Topic: Bitbank proposal - page 2. (Read 2172 times)
Your idea sounds a lot like https://bitcointalksearch.org/topic/ripple-lets-test-it-145896
Open source or not, isn't anything that has to do with banks what Bitcoin is against?
I wasn't aware that Bitcoin was against banks per se. The idea for Bitcoin was created as early as 2006 before the banking crisis even started. Your local bank is still trustworthy even though the Too Big To Fails seem to have gone off the rails. Also, anyone can open their own bitbank as long as other people trust them to store their coins.
I don't think so holding coins is good idea but banks could still be useful because they could simply allow buying or selling bitcoins throughout them or allow transferring money using bitcoins.
I agree that it would be quite useful for banks to act as bitcoin exchanges. And they might choose to do that instead. While that would make the Bitcoin system more convenient and stable, it would not make it more efficient, and would not enable instant settlement of transactions, as the bitbank proposal attempts to do.
Open source or not, isn't anything that has to do with banks what Bitcoin is against?
I wasn't aware that Bitcoin was against banks per se. The idea for Bitcoin was created as early as 2006 before the banking crisis even started. Your local bank is still trustworthy even though the Too Big To Fails seem to have gone off the rails. Also, anyone can open their own bitbank as long as other people trust them to store their coins.
I'm sure most banks won't sign up. The other day I was reading about Netflix and how they tried to form a partnership with Blockbuster for local delivery, and BB just laughed at them. Now BB is bankrupt!
Anyway, they don't like someone running their own personal bank inside the bank, with potential for anonymous drugs or money laundering going through there, and creating huge amounts of cash transactions with probably little profit for the bank. With the bitbank, though, you would simply be performing trusted, probably not anonymous transactions with local individuals and businesses. It is less risky for the bank, thus they have not as much reason to be against it.
I think it was discussed and many agree that it will happen as a natural next step. I'm not sure about open source banking software though, as real-world banks don't like to use that kind of software. Of course entirely new, bitcoin-only banks might come into existence, but there would be an entirely different game if some real-world banks adopted that and started providing bitcoin banking. Bitcoin would instantly get much better credibility and confidence from general population.
With new banks created by bitcoin entrepreneurs you'll have another problem. These deposits won't be insured as real-world insurance companies won't bother to understand what the company is doing and what are the risks involved. And personally I trust more cold storage wallets that I properly secured on my own than some virtual banking company that came out of the blue. You wouldn't want to put your savings there and get an email from your bitcoin bank one day telling: “Hello, we've been hacked. All funds were stolen. We are ceasing operations and shutting down. kthxbye”.
With new banks created by bitcoin entrepreneurs you'll have another problem. These deposits won't be insured as real-world insurance companies won't bother to understand what the company is doing and what are the risks involved. And personally I trust more cold storage wallets that I properly secured on my own than some virtual banking company that came out of the blue. You wouldn't want to put your savings there and get an email from your bitcoin bank one day telling: “Hello, we've been hacked. All funds were stolen. We are ceasing operations and shutting down. kthxbye”.
Small banks would probably appreciate the open-source software since they would lack the resources and expertise to develop their own. Large banks could develop their own custom software if they like.
Cold storage is useful and secure, but it just refers to offline storage of coins. That's the equivalent of putting your money in a secure vault at home, I think. While I'm sure this is quite useful, it addresses a somewhat different problem than banking. On the other hand, in the bitbank proposal, the bank kind of acts like a vault too. It takes bitcoins out of circulation and instead swaps ledger entries. In a way, that seems like an even safer way to spend your bitcoins. It is equivalent to putting your gold (that is, bitcoins) in a vault and using paper money (that is, bitbank ledger entries) to represent them in common usage. That makes your gold safe in the vault while enabling even more convenient transactions.
I hadn't thought about the insurance problem. Although of course, none of your bitcoins are insured now, so that is not really a step backward from the present situation.
Open source or not, isn't anything that has to do with banks what Bitcoin is against?
I wasn't aware that Bitcoin was against banks per se. The idea for Bitcoin was created as early as 2006 before the banking crisis even started. Your local bank is still trustworthy even though the Too Big To Fails seem to have gone off the rails. Also, anyone can open their own bitbank as long as other people trust them to store their coins.
I don't think so holding coins is good idea but banks could still be useful because they could simply allow buying or selling bitcoins throughout them or allow transferring money using bitcoins.
it's an adapt or cease evolution.
the banking system would be smart to early adapt, but the bottleneck with banking adaption does not have to do with open source software,
it's a tipping point when holding on to the system that feeds them right now won't be worth the profit divided by risk of the new system...
so essentially the bottleneck is brain power
the banking system would be smart to early adapt, but the bottleneck with banking adaption does not have to do with open source software,
it's a tipping point when holding on to the system that feeds them right now won't be worth the profit divided by risk of the new system...
so essentially the bottleneck is brain power
legendary
Activity: 1862
Merit: 1011
Reverse engineer from time to time
Open source or not, isn't anything that has to do with banks what Bitcoin is against?
