be made than bitcoins to pay back. Actually this point makes me wonder if 'bitcoin loans' can ever be meaningful.

It is this 'pure holding' bank that I am interested in, to provide security for me (which is what I pay the bank for). I believe that such a bank can exist (ie there is a method of security that means you can always get back your coins) and that it can be trusted (not sure how that trust can be established, and certainly can't think of a 'mathematically verifiable trust').

Safe deposit boxes are one such style of bank. However, they don't really provide me with the infrastructure (especially digital) to easily move the contents of my deposit around (eg use some of it to buy goods)

I think that ultimately bitcoin banks will exist and be successful and trustworthy, however I personally like that I don't have to trust them and I have the option to safely (encryption etc) store them on my own terms.
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January 02, 2012, 04:13:26 AM
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It's not the interest repayment that causes the problems, it's the fractional reserve loans.  Banks don't loan out depositors money and collect interest on repayment.  They hold depositors money as a reserve to make loans, and the reserve is only a fraction of the loan amount, the rest is just created and interest is due on the entire amount.  I hope this never comes to Bitcoin.  This thread has good info on banking https://bitcointalk.org/index.php?topic=56088.0

Losing hundreds of Bitcoins with the best scammers in the business - BFL, Avalon, KNC, HashFast.
sadpandatech
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January 02, 2012, 04:24:52 AM
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It's not the interest repayment that causes the problems, it's the fractional reserve loans.  Banks don't loan out depositors money and collect interest on repayment.  They hold depositors money as a reserve to make loans, and the reserve is only a fraction of the loan amount, the rest is just created and interest is due on the entire amount.  I hope this never comes to Bitcoin.  This thread has good info on banking https://bitcointalk.org/index.php?topic=56088.0

ty, this is a much more accurate response than the one I gave earlier about the issue.

If you're not excited by the idea of being an early adopter 'now', then you should come back in three or four years and either tell us "Told you it'd never work!" or join what should, by then, be a much more stable and easier-to-use system. - GA
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January 02, 2012, 05:02:20 AM
 #25

Thread conclusion?

A bitcoin bank can exist, and there have been several.

They pose some serious issues with both trust and security. There are various levels of security (likely depending on your holdings).

Bitcoin banks present an easy way for new users to get started, which is pretty bad as they are the people that know very little about what they are getting into.

I think wallets have a long way to go on usability & security (some better at one than the other) and it would be great if they get to a point where they are easy for someone new (potentially a poor old grandma) to use without getting confused.

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January 02, 2012, 06:26:27 AM
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So for the 99% of people who don't even own multiple machines let alone know that they should use them in this manner and least of all even care to use them (laziness etc)... what about them? I think they need a bank. You grandmother would never use multiple machines to store bitcoin, but she can use fiat cash and she can use a bank. Hence, imo, she can't use bitcoin. I think this is a big part of allowing adoption of bitcoin as a currency, and the current attitude of 'its safe as it is' contributes somewhat to the hinderance of uptake.

Does granny have a credit card or bank card? Those now have a computer built in so that they can participate in public key authentication without revealing the private key (to discourage cloning). I currently have my bank card in a aluminum foil faraday cage pending X-ray and Near-feild reader removal. A bitcoin smart-card would likely have a display and keypad built-in, such that you would not have to trust your "normal" computer.
 
I always think to myself, if my boss paid me in hard cash, I would be nervous as hell trying to store that in my house or wherever. But really, this is exactly how bitcoin works, and it seems kinda, not unsafe, just... absurd. It's not right to expect people to put themselves at those sorts of risks.

You can have your boss sent the Bitcoin directly to a paper plastic wallet buried at the bottom of the ocean. That way, you don't have to physically carry the bitcoin at predictable intervals.

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January 02, 2012, 07:45:36 AM
 #27

We are currently still offer a Free Bank Account.

 Without fee.

 We are strongly established in the German market and we are beginning slowly but steadily towards Eastern Europe (Russia) and the U.S. to approach each.

 We also offer shares on the DAX and in the coming days to when we have our license the Dow Jones.

 Purchase sale is over against us.
 Your losses are our gains Uind vice versa.

 In the case of a lack of capital, we offer our customers a loan.

 greeting
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January 03, 2012, 07:13:49 AM
 #28

Many banks can and will accept bitcoin deposits someday soon, if not this year then the next few years.  These banks will presumably provide banking services for customers with accounts denominated in bitcoin.  Just like banks do for other currencies.

If you can't wait for that, you can use a non-bank institution as other posters have suggested, but if they lose your money, you won't have much recourse.

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January 03, 2012, 11:02:02 AM
 #29

Storing bitcoins in some sort of bank is not a non-issue. So I concur 100% with the posts above saying that we need to have those in place. It's not even about actual grandmas, there are people who are considerably younger and won't be grandma for many years who already have 'grandma' status when it comes to computers let alone online banking let alone bitcoin.

I'm not talking about people still using fax machines - those are cool. I'm talking about people who choose not to incorporate computers into their daily life to a degree that it will ever make them use a bitcoin client. So if you say using bitcoin and making sure your money is safe is a non-issue really think about this to check your geek status:

5 years ago, would you have considered running through Diablo 2's hell 'naked' in a team of three in order to look for rare items to drop so you could sell them as virtual items on ebay? If you can answer this question with 'yes' you're a nerd and should not be making real world suggestions on how it's no problem to create multiple btc accounts or print out private keys. Even many bitcoins adopters will probably ask 'what are those private keys anyway?'

Forget flexcoin. But could it be a good idea to convince pool owners to turn their pools into banks? Some of them have earned themselves a lot of trust already, they are tech-savy (pool security, programming code, DDOS attack counter measures) and have little to no incentive to run away with our money.

gnar1ta$
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January 03, 2012, 02:01:30 PM
 #30

Many banks can and will accept bitcoin deposits someday soon, if not this year then the next few years.  These banks will presumably provide banking services for customers with accounts denominated in bitcoin.  Just like banks do for other currencies.

Do you have any source for this?  I don't know of any US banks that take bitcoin deposits, and don't see any incentive for them to do so. But I like the optimism, and would be happy to be wrong.

Losing hundreds of Bitcoins with the best scammers in the business - BFL, Avalon, KNC, HashFast.
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January 03, 2012, 04:18:27 PM
 #31

flexcoin is a really amazing site, a great idea, I am very impressed.

However, what distinguishes it as trustworthy as compared to something such as MyBitcoin? How do you verify that this organisation will keep your coin for you?

I guess this boils down to philosophy more than technology, but I can imagine a lot of people would genuinely wonder how to verify the trust of what is essentially 'just another website'.

Trust takes time. Transparency and enough real world info for accountability go a long way as well.
I would like to know where Flexcoin LLC is registered?  (I checked PA and Fl and could not find anything.)
Who owns it? (real life names)
Where do they live?
Are there any plans to 'bond' some amount to protect against loss of the coins in either 'hot' or 'cold' storage?


It's not flexcoin LLC it's actually Yooter InterActive Marketing,  1 south second street pottsville, pa 17901 ...

the parent company is http://www.yooter.com

I know it because Yooter is my company.

Smiley


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