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They have achieved trust is system. If my bank stops existing right now, I still have any money. If <exchange> gets hacked, tough luck.

cmurf 9y ago
It depends on the holdings, not everything you can have in a bank account is FDIC insured. Update: By "everything" I mean not all kinds of financial instruments are insured by the FDIC. They do not cover mutual funds, annuities, bonds, etc. They cover pretty much just cash and cash equivalents.
- ceejayoz 9y ago
  It's fairly trivial to make sure everything's FDIC insured, and being wealthy enough to care about the per-account caps should mean you've got someone to advise you on doing so.
  - osteele 9y ago
    It doesn't even require a human advisor. Many banks participate in CDAR, which spreads large deposits across multiple accounts at other banks in the network. Fidelity isn't a bank, but their cash management feature includes checks, an ATM card, bill pay, and can send and receive ACH and wire transfers; they also implement this hack. None of this applies to securities. Presumably you could insure them. It's not obvious to me from first principles that the cost of insurance would wipe out any incremental appreciation value, but I've never heard of anyone doing this so probably it does.
    - koolba 9y ago
      Securities held at a broker are usually backed by SPIC protection.
- quickben 9y ago
  True. But for average people at popular banks, it's very sufficient.
conanbatt 9y ago
Thats federally insured. You are paying taxes for your 'still have your money'. Not as clear cut as you think it is. If the government insured bitcoin 'for free' you would also see a major surge in confidence.
- not_kurt_godel 9y ago
  The government insures bank deposits because it, and the vast majority of its citizens, has/have a vested interest in the stability of its currency. That's kind of the point of fiat currency. At the end of the day, there are dudes with guns that will back its value. Not so with Bitcoin. And good luck to any expecting that to change.

cmurf 9y ago

It depends on the holdings, not everything you can have in a bank account is FDIC insured. Update: By "everything" I mean not all kinds of financial instruments are insured by the FDIC. They do not cover mutual funds, annuities, bonds, etc. They cover pretty much just cash and cash equivalents.

ceejayoz 9y ago
It's fairly trivial to make sure everything's FDIC insured, and being wealthy enough to care about the per-account caps should mean you've got someone to advise you on doing so.
- osteele 9y ago
  It doesn't even require a human advisor. Many banks participate in CDAR, which spreads large deposits across multiple accounts at other banks in the network. Fidelity isn't a bank, but their cash management feature includes checks, an ATM card, bill pay, and can send and receive ACH and wire transfers; they also implement this hack. None of this applies to securities. Presumably you could insure them. It's not obvious to me from first principles that the cost of insurance would wipe out any incremental appreciation value, but I've never heard of anyone doing this so probably it does.
  - koolba 9y ago
    Securities held at a broker are usually backed by SPIC protection.
quickben 9y ago
True. But for average people at popular banks, it's very sufficient.

conanbatt 9y ago

Thats federally insured. You are paying taxes for your 'still have your money'. Not as clear cut as you think it is. If the government insured bitcoin 'for free' you would also see a major surge in confidence.

not_kurt_godel 9y ago
The government insures bank deposits because it, and the vast majority of its citizens, has/have a vested interest in the stability of its currency. That's kind of the point of fiat currency. At the end of the day, there are dudes with guns that will back its value. Not so with Bitcoin. And good luck to any expecting that to change.