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Question: Would you be interested in a Bitcoin Credit Union?
Yes - 21 (63.6%)
No - 11 (33.3%)
Other (post below) - 1 (3%)
Total Voters: 33

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Author Topic: Would you be interested in a Bitcoin Credit Union?  (Read 3147 times)
inBitweTrust
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October 04, 2014, 10:42:40 PM
 #21

Here are two more companies offering payroll services in addition to Bitpay  -

https://www.bitwage.co
http://wagepoint.com

But yes, the more competition the better.

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October 04, 2014, 11:29:46 PM
 #22

I like what you are thinking. So these are physical locations ?

No, it would serve only one purpose. Direct deposit to your Bitcoin address. There is no need for any physical location other than what is required for a main office address.
I don't think there would be much demand for this. There is no real reason why you couldn't buy bitcoin yourself whenever you are paid. There is also a chance that you would not want to have your money automatically purchase bitcoin for a number of reasons and this would only make it harder to prevent this from happening

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Elwar
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October 05, 2014, 04:04:39 PM
 #23

Setting up a physical location and going through the legal process is a multiple year project and involves millions of dollars in lawyer and regulatory fees. I just don't see the advantage in replicated the antiquated way people bank as a justifiable cost.

If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:

https://bitpay.com/bitcoin-payroll-api

Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?

For a nationwide credit union a physical location makes no sense at all.

If there is another way that I can go to my employer right now and give them my direct deposit account number and get paid in bitcoins, I am all ears.

A simple credit union can be started for less than $100k. Focusing first solely on direct deposit would bring the price much lower.

The BitPay payroll is trying to get companies to sign up to pay their employees in Bitcoin. But matching companies that pay in Bitcoin and people who want to be paid in Bitcoin will be a small number.

The price may be as low as it is because so many people are clinging on to the fiat world so much that the concept of getting paid in Bitcoin and converting to fiat for those few things they need to pay for is a scary concept.

I, for one, get paid in dollars and live on euros in Germany. I wish I could drop my US bank account but I need it for direct deposit to convert to bitcoins.

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inBitweTrust
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October 05, 2014, 04:20:06 PM
 #24

Sorry, I finally get it. The 3 solutions I cited involve employers signing up which they probably won't do and what you are suggesting allows any employee to automatically receive direct deposits in a split between BTC and Fiat without the employer even knowing that is happening.

Couldn't this be accomplished simply with Coinbases tool to automatically buy BTC at set intervals or indirectly through their API with apps like Bitcoin Trader?
So if you want 30% in BTC and the rest in fiat you would merely make a recurring buy order for that percentage of your salary(most people have consistent salaries ) after the direct deposit went through/

Wouldn't that work?

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October 05, 2014, 06:38:34 PM
 #25

Sorry, I finally get it. The 3 solutions I cited involve employers signing up which they probably won't do and what you are suggesting allows any employee to automatically receive direct deposits in a split between BTC and Fiat without the employer even knowing that is happening.

Couldn't this be accomplished simply with Coinbases tool to automatically buy BTC at set intervals or indirectly through their API with apps like Bitcoin Trader?
So if you want 30% in BTC and the rest in fiat you would merely make a recurring buy order for that percentage of your salary(most people have consistent salaries ) after the direct deposit went through/

Wouldn't that work?

Not necessarily a split between BTC and fiat because that would require the Credit Union to hold fiat deposits which would just turn it into yet another bank account and make it more difficult to get approved and more costly to run.

Some employers allow you to withdraw different percentages to different bank accounts. But if we got the exchange price as close to 0% as possible (contracting with companies that need fiat for bitcoins) then it would be just like being paid in bitcoins. Then you could convert what you need in fiat via CoinBase or use a bitcoin debit card or the many other ways of getting fiat for bitcoins.

You can set up Coinbase to do an automatic buy, it would have to be timed the day you get paid and if your pay goes up or down it would not be able to fluctuate. Plus it takes several days for the transfer to go through. And you need a bank account for this, which would be more likely to freeze your account with no legal recourse as opposed to the government shutting down a whole credit union without any legal recourse.

