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You’re the second reply who seems to think that I have no idea how banks actually work or why they can often pay interest. Did you just skip my second paragraph

You’re the second reply who seems to think that I have no idea how banks actually work or why they can often pay interest. Did you just skip my second paragraph, or what’s the deal?

Zhenya 7y ago
I read your second paragraph. There is almost a zero-cost to storing the money and as the account size grows the cost to transact on this account per dollar of storage also approaches zero. Meanwhile the lending power of the bank multiples by large whole numbers. They aren't storing your bills or gold coins.
- mikeash 7y ago
  Yes, costs are low, but so is the potential revenue from loans right now. I never said anything about storing bills or coins.
  - JumpCrisscross 7y ago
    > so is the potential revenue from loans right now Broader interest rates are low, too. The revenue potential for banks is limited. Particularly European ones. European banks have failed to compete for investment opportunities. Negative rates push that onus back onto savers.
- floatingatoll 7y ago
  “Zero-cost excluding the cost of insurance” is more precise here. Bitcoin is zero-cost^ to store for any dollar amount. So are gold bars. Insuring them against theft and loss is not zero-cost. A shovel for burying gold in your yard is cheap (high capex, low opex), but if a sinkhole opens up and eats your gold, you’re probably out of luck. A hard drive for your Bitcoin is cheap (high capes, low opex), but if a lightning bolt burns your house down and you aren’t paying for offsite backups, you might be out of luck. What degree of loss do you wish to insure against (accident, damage, theft, loss) — and what percentage of your money are you willing to spend on that? ^ “I bury coins on my land” seems zero-cost, but it just means that you’re paying property tax to insure against treasure hunters uncovering your hoard with a metal detector. External costs need to be accounted for.

You’re the second reply who seems to think that I have no idea how banks actually work or why they can often pay interest. Did you just skip my second paragraph, or what’s the deal?

Zhenya 7y ago

I read your second paragraph. There is almost a zero-cost to storing the money and as the account size grows the cost to transact on this account per dollar of storage also approaches zero. Meanwhile the lending power of the bank multiples by large whole numbers. They aren't storing your bills or gold coins.

mikeash 7y ago
Yes, costs are low, but so is the potential revenue from loans right now. I never said anything about storing bills or coins.
- JumpCrisscross 7y ago
  > so is the potential revenue from loans right now Broader interest rates are low, too. The revenue potential for banks is limited. Particularly European ones. European banks have failed to compete for investment opportunities. Negative rates push that onus back onto savers.
floatingatoll 7y ago
“Zero-cost excluding the cost of insurance” is more precise here. Bitcoin is zero-cost^ to store for any dollar amount. So are gold bars. Insuring them against theft and loss is not zero-cost. A shovel for burying gold in your yard is cheap (high capex, low opex), but if a sinkhole opens up and eats your gold, you’re probably out of luck. A hard drive for your Bitcoin is cheap (high capes, low opex), but if a lightning bolt burns your house down and you aren’t paying for offsite backups, you might be out of luck. What degree of loss do you wish to insure against (accident, damage, theft, loss) — and what percentage of your money are you willing to spend on that? ^ “I bury coins on my land” seems zero-cost, but it just means that you’re paying property tax to insure against treasure hunters uncovering your hoard with a metal detector. External costs need to be accounted for.