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Ooh, a crypto bank could be cool. Maybe the bank could create its own class of coin, and make it so that each bank_coin can be redeemed for a btc they have in d

Ooh, a crypto bank could be cool. Maybe the bank could create its own class of coin, and make it so that each bank_coin can be redeemed for a btc they have in deposits. Since not everyone needs their btc often since they're hodling all the time, the bank could probably lend out more bank_coins than they have bitcoin to help others get access to more assets and get a return on the loans. As long as everyone didn't withdraw at the same time it'd probably be fine.

throwaway6734 5y ago
They could also provide protections for end users so that if there are fraudulent transactions they could work with other banks to undo transactions. Wow this is such an advancement in banking and finance!
- spywaregorilla 5y ago
  Probably need some sort of central org to agree on a fair rate bank_coin / btc to avoid a race to the bottom though
  - deleted 5y ago
    [deleted]
- base698 5y ago
  From 2010: While this view of Bitcoin might sound like it is a betrayal of Bitcoin's original vision of fully peer‐to‐peer cash, it is not a new vision. Hal Finney, the recipient of the first Bitcoin transaction from Nakamoto, wrote this on the Bitcoin forum in 2010: Actually there is a very good reason for Bitcoin‐backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases. Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others. George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self‐regulating.
  - spywaregorilla 5y ago
    That's one hell of year to say "You know, I think banks should be able to choose whatever fractional reserve rate they want"
retube 5y ago
amazing how everything gets rediscovered :)
- wyager 5y ago
  This patronizing line of commentary is so tiresome. I guarantee the median Bitcoin industry participant has an excellent knowledge of banking history. Half the people in Bitcoin are there because they’re aware of the trends in fiat money since Executive Order 6102, August 15th 1971, etc.
  - spywaregorilla 5y ago
    When I google btc price, all of the headline news articles are about elon musk making memes.
giaour 5y ago
There could be some kind of Crypto Deposit Insurance Corporation (CDIC) to insure deposit accounts in case everyone does try to withdraw at the same time. You might want an entity with deep pockets and serious longevity (like maybe a sovereign state?) to offer that so you could trust that it would exist for the foreseeable future
- lisper 5y ago
  What a great idea! The sovereign state could even offer loan guarantees to help stabilize the system during financial crises. Wow, crypto is really turning into a game-changing innovation!
  - doggosphere 5y ago
    Your state would eventually fail, but the core decentralized blockchain lives on.
    - jakeva 5y ago
      Assuming there is still a power grid
  - MR4D 5y ago
    Well, then you need to set up a Federal Cryptocurrency Reserve System (FCRS) in the US, and a European Cryptocurrency Central Bank (ECCB). And if that happens, you probably need a World Cryptocurrency Bank, and an International Cryptocurrency Fund as well. Wow, things are going to get fun!
analyst74 5y ago
They can also spin off an insurance arm called Crypto Deposit Insurance Corp, and provide CDIC insurance to depositors in case their bank becomes insolvent.
- spywaregorilla 5y ago
  Greatly amused that were a little later than the other comment but arrived at the same acronym
  - arthurcolle 5y ago
    I mean, what else would you call it? It's not really that clever IMO. But yes, I see the recreation of all these traditional institutions but with a crypto flavoring to be a little unnecessary and instead of reinvisioning specific financial instruments and other types of financial products, people are just reskinning the same underlying products + mechanisms.
tudelo 5y ago
I mean, the idea of trading one coin for a "new" coin is pretty wide spread now. And the coin can be printed by the contract owner, if they specify it that way. So if people want to buy in to that system they totally can, and it can exist now. Its surprisingly easy to create your own coin, and the nice part about creating smart apps on blockchains is that you don't have to worry about hosting.
iSnow 5y ago
I think some kind of IOUs would work really well here! While we are at it, we also could do this for USD on the blockchain. We could say "tether" them while embezzling the real USD.
Seattle3503 5y ago
> Since not everyone needs their btc often since they're hodling all the time, the bank could probably lend out more bank_coins than they have bitcoin to help others get access to more assets and get a return on the loans. I know you're trying to be cute, but the SPDI charter that Kraken Bank has prohibits fractional reserves. Kraken must hold your deposit.
- joemazerino 5y ago
  For now ;D
- spywaregorilla 5y ago
  I tried looking that up and found this: https://bpi.com/beware-the-kraken/#_ftn1 https://bpi.com/beware-the-kraken/#_ftn1 > If Kraken Financial had been in full operation in March 2020, it may not only have ended up insolvent by mid-March but would likely have been subject to a bank run. In practice, it has more in common with a prime money market fund than a bank. Sounds about right
  - Seattle3503 5y ago
    BPI isn't an impartial source of information. They are essentially a think tank / lobby group for incumbent banks. See their about page: https://bpi.com/about-us https://bpi.com/about-us
    - spywaregorilla 5y ago
      Maybe? Their thesis seems pretty straightforward though. Kraken deposits are uninsured. Kraken intends to invest your deposits in fixed income assets, which are vulnerable to capital losses if interest rates rise, among other things (e.g. corporate bonds). If these investments go negative, Kraken will have less than 100% reserves and there's no insurance to help customers, so the rational thing to do is withdraw all assets before others do.
      - Seattle3503 5y ago
wyager 5y ago
You joke, but a lot of BTC advocates would probably be satisfied if we still had a gold-backed dollar. A paper note backed by BTC is at least marginally better than a paper note backed by nothing.
- hcknwscommenter 5y ago
  > A paper note backed by BTC is at least marginally better than a paper note backed by nothing. Assuming you are believe the US dollar is a paper note "backed by nothing." Many people strongly disagree with this statement.
  - UncleOxidant 5y ago
    The US dollar is backed by a large military and nuclear weapons. I don't get these people who are always saying "it's backed by nothing".
    - wyager 5y ago
      > The US dollar is backed by a large military and nuclear weapons. This is a meaningless statement. Please explain explicitly how you think nuclear weapons ensure that the dollar has some trade value. The US government doesn’t offer nuking privileges at a fixed price, to my knowledge.
      - hcknwscommenter 5y ago
        The U.S. government collects taxes throughout the world and those taxes MUST be paid in US dollars. Most international trade eventually (if not exclusively) passes through the dollar system. Since no jurisdiction is entirely self-reliant, basically all aspects of the economic system touch on the dollar directly or indirectly. That tax collection is enforced by an apparatus with many levers of power including, but not limited to, the military and its nuclear weapons. So yes, the dollar is backed by the threat of nuclear annihilation in some sense.
- spywaregorilla 5y ago
intev 5y ago
I know you're being sarcastic but you know what has happened? All these exchanges issued their own tokens that is backed by NOTHING and have their own tokenomics. One of the reasons people assigned value to those tokens was the more you owned the larger discount you got in trading fees. In same cases better savings rate. What's funny is it started the same way your clever little remark did but it didn't end the same way. I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement.
- spywaregorilla 5y ago
  > I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement. I mean yeah. Traditional banking is very lucrative, especially at lower reserve requirements and capital investment regulations.

