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>I really don't know why this isn't a larger part of this conversation. That's been the elephant in the room ever since Satoshi published its paper more than a

by simias 7y ago

>I really don't know why this isn't a larger part of this conversation. That's been the elephant in the room ever since Satoshi published its paper more than a decade ago. When I discuss with cryptocurrency enthusiasts I often get the impression that they think that banks are this kind of useless parasite body that somehow appears like mosquitoes around a pond in summer. That they only serve to basically operate ATMs, send you your Visa card and crash the market every other decade or so. This is of course a gross misunderstanding of what banks are, what they do, why they do it and where they come from. In particular the idea that "bitcoin is going to kill banks" (a very common sentiment in my experience in cryptocurrency circles) is about as meaningful as "this new type of snowboard is going to kill ski resorts!". No it won't, it might change some things about how they operate but after the transition period it'll be business as usual. Cryptocurrencies don't come even close to replacing most of the services offered by banks. Actually, they don't even come close to replacing most of the services offered by actual currency. It's this weird cognitive dissonance that you encounter in conspiracy theory circles: the banking system is this hellish beast that steals money from the honest middle-class worker, operated from a global circle of elites acting from the shadows and that must be destroyed at all cost to save humanity. How do you do that? By replacing their currency by your own, they'll never see that coming, those idiots.

holy_city 7y ago
Someone once told me that U of Chicago's business school used this classic to describe banking: https://www.youtube.com/watch?v=iPkJH6BT7dM https://www.youtube.com/watch?v=iPkJH6BT7dM
sprafa 7y ago
This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deustche Bank to just buy 51% of Bitcoin and make it do whatever they wanted? I could never see the potential for either fact to be avoided, as much as the frothing Bitcoin-enthusiasts would like it to.
- panarky 7y ago
  > This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. The reason I stayed in is because Bitcoin solved a seemingly intractable problem, it works in the real world, and it's survived and even thrived in the face of fierce attacks for a decade. Yes, there are many shills who are delusional and ignorant. Yes, speculators and fraudsters are running wild. None of that changes the fundamental characteristics that make this a fascinating and promising technology, network and social movement.
  - sprafa 7y ago
    Yes true, this is why I “dropped out of it” then eventually came back to it. The fact that I have Venezuelan friends who started hoarding it to avoid capital controls in their country convinced me of its usefulness and long-term viability.
    - headsoup 7y ago
      So long as someone is there willing to pay the same price for those coins. Do the grocery stores, butchers and other providers accept Bitcoin there? How do they value their goods against a 'currency' that is growing X00% weekly?
      - gomox 7y ago
        The mild fluctuations of the Bitcoin price can look like a walk in the park compared to the Venezuelan local currency.
        headsoup 7y ago
        I'm not familiar with the history, but is Venezuela's currency constantly volatile or are recent events an anomaly? How do you define Bitcoin's fluctuations as 'mild' - i.e what are you comparing it to other than the local currency to determine stability?
jpkiser 7y ago
Yes, there are many Bitcoiners who believe that everyone will become their own bank but I believe a more common sentiment is the idea off full backed reserved. But a great I feel that a more common belief held by Bitcoiners is that the "inherent" issues with capitalism come from fractional reserve banking. Now for the first time in history there is a form of money that you can prove in a matter of seconds that your money didn't move when you gave custody to the bank. In fact with multisignature transactions banks would simply act as a escrow service for those, I imagine a most people, who do not feel comfortable managing their own keys.
- geezerjay 7y ago
  > Now for the first time in history there is a form of money that you can prove in a matter of seconds that your money didn't move when you gave custody to the bank. Why do you believe this has any relevance at all? People want to buy stuff, not exchange bill with serial number #abcxyz with stuff. And from my example you can easily understand why your assertion is quite wrong to begin with.
  - JoeSamoa 7y ago
    I care about my exact bills and your exact bills. I care. Maybe you don't, but I do and so does the person you replied to. That makes at least two of us.
    - codyb 7y ago
      You care about your exact bills? You actually take the time to look at the serial numbers of all the bills you use in a given day/week/month/year? For what purpose? I check for cool serial numbers fairly frequently but I couldn’t say I care about the exact bills. A five’s a five. That’s why currency is great.
      - JoeSamoa 7y ago
        If I was interested in financial forensics I'd be interested in the serials. Don't be dense.
deleted 7y ago
[deleted]
chaoticmass 7y ago
I can't pay my taxes in Crypto, so in that sense I don't think will ever completely replace fiat currency and the banks.
- Rychard 7y ago
  You can do this in at least one US state: Ohio[1]. I'm not sure of how many other states (if any) that have something similar. [1]: https://ohiocrypto.com/ https://ohiocrypto.com/
  - bduerst 7y ago
    >Please use Internet Explorer to view site and thank you for your cooperation. There's some irony here.
draw_down 7y ago
Holy smokes, this is one of the best posts I’ve ever seen on here.
hinkley 7y ago
This also bothers me about the end of Fight Club. You think destroying bank records will remove the power inequality from the system? Good luck with that, kid. Power has money, but money isn't power. It's the table scraps the rest of us chase after. It's also why you can tax the rich all you want and it won't take their power away. The transactions that truly matter to them aren't usually denominated in dollars. Cash is Plan B at best. Don't believe me? Look at stories about nouveau rich not being taken seriously. You have to work your butts off to get your kids taken seriously (if you aren't lucky or fast enough, your grandkids, assuming your kids haven't blown their inheritance by then). You don't know anybody, and you don't have anything they need. All you have is money. Trump talked about this every time he filed for bankruptcy. I'm sure his buddies would have preferred he kept his big mouth shut.
- splintercell 7y ago
  > Look at stories about nouveau rich not being taken seriously. Yeah because there are actual differences between new rich and the old rich.
- elmomle 7y ago
  Wanted to ask for a citation on that last paragraph. I'd be very interested to read more first-hand accounts about what you're talking about.
oarabbus_ 7y ago
You've said what banks are _not_ and the gross misunderstandings people have about what banks (aren't). But you didn't actually tell the reader what banks _are_. Care to elaborate?
heimatau 7y ago
> This is of course a gross misunderstanding of what banks are, what they do, why they do it and where they come from. You're being overly reductionist. The functions of banks are great and valuable but they are disproportionately so. Why? Because they get free money from the Fed and are using fractional reserves. Do you think the Bank's services would be as pervasive if the working class had a stable store of value for their work? I don't. Banks need competition and with Bitcoin and the crypto space, they finally got some serious competition. Also, there are plenty of startups in the cryptocurrency space that ARE doing functions that banks offer. SALT is one that comes to mind quickly but there are plenty of others.