With direct deposits people actually are given the option of never having a bank account ever again. I have no bank account in germany, if I need cash I sell on localbitcoins (bought a car that way last month). But I still need my US account for funding CoinBase.

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inBitweTrust
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October 05, 2014, 06:54:08 PM
 #26

With direct deposits people actually are given the option of never having a bank account ever again. I have no bank account in germany, if I need cash I sell on localbitcoins (bought a car that way last month). But I still need my US account for funding CoinBase.

Coinbase has expanded to 13 countries in EU, just not Germany yet. Tongue
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14

I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile. 

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October 06, 2014, 02:22:27 PM
 #27

Bitcoin Union in every country.
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October 06, 2014, 02:42:29 PM
 #28

Coinbase has expanded to 13 countries in EU, just not Germany yet. Tongue
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14

I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile. 

I live in Germany but get paid in the US so I use a US bank account for my CoinBase account.

The $100k was off the top of my head after reading the NCUA site. Here is their break down of a typical credit union:

Estimated Pre-Chartering (Start-Up) Costs

Pre-Chartering Consultant/Organizer Fees: 35,000
Electronic Data Processing Computer Hardware: 2,800
General Ledger/Share and Loan Accounting Software: 4,000
Computer Installation & Training: 1,485
Check Writing Software (Laser): 500
Loan Delinquency Notice Printing Software: 220
Statement Printing Software: 275
Direct Deposit - ACH Software: 1,670
Enhanced General Ledger Software (Fixed Assets,
Prepaid/Deferred Expenses, Accrued Expenses): 250
Credit Bureau Software: 795
Credit Bureau Reporting Software: 330
Total Estimated EDP Computer Costs: 9,905
Furniture & Equipment - Desks, Chairs, File Cabinets,
Security: 4,000
Marketing/Surveying: 1,000

Total Estimated Pre-Chartering Costs: 49,905

Another chart shows -
Total Estimated Annual Operating Expenses: 76,781

These are taken from the NCUA website:
http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocument6-26-09.pdf

We would actually have lower expenses as we would be focused mainly on Direct Deposit - ACH with no need for loans or holding account balances, etc.

http://www.bitpools.com
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Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
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October 07, 2014, 06:27:02 AM
 #29

Coinbase has expanded to 13 countries in EU, just not Germany yet. Tongue
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14

I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile. 

I live in Germany but get paid in the US so I use a US bank account for my CoinBase account.

The $100k was off the top of my head after reading the NCUA site. Here is their break down of a typical credit union:

Estimated Pre-Chartering (Start-Up) Costs

Pre-Chartering Consultant/Organizer Fees: 35,000
Electronic Data Processing Computer Hardware: 2,800
General Ledger/Share and Loan Accounting Software: 4,000
Computer Installation & Training: 1,485
Check Writing Software (Laser): 500
Loan Delinquency Notice Printing Software: 220
Statement Printing Software: 275
Direct Deposit - ACH Software: 1,670
Enhanced General Ledger Software (Fixed Assets,
Prepaid/Deferred Expenses, Accrued Expenses): 250
Credit Bureau Software: 795
Credit Bureau Reporting Software: 330
Total Estimated EDP Computer Costs: 9,905
Furniture & Equipment - Desks, Chairs, File Cabinets,
Security: 4,000
Marketing/Surveying: 1,000

Total Estimated Pre-Chartering Costs: 49,905

Another chart shows -
Total Estimated Annual Operating Expenses: 76,781

These are taken from the NCUA website:
http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocument6-26-09.pdf

We would actually have lower expenses as we would be focused mainly on Direct Deposit - ACH with no need for loans or holding account balances, etc.
Both banks and credit unions alike make their money off of loans. This is their primary source of income.

You may have lower costs but would still have costs which would need to be passed along.

One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)
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October 07, 2014, 07:43:01 AM
 #30

Both banks and credit unions alike make their money off of loans. This is their primary source of income.

You may have lower costs but would still have costs which would need to be passed along.

One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)

Credit Unions are member owned, most will charge a membership fee up front of around $25. If we are able to get 500 people who are interested, an up front fee of $100 each would cover the start up costs...the recommended initial users of 3000 would only require a $20 up front fee.

