Would you be interested in a Bitcoin Credit Union?

[Elwar]

I would like to get a feel for how much interest there would be in forming a Bitcoin Credit Union. Post your thoughts here.

Objective
Set up a Credit Union where Bitcoin users can set up direct deposit at work directly to a Bitcoin address. This will be the main function of the Credit Union initially with the ability to expand into other services down the road.

Approach
Credit Unions are not as difficult to get running as one might think. The main initial steps are setting up a business plan and getting signatures from those that might be willing to join. The goal will be to get 3,000 people to support the concept while less is still ok but makes things more difficult. 500 people will be the minimum. Focusing on a simple initial setup of direct deposit will allow us to apply for an Express Charter and will make it more likely that the Credit Union will be approved.

What we need to begin
There are 10 main steps to setting up a Credit Union:
1. Find something in common (Bitcoin users)
2. Get together. A "yes" vote by 500 members while 3000 will help the process.
3. Do the paperwork. There will be plenty of forms to be filled out and submitted.
4. Meet the membership requirement. We will need to get signatures and a survey from the potential members.
5. Find a financial expert. We need a CPA or someone good with accounting for the organizing committee.
6. Form a committee. A small amount of people to help organize with good financial history.
7. Set up a board of directors. We will vote on who we want for the initial board of directors.
8. Collect money. To help with the initial funding we will need funds to get the ball rolling whether through donations or initial membership fee.
9. Charter assistance. It would be useful to have the assistance of someone who has already set up a Credit Union to help review our submission.
10. Apply for status. Petition the National Credit Union Administration for official status.

Initial business plan
The goal is to make direct deposit to a Bitcoin address as simple as possible. A Bitcoin user will join the Bitcoin Credit Union with the same process as joining a bank or credit union. They will provide a deposit Bitcoin address. The Bitcoin Credit Union will provide an account address. The Bitcoin user will provide the direct deposit account to their employer and when they are paid the funds will be converted to bitcoins and deposited into their account. From the user this process will be transparent. The Bitcoin Credit Union will coordinate with a company/companies to provide the best exchange rate. The members will decide whether day to day operations are paid for via the initial membership fee or from a small percentage taken during the conversion. The goal will be to keep the cost down as low as possible using volunteers as much as possible for operations.

If you made it this far and are interested, sign up here to help move this forward.
http://www.bitpools.com/?Bitcoin%20Credit%20Union

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[franky1]

arnt you already describing coinbase lol

many people already treat exchanges as a form of credit union (little shrimp, not whales)

although making it as a 'formal' credit union might be useful.

it can work as a little shrimp savings thing. but i would not aim it at large whales. that way its much easier to obtain liability insurance as each account can be secured against say $2k. much cheaper to insure rather than policies of $250k per account holder (banking world).

id never recommend storing bitcoin in third parties without proper insurance. thus small account limits and affordable insurance will win this project passing the feasibility tests.

[Elwar]

arnt you already describing coinbase lol

many people already treat exchanges as a form of credit union (little shrimp, not whales)

While this can be done via coinbase by setting up some sort of automation, with a credit union people can skip the step of money flowing through their bank account and the problems that come with having a bank account.

This would be like BitPay but in reverse. The employee doesn't have to worry about fiat and gets bitcoins directly in their account.

[Elwar]

It would also be the best way to associate a Direct Deposit account number to a Bitcoin address.


Any business or individual can give out that number for direct deposit to their Bitcoin address.

[cbeast]

This concept is much bigger than a traditional CU. Private key management schemes can be secure and scalable to any size. I would like to see families learn to manage their own Bitcoin CU that is not under any jurisdiction. They would form the foundation of a Bitcoin economy. I think the Philippines is a good place to try it because families are quite large and close.

[franky1]

It would also be the best way to associate a Direct Deposit account number to a Bitcoin address.


Any business or individual can give out that number for direct deposit to their Bitcoin address.

now your approaching the big hurdle!
account numbers.

for you to accept FIAT electronically needs a bank account. fine and dandy in normal credit union terms, but when it comes to direct deposits. thats a little harder.

here in the UK there is a credit union that has 1 bank account. and individual 'account' holders deposit with the same account number, but put a reference thats personal to them..

much like how deposits work in btc-e and bitstamp etc. where the reference is where a person puts their ID number.

having proper individual account numbers, means you would have to be part of the proper financial system ( a bank) not a layer above it (credit union/ payment processor). so be careful when talking about direct deposit numbers, just have individual account reference ID numbers instead.