throwaway6734 5y ago

They could also provide protections for end users so that if there are fraudulent transactions they could work with other banks to undo transactions. Wow this is such an advancement in banking and finance!

spywaregorilla 5y ago
Probably need some sort of central org to agree on a fair rate bank_coin / btc to avoid a race to the bottom though
- deleted 5y ago
  [deleted]
base698 5y ago
From 2010: While this view of Bitcoin might sound like it is a betrayal of Bitcoin's original vision of fully peer‐to‐peer cash, it is not a new vision. Hal Finney, the recipient of the first Bitcoin transaction from Nakamoto, wrote this on the Bitcoin forum in 2010: Actually there is a very good reason for Bitcoin‐backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases. Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others. George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self‐regulating.
- spywaregorilla 5y ago
  That's one hell of year to say "You know, I think banks should be able to choose whatever fractional reserve rate they want"

retube 5y ago

amazing how everything gets rediscovered :)

wyager 5y ago
This patronizing line of commentary is so tiresome. I guarantee the median Bitcoin industry participant has an excellent knowledge of banking history. Half the people in Bitcoin are there because they’re aware of the trends in fiat money since Executive Order 6102, August 15th 1971, etc.
- spywaregorilla 5y ago
  When I google btc price, all of the headline news articles are about elon musk making memes.

giaour 5y ago

There could be some kind of Crypto Deposit Insurance Corporation (CDIC) to insure deposit accounts in case everyone does try to withdraw at the same time. You might want an entity with deep pockets and serious longevity (like maybe a sovereign state?) to offer that so you could trust that it would exist for the foreseeable future

lisper 5y ago
What a great idea! The sovereign state could even offer loan guarantees to help stabilize the system during financial crises. Wow, crypto is really turning into a game-changing innovation!
- doggosphere 5y ago
  Your state would eventually fail, but the core decentralized blockchain lives on.
  - jakeva 5y ago
    Assuming there is still a power grid
- MR4D 5y ago
  Well, then you need to set up a Federal Cryptocurrency Reserve System (FCRS) in the US, and a European Cryptocurrency Central Bank (ECCB). And if that happens, you probably need a World Cryptocurrency Bank, and an International Cryptocurrency Fund as well. Wow, things are going to get fun!

