Why There Should Be A Bitcoin Central Bank

[Aemon]

Why would we need a central bank?  I don't understand the purpose of trying to get a bank involved into Bitcoin.  I think Bitcoin was purely created for the opposite purpose. 

[Cortex7]

Why would we need a central bank?  I don't understand the purpose of trying to get a bank involved into Bitcoin.  I think Bitcoin was purely created for the opposite purpose. 

The purpose would be:

Enrich the group of people running the bank.

It's a stupid idea (unless you're the schmuck running it).

[odolvlobo]

Why would we need a central bank?  I don't understand the purpose of trying to get a bank involved into Bitcoin.  I think Bitcoin was purely created for the opposite purpose.  

The logic is simple:

1. There will be Bitcoin banks because many people like to have someone else hold their money (for example, all the people with money in their Coinbase accounts and on exchanges).

2. These banks will loan out their deposits (because they can and it generates a profit). That means fractional reserve banking for Bitcoin.

3. A Bitcoin central bank facilitating inter-bank lending of reserves will lower the occurrence of Bitcoin bank defaults.

There should be a Bitcoin central bank.

[Aemon]

The logic is simple:

1. There will be Bitcoin banks because many people like to have someone else hold their money (for example, all the people with money in their Coinbase accounts and on exchanges).

2. These banks will loan out their deposits (because they can and it generates a profit). That means fractional reserve banking for Bitcoin.

3. A Bitcoin central bank facilitating inter-bank lending of reserves will lower the occurrence of Bitcoin bank defaults.

There should be a Bitcoin central bank.

1.  So you are saying that Coinbase is a bank, and therefore this post is not needed?

If you have a bitcoin central  bank it will need to be monitored by someone, therefore you are throwing the government in so that they can tax the bitcoin bank, and it would be then have to be backed up by something physical, thus destroying the idea of a bitcoin bank.  My personal opinion anyway

[btc-facebook]

Why would we need a central bank?  I don't understand the purpose of trying to get a bank involved into Bitcoin.  I think Bitcoin was purely created for the opposite purpose.  

The logic is simple:

1. There will be Bitcoin banks because many people like to have someone else hold their money (for example, all the people with money in their Coinbase accounts and on exchanges).

2. These banks will loan out their deposits (because they can and it generates a profit). That means fractional reserve banking for Bitcoin.

3. A Bitcoin central bank facilitating inter-bank lending of reserves will lower the occurrence of Bitcoin bank defaults.

There should be a Bitcoin central bank.

The proposed NY regulations would actually prevent 2 from happening as the regulations would require that any exchange hold an amount of bitcoin equal to or greater then the amount of bitcoin owed to their customers via deposits

EDIT: I would also prevent 3 as well as there would be no point for 3 if 2 cannot happen

[Aemon]

If Coinbase (already holding peoples coins) is one of the reasons because people like other people to hold their money, then why do you think we need another bank?

[SanMerryDro]

If Coinbase (already holding peoples coins) is one of the reasons because people like other people to hold their money, then why do you think we need another bank?

you mean coinbase is a bitcoinbank?

[odolvlobo]

If Coinbase (already holding peoples coins) is one of the reasons because people like other people to hold their money, then why do you think we need another bank?

We need another bank to compete with Coinbase, of course.

[Eisenhower34]

If Coinbase (already holding peoples coins) is one of the reasons because people like other people to hold their money, then why do you think we need another bank?

We need another bank to compete with Coinbase, of course.

We have circle and we have many exchanges that work in very similar ways that coinbase works.

While I personally think that if you want to allow a third party to control the private keys that hold your bitcoin, that coinbase is likely the safest service to use, this is generally a very bad idea, especially for larger amounts

[Gine.Unnta]

If Coinbase (already holding peoples coins) is one of the reasons because people like other people to hold their money, then why do you think we need another bank?

you mean coinbase is a bitcoinbank?

Although coinbase is not a bank, but it already has a savings function of banks. So many Bitcoin exchanges are too.

[LiberyOrDeath]

The notion of a Bitcoin central bank is going against all the principles that BTC and crypto stand for, it sounds repulsive to me and to many others who share libertarian philosophy.

[mullerdan]

Bitcoin central bank ? very bad idea ! each bitcoin's owner is his own bank that all !

[odolvlobo]

Bitcoin central bank ? very bad idea ! each bitcoin's owner is his own bank that all !

Oh, you are a bank? I'd like to see you loan someone money to buy a house.

[Argwai96]

Bitcoin central bank ? very bad idea ! each bitcoin's owner is his own bank that all !

Oh, you are a bank? I'd like to see you loan someone money to buy a house.

Well people should not act as every function of a bank (generally individuals are not very good at being able to measure the risk of a particular loan, and as such should not be lending - even in a p2p fashion). What they should be doing is protecting their money in a similar way that a bank will protect their depositor's money

[Q7]

Just let bitcoin free and decentralized. No can claim the right to own the network

[Jamie_Boulder]

There are two sides of this argument that both make very good points.

For:
As the article points out we would have a central authority with the ability to audit these exchanges and penalize them for any wrong doing, we would also have a public ledger of trusted Bitcoin exchanges for people to use which makes things a lot easier on newbies entering the market.

Against:
Sounds like we're trying to rebuild a system we already have and that's failing us everyday, with corruption allegations and convictions related to these central authorities in the fiat world how do we make sure we don't make the same mistakes again? is it even possible? greed exists everywhere I'm afraid - even in the virtual currency world.

[bitnanigans]

I thought one of the key factors of Bitcoin was decentralisation. A central bank would be going against this core tenet.

[jbreher]

For:
As the article points out we would have a central authority with the ability to audit these exchanges and penalize them for any wrong doing,

Against: this function does not require a central bank. As half of the exchanges' business is fiat, there are already mechanisms in place to police this activity.

[odolvlobo]

For:
As the article points out we would have a central authority with the ability to audit these exchanges and penalize them for any wrong doing,

Against: this function does not require a central bank. As half of the exchanges' business is fiat, there are already mechanisms in place to police this activity.

The function of a Bitcoin central bank would be to protect member banks against bank runs. Because member banks would be at risk from each other, they would agree to follow certain rules and submit to regular audits.

[ninjaskip]

For:
As the article points out we would have a central authority with the ability to audit these exchanges and penalize them for any wrong doing,

Against: this function does not require a central bank. As half of the exchanges' business is fiat, there are already mechanisms in place to police this activity.

The function of a Bitcoin central bank would be to protect member banks against bank runs. Because member banks would be at risk from each other, they would agree to follow certain rules and submit to regular audits.

The hobbit Satoshi would be sad.