The price given for yearly expenses by the NCUA is around $75,000. Without handling cash or loans this price would likely be lower. Say around $50,000 for simplicity sake.

So we could either get 500 new people per year at $100 each or 2500 people per year at $20 each. Or we charge a small percentage for exchanging from dollars to bitcoins.

With 500 people making the average US salary of around $50,000 per year we could charge .2% per direct deposit to cover costs. With 1000 people we could get the rate down to .1%...quite negligible.

And being member owned, the members get to decide the best route.

And if it had enough support I am sure a few early adopters would be willing to put up the initial $50k to get this set up.

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Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
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October 09, 2014, 01:37:35 PM
 #31

I would imagine for the $50k upfront costs we could get some sponsors to help with that. Maybe sponsor the first 500 people's membership fees.

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October 09, 2014, 06:58:51 PM
 #32

some of the upfront costs are not needed.
credit bureau software..? honestly you dont need to run credit checks on people depositing fiat
cheque printing? again... not needed, well thats if i read the purpose of the credit buruea correctly
anything related to loads...? again not needed.

usually a credit union is very much in house, imagine it like a book club that people buy into where the funds are stored in the house owners personal safe (thats the most imaginative laymans version i can use, so dont judge). where no interaction happens with banks because most payments are cash in hand. many churches and schools have these 'savings clubs'.

in elwars links. the PDF only really explains that a credit union which wants a wider coverage and interaction with banks(for electronic direct deposit) are best suited to find debit card issuers, which would easily and cheaply allow customers to get a 'bank account' numbers branded to the credit union for employers to then direct deposit into.

maybe if elwar speaks to current bitcoin debit card businesses (obviously not the scam ones) and work with them to mitigate costs so that customers can easily get a card and have their employer deposit fiat into. which converts to bitcoin... and then the combined service of the bitcoin debit card who until now receives bitcoin to convert to FIAT. will mutually benefit each other. as 2 separate services under the same card issuer, so that swaps for bitcoin<->fiat can be done inhouse.

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October 10, 2014, 01:52:11 AM
 #33

Both banks and credit unions alike make their money off of loans. This is their primary source of income.

You may have lower costs but would still have costs which would need to be passed along.

One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)

Credit Unions are member owned, most will charge a membership fee up front of around $25. If we are able to get 500 people who are interested, an up front fee of $100 each would cover the start up costs...the recommended initial users of 3000 would only require a $20 up front fee.

The price given for yearly expenses by the NCUA is around $75,000. Without handling cash or loans this price would likely be lower. Say around $50,000 for simplicity sake.

So we could either get 500 new people per year at $100 each or 2500 people per year at $20 each. Or we charge a small percentage for exchanging from dollars to bitcoins.

With 500 people making the average US salary of around $50,000 per year we could charge .2% per direct deposit to cover costs. With 1000 people we could get the rate down to .1%...quite negligible.

And being member owned, the members get to decide the best route.

And if it had enough support I am sure a few early adopters would be willing to put up the initial $50k to get this set up.
The reason people are willing to pay money to be a member of a credit union is because they offer higher rates on deposits and lower rates on loans. If these features are removed them the main incentive to join is removed.

Your .1 or .2% is quite high just to receive your money. These fees would need to be above what you would charge from exchange fees (that you would need to pass on). It would probably be cheaper to just get a free checking account from a large bank, get direct deposit, transfer money to bitstamp every two weeks (or however often you are paid) and buy on bitstamp "manually" the process would only take ~20 minutes each pay period and would save money over the long run.