I wasn't aware that Bitcoin was against banks per se. The idea for Bitcoin was created as early as 2006 before the banking crisis even started. Your local bank is still trustworthy even though the Too Big To Fails seem to have gone off the rails. Also, anyone can open their own bitbank as long as other people trust them to store their coins.
I think it was discussed and many agree that it will happen as a natural next step. I'm not sure about open source banking software though, as real-world banks don't like to use that kind of software. Of course entirely new, bitcoin-only banks might come into existence, but there would be an entirely different game if some real-world banks adopted that and started providing bitcoin banking. Bitcoin would instantly get much better credibility and confidence from general population.
With new banks created by bitcoin entrepreneurs you'll have another problem. These deposits won't be insured as real-world insurance companies won't bother to understand what the company is doing and what are the risks involved. And personally I trust more cold storage wallets that I properly secured on my own than some virtual banking company that came out of the blue. You wouldn't want to put your savings there and get an email from your bitcoin bank one day telling: “Hello, we've been hacked. All funds were stolen. We are ceasing operations and shutting down. kthxbye”.
With new banks created by bitcoin entrepreneurs you'll have another problem. These deposits won't be insured as real-world insurance companies won't bother to understand what the company is doing and what are the risks involved. And personally I trust more cold storage wallets that I properly secured on my own than some virtual banking company that came out of the blue. You wouldn't want to put your savings there and get an email from your bitcoin bank one day telling: “Hello, we've been hacked. All funds were stolen. We are ceasing operations and shutting down. kthxbye”.
Open source or not, isn't anything that has to do with banks what Bitcoin is against?
I wasn't aware that Bitcoin was against banks per se. The idea for Bitcoin was created as early as 2006 before the banking crisis even started. Your local bank is still trustworthy even though the Too Big To Fails seem to have gone off the rails. Also, anyone can open their own bitbank as long as other people trust them to store their coins.
legendary
Activity: 1862
Merit: 1011
Reverse engineer from time to time
Open source or not, isn't anything that has to do with banks what Bitcoin is against?
Whats the next step - local banks can do fractional reserve lending of BTC?
BTC would have to be recognized as a financial asset by the system for that to happen, otherwise I don't think banks could lend against them. If they were considered an asset, the banks could buy bitcoins and make loans against them even without "bitbank" software. Although I was thinking of a cash transfer system, not of fractional reserve lending, which I am not a big fan of as such. Also, I am not a bankster, just a bitcoin fan!
I think whether we want it or not, OP's idea is something that is bound to happen in a near future.
Whats the next step - local banks can do fractional reserve lending of BTC?
I have an idea for a new type of software to work with Bitcoin. I call it the "Bitbank". This isn't a modification of the Bitcoin software itself, but rather an additional layer of software to wrap around Bitcoin in order to improve its functionality. It could work with any altcoin that uses a similar peer-to-peer transaction system, not just Bitcoin.
A Bitbank would be a separate open source project from Bitcoin to implement a standardized banking system for bitcoins. The idea is that a trusted 3rd party, your local bank, stores your bitcoins for you. They also cooperate with local businesses that accept bitcoins, who have an account there. They keep a separate internal ledger from bitcoins that maintains everyone's balance. Whenever a local transfer occurs, they instantly make a balance adjustment without actually transferring any bitcoins.
Whenever an accumulation of interbank transfers of sufficient size occurs, they can actually broadcast the transaction to other bitbanks or users, thus settling it. If there were a trusted network of bitbanks, they could speed this process up as well. Two bitbanks within the network could transfer funds on a ledger between them throughout the day, and only settle accounts when the difference exceeded a certain threshold ($100,000) or a certain time period (1 day). Thus purchases could be made throughout the network continuously and only be settled intermittently. Unlike Bitcoin, these transactions would be based on a certain level of trust, which would imply some type of real-world accountability to contract or law, or a business relationship, before it would work.
This would greatly reduce the amount of actual bitcoin transactions needed, thus taking pressure off the network. The bitcoin network would resemble more an "interbank clearing network" than an "all to all transaction network". Since small transactions, such as buying a cup of coffee, only result in an internal ledger entry in the bank, they can be done instantly. Furthermore, having less transactions on the network makes it run faster overall (solves "confirmation delay" problem).
