Topic: Bitcoin will do to the banks, what email did to the post office. True or false? (Read 3775 times)

Sounds like a win-win to me.  Paper is going out the window; it takes too long to move around, and can get quite heavy if you have a lot of writing.  I can't remember the last time I mailed a letter...

At best, the postal office would stick around simply to deliver packages.  I'm okay with that, as long as it stops being subsidized.

Thank you for those links

But remember that there is more than just the USD.

Take the UK's hierarchical system:

We have CHAPS as the GBP RTGS, equivalent to Fedwire for the USD.

But we also have systems such as BACS, Faster Payments and other deferred net settlement systems (which I guess also includes Visa/MC settlement, etc) that do internal netting and then settle gross over CHAPS.  People use them because they're cheaper and offer other advantages (e.g. related to liquidity requirements or membership rules)

That is: in my mental model, I see BTC+Bitcoin Network as an analogue of USD+Fedwire or GBP+CHAPS.

The key question, thus, is:  do we see the Bitcoin network scaling to the point that the deferred net settlement systems (e.g. BACS) are not required?  Or do we expect this federated/hierarchical approach to emerge in the Bitcoin world too?

My prediction is that, just as BACS and Faster Payments in the UK would continue to exist, even if everybody was allowed to use CHAPS, I predict that net settlement systems for BTC will crop up, which internalise transactions where possible and settle gross amounts over the Bitcoin network as required.... even if Bitcoin network scalability is a non-issue or transaction charges don't become prohibitive for small transactions.

But I guess time will tell.

(and sorry...  I feel like I'm banging on about this on a thread that isn't really about payment systems, which wasn't my intention....)

Current ACH system (which is mainly Federal Reserve), probably yes.

Banks, probably not.

Post office was not killed by email because it was subsidized by printed fiat money. Bitcoin will kill fiat, so the postal office won't be subsidized, so it would need either to shut down or provide a competitive service at higher prices. Since much less number of letters would be sent over for fair high prices, the total amount of paper mail will be greatly reduced. And digital contracts will replace the need to transfer paper certificates and ink signatures.

I like that banks can insure my deposits, so even if they screw up I'm not screwed.  Mt.Gox did themself a big favor by recovering from their early hacking, intact.

The other side of bitcoin is that a bunch can't be printed overnight to bail a government out of debt at everyone else's expense.  A bank can hold bitcoins as well as any other currency, don't see how bitcoin replaces it there.  Government seizure/liens of bank balances is a big negative against banks, though.

Thanks. Arrogance noted

www.falkvinge.net/2011/05/11/with-the-napster-of-banking-round-the-corner-bring-out-your-popcorn/
that is a great article

First ask http://www.downforeveryoneorjustme.com

Then try another browser.

You got it

Love your view. World changing prophecy

if that is true, we will maybe experience a major depression and crisis.

who invests in stocks if people at large prefer to keep bitcoins under their mattresses?

all that may prevent this from happening is if Bitcoin is considered a risky asset itself.

Agree.

Banks are not only in the business of managing money and payments, they are also in the business of managing risk.

The market for risk management isn't going to disappear because of bitcoin.

OP: add a poll at the top please.

email annihilated the post office like mobile phones did fixed lines

bitcoin will massacre hard cash and traditional bank accounts

stocks and shares will start to mirror their bitcoin worth along, with bonds and derivatives

citizens business the government and major corporations will need capitalizing with bitcoin

anyone who cant use a computer is going to need to learn which will most likely be

the easiest form of phone with wallet app



 

Not everybody was paying attention a couple years ago Jaagu. I certainly wasnt.
I clicked on your link, but it didnt work. Is it no longer current? I'd love to check it out if you can provide a current link plz?

Thank you for that comprehensive reply nwbitcoin. You make some very good and interesting points. It also accurred to me banks might take advantage of bitcoin. Unfortunately bitcoin might pioneer a wonderful new concept, which is then picked up by, and exploited by big business. Despite of, or maybe because of the banks invested interests in money transactions, they might be the ones to do so. Only time can tell

The future always brings change, it isn't one thing that causes it, although one thing can lead to another, which leads to another etc.

Email has changed the post office, however, it might be useful to get our diaries sync'ed!

Email was invented in 1973.  The post office only started noticing email in the late 90s, but mostly in the last 5 years.

The reason email has had an effect on this, is also connected to the way that companies interact with their customers.  They started sending their bills by email, so the amount of official post went down. We also had the introduction of direct debit as a way to pay bills, so we didn't need so much of our accounting information sent to us.  It wasn't just because of eBay and Amazon that the post office is having problems. People, generally, didn't send letters to each other on the scale that we send emails.

With that background, how much do you think bitcoin is going to effect the banks?

If anything, the internet has already effected the banks, and bitcoin is a bit late to that party.  Local branches are disappearing, and the whole banking experience is very centralized. The difference with bitcoin, compared to email is that its not the same analogy.

Bitcoin is just a variation of what the banks are already doing.  If you want to pay a factory in China, you just talk to your bank who will arrange it.

What bitcoin offers is a cheaper way to do it.

If bitcoin takes off, I wouldn't be surprised to see that the biggest users of it will become banks - after all they already know all the people who would gain from using it.

If you want a better analogy, think of how VOIP didn't kill the International telecom giants like many thought it would, it just became another of the products they offered!

Yawn.
This topic was covered by Falkvinge couple years ago:
With The Napster of Banking Round The Corner, Bring Out Your Popcorn
by Rick Falkvinge
http://falkvinge.net/2011/05/11/with-the-napster-of-banking-round-the-corner-bring-out-your-popcorn

+1

In all respect, I have not implied email has killed or is killing the post office. And therefore I have not implying bitcoin will kill the banks either. And for the record, I agree with your other opinions.
I am simply pointing out, it had profound implications for the postal business. The post office used to see itself primarily as a letter delivery service, and also parcels. Can you imagine their fears when somebody told them email had arrived? It took them years to adjust and arrive at the diversified business they are today. And a great business they are too.
I think this post is a fair, if not a perfect analogy. Money users can now transact instantly at no cost, and without the banks service. Assuming bitcoin finds its place in the mainstream, which I hope it does, then I think History will show banks profoundly effected. And they will adjust and they will likely prosper. But perhaps a little more honest for not having complete control of our money.