[Elwar]

It would also be the best way to associate a Direct Deposit account number to a Bitcoin address.

Any business or individual can give out that number for direct deposit to their Bitcoin address.

now your approaching the big hurdle!
account numbers.

for you to accept FIAT electronically needs a bank account. fine and dandy in normal credit union terms, but when it comes to direct deposits. thats a little harder.

here in the UK there is a credit union that has 1 bank account. and individual 'account' holders deposit with the same account number, but put a reference thats personal to them..

much like how deposits work in btc-e and bitstamp etc. where the reference is where a person puts their ID number.

having proper individual account numbers, means you would have to be part of the proper financial system ( a bank) not a layer above it (credit union/ payment processor). so be careful when talking about direct deposit numbers, just have individual account reference ID numbers instead.

Ahh, I see. That would make things difficult. I was focusing on the US, I guess I should have clarified that. I have a credit union account with an account number and checks and everything a bank has. I can do ACH transfers, etc. A credit union is member owned, is usually for a specific purpose and not as complicated as a bank.

In the US when you go to get paid they ask for your direct deposit routing number and account number. The routing number is the number for the financial institution and the account number references your account. If we can get a routing number we can set up the account numbers to point to a specific Bitcoin address.

I think if we could do like BitPay does where companies that want to accept Bitcoin with no desire to deal in Bitcoin can do so, but we can set it up so that people who are paid in fiat with no desire to deal in fiat can do so. A hybrid approach to people being paid in Bitcoin just like BitPay is a hybrid approach to merchants accepting Bitcoin.

[inBitweTrust]

No, there are already good solutions to act as transitional intermediaries like coinbase, circle, bitstamp, bitpay. We don't need more solutions. Lets focus on promoting how Bitcoins were meant to function by getting more users to adopt multisig and hardware wallets.

Employers should be paying directly to employee's stealth addresses.

The future is P2P banking with decentralized markets and exchanges, centralized banks and exchanges are merely speed bumps along the way.

[Elwar]

Employers should be paying directly to employee's stealth addresses.

I agree, but there are no options such as coinbase, bitpay, bitstamp, etc to do so.

Even if an employer wanted to do so they would have to jump through plenty of hoops to make it work.

[bbit]

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

[inBitweTrust]

I agree, but there are no options such as coinbase, bitpay, bitstamp, etc to do so.

Even if an employer wanted to do so they would have to jump through plenty of hoops to make it work.

There are options, but do indeed need to be refined. Why don't we work on that directly as a community vs a brick and mortar institution that can be corrupted by the state. Isn't that what we are trying to get away from?

[Elwar]

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.

[inBitweTrust]

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.

Yes, interesting, but how is this different than https://bitpay.com/bitcoin-payroll-api  ?

[Elwar]

I agree, but there are no options such as coinbase, bitpay, bitstamp, etc to do so.

Even if an employer wanted to do so they would have to jump through plenty of hoops to make it work.

There are options, but do indeed need to be refined. Why don't we work on that directly as a community vs a brick and mortar institution that can be corrupted by the state. Isn't that what we are trying to get away from?

That is exactly what this is for, getting away from brick and mortar institutions. Right now you need a bank account to get paid in fiat so you can send that fiat to an exchange.

What we need to move forward is for people to get paid in Bitcoin.

We have merchants accepting Bitcoin but they are paid in bitcoins and immediately convert it to fiat.

We need people who get paid in fiat to immediately convert to bitcoins. The other side of the chicken and egg.

[zimmah]

So, what is the point?

Why do we need this, and how is this different from what we already have?

[lucasjkr]

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.

No, it would need to handle cash as we'll. I can't think of any user that can pay all of their bills in bitcoin. So in the ideal situation, one would set up an account, designate a percentage of their pay to be converted to bitcoins, while the rest remains as cash in their account, accessible via ATM or check.   

If you're not willing to go all the way and offer fiat banking services as well as bitcoin services, then there's really no advantage to this credit union idea compared to just getting paid as normal and having coo base make regular purchases from you linked bank account. If anything the later would be easier, since, again, people, do need a certain amount of fiat to survive. Having all their pay converted to bitcoi would just result in them needing to convert back to fiat immediately in order to pay their bills.

