Why There Should Be A Bitcoin Central Bank

[blatchcorn]

This article just demonstrates how little some people know about Bitcoin

[spazzdla]

You support fractional banking..

GEt out.

[Aemon]

I guess what happens if someone is able to hack all the accounts...? 

I think it would sort of suck for someone to completely take over the Bitcoin network and have all the money with no way of reversing it...

At least banks now can reverse transactions so that can protect your money..

[CurbsideProphet]

I guess what happens if someone is able to hack all the accounts...? 

I think it would sort of suck for someone to completely take over the Bitcoin network and have all the money with no way of reversing it...

At least banks now can reverse transactions so that can protect your money..

I don't think you really understand how Bitcoin works, you can't "hack" all the accounts.  You can take over the network with a 51% attack (see wiki for details) but that's not something that would have to be permanent.

[Razick]

The beauty of blockchain technology is that it allows Bitcoin banks to prove solvency while operating on fractional reserve principle. Banks should publish information about their reserves, assets and liabilities and provide as much proof as possible. Consumers should base their decisions about how much to deposit in a given bank on that information.

A non-government organization could provide an easy to read risk-assessment of various banks so that customers could make informed decisions without having to be educated on banking practices.

I don't think you really understand how Bitcoin works, you can't "hack" all the accounts.  You can take over the network with a 51% attack (see wiki for details) but that's not something that would have to be permanent.

Not only is it not permanent, but its effects are also very limited. The attacker cannot mint new coins or steal from other's wallets, they can only double spend their own transactions. According to the wiki:

An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:

Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
Prevent some or all transactions from gaining any confirmations
Prevent some or all other miners from mining any valid blocks

[Fearless]

People who want banks should just use cash.

Absolutely,bitcoin is better as it is,there is no need of any change in its state and it isn't possible as well

[R2D221]

I guess what happens if someone is able to hack all the accounts...? 

I think it would sort of suck for someone to completely take over the Bitcoin network and have all the money with no way of reversing it...

At least banks now can reverse transactions so that can protect your money..

I don't think you really understand how Bitcoin works, you can't "hack" all the accounts.  You can take over the network with a 51% attack (see wiki for details) but that's not something that would have to be permanent.

One can, however, hack the server with all of the hypothetical bank's private keys, and then empty all of them. (Hasn't this happened already?)

[Chris_Sabian]

A fractional reserve banking system and a central bank was just the problem that Satoshi had and the reason why Bitcoin was created. 

This is a absolutely terrible idea.

[jonald_fyookball]

The beauty of blockchain technology is that it allows Bitcoin banks to prove solvency while operating on fractional reserve principle.

so, say that there are several bitcoin banks proving solvency.  one has 100% of reserves, one has 50% , and one has 10%.  Which one will you pick? 

Do see where I am going with this?   Those operating on fractional reserve will be outcompeted.

[odolvlobo]

The beauty of blockchain technology is that it allows Bitcoin banks to prove solvency while operating on fractional reserve principle.

so, say that there are several bitcoin banks proving solvency.  one has 100% of reserves, one has 50% , and one has 10%.  Which one will you pick?  

Do see where I am going with this?   Those operating on fractional reserve will be outcompeted.

Not if they pay interest on deposits.

[jonald_fyookball]

The beauty of blockchain technology is that it allows Bitcoin banks to prove solvency while operating on fractional reserve principle.

so, say that there are several bitcoin banks proving solvency.  one has 100% of reserves, one has 50% , and one has 10%.  Which one will you pick?  

Do see where I am going with this?   Those operating on fractional reserve will be outcompeted.

Not if they pay interest on deposits.

sounds like a Ponzi to me

[bitkilo]

We don't need a btc bank thats what btc is all about, no 3rd party who controls our money. If you are using bitcoin then welcome to the world of taking your finanical security in your own hands.
I guess coinbase vault is like a bank but you don't get interest or protection if it's stolen, they will just secure your btc on paper wallets in some bank vault, or sock draw who knows.
If any thread might get satoshi to pitch in this is it, he would being saying to himself they don't understand. 

[tupelo]

Yes, bitcoin lets users be their own bank. It is all about circumventing the need for trust. This is what the blockchain does and why we don't need a bank.

[odolvlobo]

We don't need a btc bank thats what btc is all about, no 3rd party who controls our money. If you are using bitcoin then welcome to the world of taking your finanical security in your own hands.
I guess coinbase vault is like a bank but you don't get interest or protection if it's stolen, they will just secure your btc on paper wallets in some bank vault, or sock draw who knows.
If any thread might get satoshi to pitch in this is it, he would being saying to himself they don't understand.  

