Topic: Bitcoin could stand to have certificates backed by BTC (Read 640 times)

Banks tend to operate at 3% http://en.wikipedia.org/wiki/Net_interest_margin or higher. Plus there are exchange rates and myriads of other fees. In the 1700s, this may have been a great idea, but isn't cryptocurrency a better idea? Time will tell.

Centralized funds are fine by me as a means of getting money where it needs to go, such as lent to entrepreneurs or issued as currency such as a money order.  The more people using the currency, the more regular the price of it will become, so anything lending to enhanced utilization would be positive I think.  In the late 1700s in North America some of the bank currencies were more stable and worth more than the government issued currencies.

Another 2c:

( The deflationary nature of bitcoin is also sometimes argued on here as the reason it could not be well used for lending, but I think the only obstacle is to tie contracts to some more standardized value of goods like the USD price of wheat or exchange rate.  In that event even if the value of BTC was inflating in relation to the USD or whatever, the contract would still not require a fixed amount of BTC but rather an amount modified against purchasing power of some other unit of measure -- basically what the US should have been doing over the past years in business instead of inflating the money supply at the source which inevitably leads to the destabilizing economic disparities we see today. The point of the fed was to expand and contract the money supply as needed, but all they've done over the past 50 years is inflate it. )

A 1% transaction fee would command a high priority for miners/auditors on the bitcoin network. I'm not sure if a bank could even operate at a 2% margin. You can convert bitcoin to tangible forms to "sneakernet" them around, but they will still need the bitcoin network to verify a transaction. If you bring a bank into the transaction, you are going outside the bitcoin network, which is fine if you trust centralized funds. Hopefully, bitcoin devs will engineer a solution for this need.

Once of the problems with bitcoin is liquidity.  The idea would be for someone to produce difficult to counterfeit certificates (like actual currency) that could be exchanged for bitcoin itself.  The way it could do this would be to mail the certificates somewhere after writing your address on them, and then the BTC would sent to that address, after which the end user could exchange it for currency or whatever.  The "bank" could take 2% or whatever fee when issuing the currency or redeeming it, eg if you buy a 10BTC bill you would pay 10.20BTC for it for the convenience of a bill.

This would be one of the easier ways that BTC could be used by people to trade for real goods in real time.  This way, no long wait times for BTC for confirmations or whatever -- it would basically be normal cash that'd be easy for even non-tech saavy people to use.

Probably not the first person with this thought -- what do you guys think?  Further it'd be even more anonymous as there would be no more block chain/transaction records that indicated anything meaningful since BTC would constantly be coming or going from the "bank" to whomsoever.