Any time you add an additional middle man you are going to increase costs
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October 10, 2014, 02:08:11 AM
 #34

i am interested in  Bitcoin Credit Union
but how to operate. who will own it

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October 10, 2014, 02:23:03 AM
 #35

Direct deposits use the FedACH system. If you accept fiat via FedACH then transfer it to Coinbase for conversion you will need to have all the headaches and licenses in place that banks have. If you're going to also deal in fiat you're going to need an experienced compliance officer for AML/KYC. I think Charlie's available if you need someone now. lol

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October 10, 2014, 05:08:07 AM
 #36

Interested is a good work.
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October 10, 2014, 10:25:40 AM
 #37

Direct deposits use the FedACH system. If you accept fiat via FedACH then transfer it to Coinbase for conversion you will need to have all the headaches and licenses in place that banks have. If you're going to also deal in fiat you're going to need an experienced compliance officer for AML/KYC. I think Charlie's available if you need someone now. lol

yep, trying to join the ACH network is a big hurdle. if it was as easy as a $50k investment, then EVERYONE would start their own bank brands, but there is only a few in reality, which shows its not easy or cheap.

however as mentioned in the last post, people having their own debit card to 'top up' give their employer the deposit details. and then elwar in partnership with a bitcoin debit card company working the other direction (bitcoin->fiat). can work together to swap fiat for coin internally rather than relying on fluctuating exchanges

I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER.
Don't take any information given on this forum on face value. Please do your own due diligence & respect what is written here as both opinion & information gleaned from experience. If you wish to seek legal FACTUAL advice, then seek the guidance of a LEGAL specialist.
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October 10, 2014, 10:38:51 AM
 #38

Direct deposits use the FedACH system. If you accept fiat via FedACH then transfer it to Coinbase for conversion you will need to have all the headaches and licenses in place that banks have. If you're going to also deal in fiat you're going to need an experienced compliance officer for AML/KYC. I think Charlie's available if you need someone now. lol

yep, trying to join the ACH network is a big hurdle. if it was as easy as a $50k investment, then EVERYONE would start their own bank brands, but there is only a few in reality, which shows its not easy or cheap.

however as mentioned in the last post, people having their own debit card to 'top up' give their employer the deposit details. and then elwar in partnership with a bitcoin debit card company working the other direction (bitcoin->fiat). can work together to swap fiat for coin internally rather than relying on fluctuating exchanges

I agree, it would not make sense to use an exchange. Working either with a bitcoin debit card company or directly with high volume miners would allow for getting exchange rates without the overhead of the exchange.

Considering the amount and time would be fairly consistent it would be easier to negotiate ("Our current fiat amount is $385,000 every Friday increasing at an average rate of 5% per month.."). Might even be able to negotiate a rate better than exchanges to cover the minimal costs of operation.

Working with debit card companies will make it much easier...most of a credit union's costs come from offering fiat services. Holding zero balances would cut out most of the cost.

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October 10, 2014, 12:34:59 PM
 #39

Anything that would make bitcoin progress, I will support!

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October 10, 2014, 01:49:47 PM
 #40

Direct deposits use the FedACH system. If you accept fiat via FedACH then transfer it to Coinbase for conversion you will need to have all the headaches and licenses in place that banks have. If you're going to also deal in fiat you're going to need an experienced compliance officer for AML/KYC. I think Charlie's available if you need someone now. lol

yep, trying to join the ACH network is a big hurdle. if it was as easy as a $50k investment, then EVERYONE would start their own bank brands, but there is only a few in reality, which shows its not easy or cheap.

however as mentioned in the last post, people having their own debit card to 'top up' give their employer the deposit details. and then elwar in partnership with a bitcoin debit card company working the other direction (bitcoin->fiat). can work together to swap fiat for coin internally rather than relying on fluctuating exchanges

I agree, it would not make sense to use an exchange. Working either with a bitcoin debit card company or directly with high volume miners would allow for getting exchange rates without the overhead of the exchange.

Considering the amount and time would be fairly consistent it would be easier to negotiate ("Our current fiat amount is $385,000 every Friday increasing at an average rate of 5% per month.."). Might even be able to negotiate a rate better than exchanges to cover the minimal costs of operation.

Working with debit card companies will make it much easier...most of a credit union's costs come from offering fiat services. Holding zero balances would cut out most of the cost.

If you never intend to touch fiat at all you don't need to apply to be a credit union. Credit unions don't deal with commodities. You can just set that up as a club or non profit for tax purposes. Maybe apply for a 501c. Are you planning on being for profit or nonprofit?

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