So do you want to go all the way? Set up a credo union that handles/accepts cash, check, ATM cards and bitcoin? Because otherwise there's just not a purpose IMO.

[franky1]

I agree, but there are no options such as coinbase, bitpay, bitstamp, etc to do so.

Even if an employer wanted to do so they would have to jump through plenty of hoops to make it work.

There are options, but do indeed need to be refined. Why don't we work on that directly as a community vs a brick and mortar institution that can be corrupted by the state. Isn't that what we are trying to get away from?

That is exactly what this is for, getting away from brick and mortar institutions. Right now you need a bank account to get paid in fiat so you can send that fiat to an exchange.

What we need to move forward is for people to get paid in Bitcoin.

We have merchants accepting Bitcoin but they are paid in bitcoins and immediately convert it to fiat.

We need people who get paid in fiat to immediately convert to bitcoins. The other side of the chicken and egg.

easiest thing to do rather than a credit union of bank account numbers, is for merchants (who know their employee's tax brackets) pay the 60-90% in bitcoin to employee's and the other 10-40% is converted to fiat for tax.

a push on merchants to not convert as much bitcoin and only do it when really needed. then employees wont even need 'union accounts' just bitcoin addresses. i think thats what inbitwetrust is trying to say.

YET thats the philosophy of a 100% world bitcoin takeover.. which can take decades, if at all.

i think a credit union to make employers lives easier so that employers that have not even adopted bitcoin and prefer fiat can just send funds to employee's 'accounts' in the current banking system. is the interim objective here.

but then we run into the hurdles of bitcoin usefulness. as bitcoin is still young and not everyone can successfully live 100% bitcoin lives (walmart/7-11/mcdonalds/starbucks/jcpenny) dont accept bitcoin.

so it summary,
elwar is planning and thinking about the goals of 2015-2020 and inbitwetrust is thinking about goals of 2020+

now the chicken and the egg:
1) we set up a credit union for the fiat loving merchants and those merchants still clinging onto fiat to pay staff who want bitcoin without merhants realising the payments are converted. (gives the 'unbanked' staff a method to get paid)
2) we get more merchants to accept bitcoin from customers
3) we get merchants suppliers to accept bitcoinso that merchants can pay direct without conversion
3) merchants that will help peoples daily 'survival' (minimal daily needs(food, clothing landlords, toiletries, home repair))
4) we get merchants to KEEP bitcoin, to then pay staff (as average joe adoption grows)
5) by this point alot of merchants will pay staff direct in bitcoin without need of credit union. but fiat still exists and a credit union still has usefulness

[franky1]

a credit union has purpose and passes the test of time of a 5 year lifespan. thus worth achieving. and it can be an integral part of bitcoin growth and adoption.

it does not need physical locations in every town. as bitcoin ATM's dotted around can fill that gap

id say once credit unions are set up, for those employees wanting bitcoin or even just wanting a 'account' to receive wages into. we then push for more merchants to accept bitcoin as a customer payment method. seriously concentrating on the 'home basics' of life, rather than luxuries.

then and only then is it ready to push the mass adoption of average joe to convert to bitcoin either directly from merchants accepting bitcoins or through merchants sending fiat to credit union.

this allows a period of time from starting the credit union and refining it, before mass adoption.
the merchant push inbetween is critical, and i hate people that simply think USER adoption in 2014 is key.

so in 2014-2015 i see the credit union being small and stable growth of existing userbase. which is good and practical. then once people can live on bitcoins we really push the mass adoption in 2015+

another thing that would also help the community was if we pooled in all the bitcoin ATM people and instead of them individually paying for money transfer licences each. that thy work as 'agents' /franchisee's of the credit union. thus they still do what they do but instead of 20 people in one state paying 1 licence each. they payjust 5% and be still licenced, as they are under the umbrella of the credit union brand.

food for thought

[inBitweTrust]

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?

[franky1]

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?

competition is good.. thats why coinbase works well alongside bitpay.. afterall we dont want just 1 company running the bitcoin planet. choice's options and decentralisation is key.

but i agree physical locations is not needed (after all bitcoin is digital) all that is needed physically is bitcoin ATM's which we can franchise out to others to manage for us.