Topic: Cryptobank Idea - page 2. (Read 540 times)

Yes, an interesting idea. But the problem is that the cryptocurrency market is too active. Will people want to part with their assets for a long time? During the pamps, they will not be able to sell their cryptocurrencies

There's a lot of projects/ICOs that hail themselves as blockchain banks etc, but until now there hasn't been anything resembling a real crypto-bank with fractional reserve rules etc that are self-implemented. The reason for this is quite clear: crypto is the antithesis of traditional finance. But in saying that, why couldn't there be even 1 real cryptobank?

Let's put regulations aside for a minute, and assume a crypto-bank would operate in an offshore jurisdiction that was sympathetic to autonomy of Internet tokens. The crypto-bank would never handle real-life fiat in any way, only BTC and other crypto-currencies.

It would work like this:
1) People can "deposit" BTC/ETH etc into the bank with insurance limits. Eg: Every depositor will have a 50% insurance guarantee on their total deposit.
2) Fractional reserve banking would be allowed but with a twist (I'm against FR personally but just for the idea of the project, we would allow it). The twist is this: At least 50% of deposited crypto must be kept in cold storage and cannot be touched. Compare this to traditional banks which only need to keep 20% or so. We would require a higher safety reserve due to the unpredictable and high-risk nature of crypto investments. The other 50% may be used by the crypto-bank and used for speculative but hopefully low risk investments that are based on the blockchain (well researched ICOs, trading strategies, loans etc). Again, no money is ever converted to USD or any other fiat in order to avoid financial regulations.
3) People may access their accounts and withdraw up to their full balance at any time. In the event of "Bank runs", client funds would be protected by the 50% insurance guarantee whereby 50% of all deposits are in cold storage. The cold storage will only be accessed for client withdrawal, nothing else. Obviously this is a risk to depositors, like with normal banks.
4) People holding their crypto in the crypto-bank would receive the following benefits:
- A base interest rate paid in BTC p/a, such as 5%. This could be paid monthly and have no time withdrawal restrictions. This is to pay for the risk the depositor makes that a bank run may occur and they only receive 50% of their funds. Since the risk of this would be theoretically low if the crypto-bank is reputable, only low interest is offered. Nevertheless the risk is higher than with a traditional bank, and that is why the amount is also higher.
- A time-locked savings interest contract. Like with normal banks, depositors may time-lock their deposit for a specific period of time, such as 6 months or up to 5 years. Interest here may vary between 5.1% - 50% p/a. It may reach as high as 50% p/a depending upon market conditions, such as the crypto-boom of 2017. Here it would make sense for the crypto-bank to offer a 50% interest rate p/a for a 1 year term when x10 returns were common.
- If possible, integration with International bills payment and other automatic payment services that could integrate with the crypto-bank, if the crypto-bank became large enough.
5) The crypto-bank would serve as a convenient alternative to traditional banking by offering a fully anonymous system. Unlike Swiss banking or other offshore jurisdictions which are commonly compromised, since the bank will never deal in fiat and only in crypto, no identity checks ever need to be made. The crypto-bank itself would of course be fully legal and regulated within its jurisdiction, but the jurisdiction would be chosen such that it would allow the bank to legally operate in an anonymous manner. This would be achievable by never, ever dealing with fiat directly in any way which would trigger various laws.

So what's the point of it for depositors? For people on BCT, the bank would be pointless. We're all too advanced to need it. But for regular mom and pop investors, it could be sound. Here is why:
- Most regular crypto investors store all their coins on hot wallets or exchanges, both of which are susceptible to hacking. The procedures involved with cold storage are often too complex for them, even when using hardware wallets. By allowing them to store their coins in a familiar bank environment they would feel more secure.
- Depositors would never need to deal with private keys. Once the deposit is made, they can be verified by either a secret key & pin + 2FA, or if they so choose (purely optionally) personal identity data.
- Depositors would receive regular interest on their BTC holdings with insurance. This is something that doesn't currently exist anywhere (ie: just by holding BTC you receive interest, along with insurance that protects against some of it).

The exact %'s etc mentioned above could of course be changed, but just as a general idea, I think a real crypto-bank could do quite well. Not talking about crypto-projects that want to apply for banking licenses and run a real bank, or projects that issue debit-cards that you can use your balance to pay for things, but a real traditional banking structure applied exclusively to the blockchain with fractional reserve rules and subsequent interest payouts.

I think something like this should come to fruition one day, but why not sooner?

If i am to decide for myself too, i need a place where i can transact with less fee as compared to other crypto markets. Basically, that’s the main purpose of cryptocurrency to help make payment system more easier and cheap.

The idea looks good in general but I think one of the reasons so many people is turning towards the cryptocurrency thing is to avoid fees and reduce transfer times.

My idea about about this cryptobank. Will be like this I think its about banking our money from crypto currency since its not yet happening to have cryptobank in this bitcoin industry  well its better to have I think because its just like we are investing our money . banking still have an interest of your money. Cryptobanking are for those people or bitcoin users who don't want to spend their money immediately and Better bank those.

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The idea of virtual currency bank? Why not, I fully support the establishment of virtual currency bank in the future, when the virtual currency is recognized and high value, also need a bank for storage and exchange, the establishment of banks Virtual currency will be inevitable in the future when virtual currency is gradually accepted