by simias 7y ago

holy_city 7y ago

Someone once told me that U of Chicago's business school used this classic to describe banking: https://www.youtube.com/watch?v=iPkJH6BT7dM https://www.youtube.com/watch?v=iPkJH6BT7dM

sprafa 7y ago

This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deustche Bank to just buy 51% of Bitcoin and make it do whatever they wanted? I could never see the potential for either fact to be avoided, as much as the frothing Bitcoin-enthusiasts would like it to.

panarky 7y ago
> This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. The reason I stayed in is because Bitcoin solved a seemingly intractable problem, it works in the real world, and it's survived and even thrived in the face of fierce attacks for a decade. Yes, there are many shills who are delusional and ignorant. Yes, speculators and fraudsters are running wild. None of that changes the fundamental characteristics that make this a fascinating and promising technology, network and social movement.
- sprafa 7y ago
  Yes true, this is why I “dropped out of it” then eventually came back to it. The fact that I have Venezuelan friends who started hoarding it to avoid capital controls in their country convinced me of its usefulness and long-term viability.
  - headsoup 7y ago
    So long as someone is there willing to pay the same price for those coins. Do the grocery stores, butchers and other providers accept Bitcoin there? How do they value their goods against a 'currency' that is growing X00% weekly?
    - gomox 7y ago
      The mild fluctuations of the Bitcoin price can look like a walk in the park compared to the Venezuelan local currency.
      - headsoup 7y ago
        I'm not familiar with the history, but is Venezuela's currency constantly volatile or are recent events an anomaly? How do you define Bitcoin's fluctuations as 'mild' - i.e what are you comparing it to other than the local currency to determine stability?