You want to buy a house or a car, but you don't have the bitcoins so you need to borrow them. Where are you going to borrow them from if there are no banks?

[Razick]

You support fractional banking..

GEt out.

I love Bitcoin but rejecting fractional reserve banking wholesale is entirely irrational and, I would argue, impossible for anyone in favor of free markets to advocate. And no, I won't get out.

If Bitcoin is as successful as I hope it will be we will have fractional reserve banking, and yes, it will apply to Bitcoins just as it applied to gold. Some people here claim that it is impossible, but to me that just shows that they don't understand what fractional reserve banking is.

Yes, bitcoin lets users be their own bank. It is all about circumventing the need for trust. This is what the blockchain does and why we don't need a bank.

The blockchain provides only storage, not the other functions of banks. This guy gets it:

You want to buy a house, but you don't have the bitcoins so you need to borrow them. Where are you going to borrow them from if there are no banks?

The beauty of blockchain technology is that it allows Bitcoin banks to prove solvency while operating on fractional reserve principle.

so, say that there are several bitcoin banks proving solvency.  one has 100% of reserves, one has 50% , and one has 10%.  Which one will you pick?  

Do see where I am going with this?   Those operating on fractional reserve will be outcompeted.

Not if they pay interest on deposits.

sounds like a Ponzi to me

It's not a Ponzi scheme if the money is being loaned out for productive use. Banking is all about letting someone else use your money productively when you don't need it. As a plus (when the Federal Reserve isn't manipulating interest rates) you get some of the profits in return.

[young3dvard]

It's not a Ponzi scheme if the money is being loaned out for productive use. Banking is all about letting someone else use your money productively when you don't need it. As a plus (when the Federal Reserve isn't manipulating interest rates) you get some of the profits in return.

If you have some money/gold/whatever you can lend it. But banks have the advantage in fractional banking to credit anybody new money out of thin air. If anybody else created new money it would be basically fraud, but banks can do it. Why?

Lending is usefull, but fractional banking is not necessary for this.

[itsAj]

A fractional reserve banking system and a central bank was just the problem that Satoshi had and the reason why Bitcoin was created.  

This is a absolutely terrible idea.

I agree. Avoiding to have to deal with central bankers and having to trust others with your wealth was one of the main reasons that bitcoin was created.

I also don't think it would really be possible to even implement something like this. A central bank would essentially need to be able to print it's local fiat currency which for the most part is very difficult to do. The bitcoin related banking infrastructure is simply not in place for a central bank to be able to properly function.

[jonald_fyookball]

You support fractional banking..

GEt out.

I love Bitcoin but rejecting fractional reserve banking wholesale is entirely irrational and, I would argue, impossible for anyone in favor of free markets to advocate. And no, I won't get out.

If Bitcoin is as successful as I hope it will be we will have fractional reserve banking, and yes, it will apply to Bitcoins just as it applied to gold. Some people here claim that it is impossible, but to me that just shows that they don't understand what fractional reserve banking is.

Yes, bitcoin lets users be their own bank. It is all about circumventing the need for trust. This is what the blockchain does and why we don't need a bank.

The blockchain provides only storage, not the other functions of banks. This guy gets it:

You want to buy a house, but you don't have the bitcoins so you need to borrow them. Where are you going to borrow them from if there are no banks?

The beauty of blockchain technology is that it allows Bitcoin banks to prove solvency while operating on fractional reserve principle.

so, say that there are several bitcoin banks proving solvency.  one has 100% of reserves, one has 50% , and one has 10%.  Which one will you pick?  

Do see where I am going with this?   Those operating on fractional reserve will be outcompeted.

Not if they pay interest on deposits.

sounds like a Ponzi to me

It's not a Ponzi scheme if the money is being loaned out for productive use. Banking is all about letting someone else use your money productively when you don't need it. As a plus (when the Federal Reserve isn't manipulating interest rates) you get some of the profits in return.

Fair enough.  I say let the free market decide and let people choose their own risk level.
Provable reserve levels are a great vehicle for this.  maybe we will see something where
80% reserves are acceptable to people but 10% isn't.

[romerun]

so that we can have btc fractional reserve which most of us already hate ? But there are people out there are cool with fractional.

[Soros Shorts]

I think Bitcoin banks and lending are fine, as long as the blockchain remains as the medium for transactions and not some off-chain trading system dealing in paper bitcoins.