analyst74 5y ago

They can also spin off an insurance arm called Crypto Deposit Insurance Corp, and provide CDIC insurance to depositors in case their bank becomes insolvent.

spywaregorilla 5y ago
Greatly amused that were a little later than the other comment but arrived at the same acronym
- arthurcolle 5y ago
  I mean, what else would you call it? It's not really that clever IMO. But yes, I see the recreation of all these traditional institutions but with a crypto flavoring to be a little unnecessary and instead of reinvisioning specific financial instruments and other types of financial products, people are just reskinning the same underlying products + mechanisms.

tudelo 5y ago

I mean, the idea of trading one coin for a "new" coin is pretty wide spread now. And the coin can be printed by the contract owner, if they specify it that way. So if people want to buy in to that system they totally can, and it can exist now. Its surprisingly easy to create your own coin, and the nice part about creating smart apps on blockchains is that you don't have to worry about hosting.

iSnow 5y ago

I think some kind of IOUs would work really well here! While we are at it, we also could do this for USD on the blockchain. We could say "tether" them while embezzling the real USD.

Seattle3503 5y ago

> Since not everyone needs their btc often since they're hodling all the time, the bank could probably lend out more bank_coins than they have bitcoin to help others get access to more assets and get a return on the loans. I know you're trying to be cute, but the SPDI charter that Kraken Bank has prohibits fractional reserves. Kraken must hold your deposit.

joemazerino 5y ago
For now ;D
spywaregorilla 5y ago
I tried looking that up and found this: https://bpi.com/beware-the-kraken/#_ftn1 https://bpi.com/beware-the-kraken/#_ftn1 > If Kraken Financial had been in full operation in March 2020, it may not only have ended up insolvent by mid-March but would likely have been subject to a bank run. In practice, it has more in common with a prime money market fund than a bank. Sounds about right
- Seattle3503 5y ago
  BPI isn't an impartial source of information. They are essentially a think tank / lobby group for incumbent banks. See their about page: https://bpi.com/about-us https://bpi.com/about-us
  - spywaregorilla 5y ago
    Maybe? Their thesis seems pretty straightforward though. Kraken deposits are uninsured. Kraken intends to invest your deposits in fixed income assets, which are vulnerable to capital losses if interest rates rise, among other things (e.g. corporate bonds). If these investments go negative, Kraken will have less than 100% reserves and there's no insurance to help customers, so the rational thing to do is withdraw all assets before others do.
    - Seattle3503 5y ago

wyager 5y ago

You joke, but a lot of BTC advocates would probably be satisfied if we still had a gold-backed dollar. A paper note backed by BTC is at least marginally better than a paper note backed by nothing.

hcknwscommenter 5y ago
> A paper note backed by BTC is at least marginally better than a paper note backed by nothing. Assuming you are believe the US dollar is a paper note "backed by nothing." Many people strongly disagree with this statement.
- UncleOxidant 5y ago
  The US dollar is backed by a large military and nuclear weapons. I don't get these people who are always saying "it's backed by nothing".
  - wyager 5y ago
    > The US dollar is backed by a large military and nuclear weapons. This is a meaningless statement. Please explain explicitly how you think nuclear weapons ensure that the dollar has some trade value. The US government doesn’t offer nuking privileges at a fixed price, to my knowledge.
    - hcknwscommenter 5y ago
      The U.S. government collects taxes throughout the world and those taxes MUST be paid in US dollars. Most international trade eventually (if not exclusively) passes through the dollar system. Since no jurisdiction is entirely self-reliant, basically all aspects of the economic system touch on the dollar directly or indirectly. That tax collection is enforced by an apparatus with many levers of power including, but not limited to, the military and its nuclear weapons. So yes, the dollar is backed by the threat of nuclear annihilation in some sense.
spywaregorilla 5y ago

intev 5y ago

I know you're being sarcastic but you know what has happened? All these exchanges issued their own tokens that is backed by NOTHING and have their own tokenomics. One of the reasons people assigned value to those tokens was the more you owned the larger discount you got in trading fees. In same cases better savings rate. What's funny is it started the same way your clever little remark did but it didn't end the same way. I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement.

spywaregorilla 5y ago
> I think the really sad part here is you think that revisiting an old problem will lead us to the exact same old solution despite decades of advancement. I mean yeah. Traditional banking is very lucrative, especially at lower reserve requirements and capital investment regulations.