Topic: Can bitcoin fill the void in a bank run? - page 2. (Read 3612 times)

Can bitcoin fill the void in a bank run?

No. Next question? 

A good argument could be made for bitcoin appreciating dramatically more than precious metals because it can be traded across space and time electronically. Physical gold and silver couldn't do this. Simply put, bitcoin is easier to carry, protect and trade with. It is arguably a better medium of exchange when compared to physical gold and silver.

Yes, but the point is that they don't have that much physical cash on hand to meet the demand. Cranking up the printing presses requires some lead time. During that interim period banks would likely shut down and barter would be order of the day. But I could be wrong...

A bank run like the ones that happened pre-fed days are not likely to happen, because the Fed backs all banks 100%. If people start withdrawing cash like crazy from their bank accounts, the Fed simply orders cash to be printed as it is necessary. Of course people would be holding on to pieces of paper with nothing to actually back it up.

@cypherdoc: Yes, I too was amazed to see the the USD and Treasuries soar while gold and silver plummeted during the '08 crisis but the next time around (as alluded to in the article) it would be the dollar itself that gets broken. It wouldn't be its' own "safe-haven".

I see how there could be demand for physical dollars but the reason there would be a demand is so that people could get out of them and convert them into a stronger currency. So what I see, in the scenario described in the article, is that the physical dollar would still drop against all other currencies (otherwise there wouldn't be a bank run in the first place) but the digital dollars would drop dramatically more in value.

A recent example is Argentina during the debt default of 2000. The peso lost 60% +/- against the dollar. There was still a huge demand for physical pesos but the banks simply closed while the value of the peso continued to drop. Physical cash virtually disappeared and people had to resort to barter if they didn't have US dollars or pesos to trade with.

So this time around the dollar wouldn't be the "safe haven", it would be what everyone is trying to get out of. Because of this I can see bitcoin and precious metals rising significantly as the new "barterable items of choice" since most Americans don't hold other currencies (at least in Argentina a lot of people held US dollars). But I could be missing something.

BTCs value would undoubtedly not be this high (or previously in the 30s) if not for the weakness of the global economy. That said, it seems like a turnaround is a long ways away. Whatever happens, diversification is always the best bet and a lot of people seem to forget this when excited about a new opportunity.

My fear as well.  However, in the event things get even worse, I'd like to be as diversified as possible.  BTC is just another layer of diversification for me.  Fortuntely, a vast majority of my wealth isn't in BTC so if things getting better with the global economy is the worst case scenario for BTC, I guess I can deal with that.

nice reference Steve.

this is actually the crux of the debate about what will happen to the USD in the next crisis (which just might happen to be upon us). 

in 2007-09 i shorted the broad stock mkt correctly but my call on commodities was incorrect as i thought gold, silver, and PM stocks would rise.  not so.  we had an outright deflationary wave that almost took out the entire US economy and the USD and UST's paradoxically rallied.  this only lasted about 6-8 mo and is an episode we have rarely seen in US history.  this was very educational for me and i think we may be on the precipice of another deflationary wave which will be longer and deeper than 2008.  this goes against all conventional wisdom but if you read this article carefully and understand what its saying, the USD will rise once again and not stop until all the bad debt is washed out.

my fear for Bitcoin is that it gets taken down as well since one could argue it is an inflationary reaction to all the quantitative easing we've had the last 3 yrs.  i fear this even more a network protocol break.

No.
It cant do nothing to prevent the difficulties of a bank run while it is happening.
Things went wrong long before that.

Reading the following article and got to thinking how those of us holding bitcoin and bullion (vs. bank deposits) would be in pretty good shape should the following event happen:

What An American Bank Run Would Look Like

http://www.zerohedge.com/article/what-american-bank-run-would-look