Given the existence of such software, it can be promoted to local banks and businesses, so they can start offering bitcoin services with less effort to their regular customers (solves "Little or No Usage outside collection and exchange" problem).
Banks on an existing network trust each other, thus they can collaboratively defragment the bitcoin base. A bank can also do this internally. The reduction of actual bitcoin transactions also helps reduce fragmentation and loss (solves the "bit dust" problem).
Your local bank or business can convert cash or bank balance to bitcoins on the spot (solves the "Lack of Decentralized Exchange Mechanism" problem).
Finally, the bank can offer services at their existing branches and ATMs denominated in bitcoins, with support for the general public (solves the "Difficult for non-technical users to adopt" problem).
This proposal has the additional benefits:
* Works with existing Bitcoin or altcoin network and does not require new currency creation
* Users don't have to act as their own bank and worry about accidental deletion, loss or theft of bitcoins
* Users can "bank with bitcoin" without even owning a computer
* Participation by existing financial institutions gives bitcoin an air of legitimacy
* Does not prevent existing anonymous, decentralized use of Bitcoin
I notice there is already at least one place calling itself a "bitcoin bank" (http://www.flexcoin.com/) that is trying to solve bitcoin problems by wrapping its software in a banking layer. I think that is a good idea.
In addition, Bitcoin is already evolving toward a banking model given the high cost of storing a full transaction chain and performing mining operations. This would help it along in the right direction.
Thoughts, anyone?
TL;DR - Imagine a new open source software called a Bitbank that stores a collection of bitcoins, enabling intrabank and interbank transfers that are much faster and more efficient, while using the existing Bitbank network for clearing interbank transactions. Why not?
A Bitbank would be a separate open source project from Bitcoin to implement a standardized banking system for bitcoins. The idea is that a trusted 3rd party, your local bank, stores your bitcoins for you. They also cooperate with local businesses that accept bitcoins, who have an account there. They keep a separate internal ledger from bitcoins that maintains everyone's balance. Whenever a local transfer occurs, they instantly make a balance adjustment without actually transferring any bitcoins.
Whenever an accumulation of interbank transfers of sufficient size occurs, they can actually broadcast the transaction to other bitbanks or users, thus settling it. If there were a trusted network of bitbanks, they could speed this process up as well. Two bitbanks within the network could transfer funds on a ledger between them throughout the day, and only settle accounts when the difference exceeded a certain threshold ($100,000) or a certain time period (1 day). Thus purchases could be made throughout the network continuously and only be settled intermittently. Unlike Bitcoin, these transactions would be based on a certain level of trust, which would imply some type of real-world accountability to contract or law, or a business relationship, before it would work.
This would greatly reduce the amount of actual bitcoin transactions needed, thus taking pressure off the network. The bitcoin network would resemble more an "interbank clearing network" than an "all to all transaction network". Since small transactions, such as buying a cup of coffee, only result in an internal ledger entry in the bank, they can be done instantly. Furthermore, having less transactions on the network makes it run faster overall (solves "confirmation delay" problem).
Given the existence of such software, it can be promoted to local banks and businesses, so they can start offering bitcoin services with less effort to their regular customers (solves "Little or No Usage outside collection and exchange" problem).
Banks on an existing network trust each other, thus they can collaboratively defragment the bitcoin base. A bank can also do this internally. The reduction of actual bitcoin transactions also helps reduce fragmentation and loss (solves the "bit dust" problem).
Your local bank or business can convert cash or bank balance to bitcoins on the spot (solves the "Lack of Decentralized Exchange Mechanism" problem).
Finally, the bank can offer services at their existing branches and ATMs denominated in bitcoins, with support for the general public (solves the "Difficult for non-technical users to adopt" problem).
This proposal has the additional benefits:
* Works with existing Bitcoin or altcoin network and does not require new currency creation
* Users don't have to act as their own bank and worry about accidental deletion, loss or theft of bitcoins
* Users can "bank with bitcoin" without even owning a computer
* Participation by existing financial institutions gives bitcoin an air of legitimacy
* Does not prevent existing anonymous, decentralized use of Bitcoin
I notice there is already at least one place calling itself a "bitcoin bank" (http://www.flexcoin.com/) that is trying to solve bitcoin problems by wrapping its software in a banking layer. I think that is a good idea.
In addition, Bitcoin is already evolving toward a banking model given the high cost of storing a full transaction chain and performing mining operations. This would help it along in the right direction.
Thoughts, anyone?
TL;DR - Imagine a new open source software called a Bitbank that stores a collection of bitcoins, enabling intrabank and interbank transfers that are much faster and more efficient, while using the existing Bitbank network for clearing interbank transactions. Why not?
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