jpkiser 7y ago

Yes, there are many Bitcoiners who believe that everyone will become their own bank but I believe a more common sentiment is the idea off full backed reserved. But a great I feel that a more common belief held by Bitcoiners is that the "inherent" issues with capitalism come from fractional reserve banking. Now for the first time in history there is a form of money that you can prove in a matter of seconds that your money didn't move when you gave custody to the bank. In fact with multisignature transactions banks would simply act as a escrow service for those, I imagine a most people, who do not feel comfortable managing their own keys.

geezerjay 7y ago
> Now for the first time in history there is a form of money that you can prove in a matter of seconds that your money didn't move when you gave custody to the bank. Why do you believe this has any relevance at all? People want to buy stuff, not exchange bill with serial number #abcxyz with stuff. And from my example you can easily understand why your assertion is quite wrong to begin with.
- JoeSamoa 7y ago
  I care about my exact bills and your exact bills. I care. Maybe you don't, but I do and so does the person you replied to. That makes at least two of us.
  - codyb 7y ago
    You care about your exact bills? You actually take the time to look at the serial numbers of all the bills you use in a given day/week/month/year? For what purpose? I check for cool serial numbers fairly frequently but I couldn’t say I care about the exact bills. A five’s a five. That’s why currency is great.
    - JoeSamoa 7y ago
      If I was interested in financial forensics I'd be interested in the serials. Don't be dense.

deleted 7y ago

[deleted]

chaoticmass 7y ago

I can't pay my taxes in Crypto, so in that sense I don't think will ever completely replace fiat currency and the banks.

Rychard 7y ago
You can do this in at least one US state: Ohio[1]. I'm not sure of how many other states (if any) that have something similar. [1]: https://ohiocrypto.com/ https://ohiocrypto.com/
- bduerst 7y ago
  >Please use Internet Explorer to view site and thank you for your cooperation. There's some irony here.

draw_down 7y ago

Holy smokes, this is one of the best posts I’ve ever seen on here.

hinkley 7y ago

This also bothers me about the end of Fight Club. You think destroying bank records will remove the power inequality from the system? Good luck with that, kid. Power has money, but money isn't power. It's the table scraps the rest of us chase after. It's also why you can tax the rich all you want and it won't take their power away. The transactions that truly matter to them aren't usually denominated in dollars. Cash is Plan B at best. Don't believe me? Look at stories about nouveau rich not being taken seriously. You have to work your butts off to get your kids taken seriously (if you aren't lucky or fast enough, your grandkids, assuming your kids haven't blown their inheritance by then). You don't know anybody, and you don't have anything they need. All you have is money. Trump talked about this every time he filed for bankruptcy. I'm sure his buddies would have preferred he kept his big mouth shut.

splintercell 7y ago
> Look at stories about nouveau rich not being taken seriously. Yeah because there are actual differences between new rich and the old rich.
elmomle 7y ago
Wanted to ask for a citation on that last paragraph. I'd be very interested to read more first-hand accounts about what you're talking about.

oarabbus_ 7y ago

You've said what banks are _not_ and the gross misunderstandings people have about what banks (aren't). But you didn't actually tell the reader what banks _are_. Care to elaborate?

heimatau 7y ago

> This is of course a gross misunderstanding of what banks are, what they do, why they do it and where they come from. You're being overly reductionist. The functions of banks are great and valuable but they are disproportionately so. Why? Because they get free money from the Fed and are using fractional reserves. Do you think the Bank's services would be as pervasive if the working class had a stable store of value for their work? I don't. Banks need competition and with Bitcoin and the crypto space, they finally got some serious competition. Also, there are plenty of startups in the cryptocurrency space that ARE doing functions that banks offer. SALT is one that comes to mind quickly but there are plenty of others.