That's all very exciting -- everybody seems to look very forward to CRISP payouts monthly. It's also really great that it's an additional saving bonus that operates very much like the savings in your bank account. You don't have to do anything to earn it, you just rack up interest over time -- and even better there is no bank that is lending our your funds while in their possession! With DNotes CRISP payouts you are in control of your own funds at all times. All in all it makes for a much more secure way to receive interest than risking your bank doing all kinds of unsavoury / economy-threatening gambles with your money!
Lending to lenders at interest can be a sound economic decision, but I would rather have the choice to either do that with my money or not. With a bank, just by having a checking or savings account I'm basically agreeing to the bank having full use of my funds for their own gain. That's the real cost of "free" checking accounts, I guess.
This brings up a question in my mind: I know DNotes Global intends to get full banking/financial licensing--basically be a bank among other things. So, how will regular fiat money held on deposit in checking accounts (or equivalent) be treated? Will the DNotes Global bank be engaging in fractional reserve banking with fiat funds? Will it need to in order to compete? I have no judgment at this point about what would be best and I'm genuinely curious.
And I do like having DNotes that earn "interest" without needing to be available for other people's use. The way stakeholders help the DNotes economy at this point is to sit on their coins (not sell them) and for that we are rewarded through the CRISP program, and if we're handy with a wallet we can also earn more immediate rewards through staking. In the fiat world, in contrast, the way you "help" the economy with your money (at least in a way that gets *somewhat* rewarded) is by putting your funds at the disposal of your bank.
I think one of the interesting first distinctions to make is that banks lending out money owned by other people for gain has economic benefit, is quite different to what was happening pre-GFC where low interest rates basically made it impossible for banks to make money this way, so they shifted their investments into risky derivative trades -- yes banks were playing a game of roulette with the government insuring against all losses, but yes, the government was also the root cause of the entire mess by incentivising the entire thing.
As to your question regarding fractional reserve lending, putting my personal views on fractional lending aside (these are well known to anybody who has read my dcebrief material), that decision has yet to be made. Another distinction would best be made between fractional reserve lending, and the use of funds created by fractional reserve lending to play roulette with the government acting to insure against all losses.
Another important point to consider is that most lending today is now made by non-banks -- DNotes Global would not need to engage in fractional reserve lending to compete if lending becomes an industry it chooses to compete aggressively in. DNotes Global Inc has yet to determine whether it will focus primarily just on chequing and savings accounts for the sake of a cryptocurrency onramp/offramp facilities (while likely offering small business and personal loans), or whether the company will seek to aggressively compete in home loans and big business loans etc. The latter could be difficult without significant outside investment and/or the ability for fractional reserve banking. It is also a point that banks now have liquidity requirements placed on them that non-banks aren't subject to, and the next crisis is likely to start with these non-bank entities and shadow banking liquidity squeeze. At this time I don't see a DNotes Global operated bank offering loans to customers in the medium term to the types of 'high risk' customers that would see the company in any kind of default crisis were widespread economic trouble become a thing like many of the larger banks were in 07/8.
At the end of the day, DNotes Global Inc will do whatever is necessary for the betterment of the entire DNotes ecosystem. Our future plans include crypto loans, and proving that DNotes can be a preferred option to fiat money, with economic stability and no ability for any group to fractionally create limitless new tokens one of those competitive strengths. If DNotes Global Inc had a fractional reserve lending bank, it wouldn't have any effect on the competitive advantage of the DNotes ecosystem, nor the core values of DNotes itself as a group. DNotes Global would be promoting its substitute payment network with all of its advantages (one of which is equitable money creation processes / no fractional reserve lending), which wouldn't be affected by having a fiat loan issuing bank, and neither would the fiat world notice the difference if DNotes Global opted not to go that route. The company would merely be participating in a well-established industry for the betterment of its competing substitute currency.
Thank you all for your support and participation in a lot of very interesting and engaging discussion. I had been tempted to participate a few times but reminded myself that my highest priority is to focus on our Reg. D funding which went live a few days ago. It is keeping me extremely busy.
I noted that Fractional-reserve Banking came up a few times in our forum discussion.
This is my position - Fractional-reserve banking is a very important tool for our banking and financial systems, as well our economic systems in general. Frankly, without that legal leverage, the world will not be where it is today. It is an important component of the engine that powers economic growth. It is also a competitive tool that DNotes Global will not forego should it own a bank one day. As a for-profit company it will wisely use every available tool to be a well-managed and best in class company. I trust that it will leverage fractional-reserve with prudence and avoid risky and over-leveraged exposures.
The fractional-reserve will not apply to DNotes – the digital currency. You cannot spend/send more DNotes than you have available in your wallet.
And right there is where the customer has a choice. If I want to get a return on investment but I don't like fractional reserve banking, I now have a viable way to avoid it. When there is an actual choice, then I agree with Alan that even something like fractional reserve banking can be a good tool in the proper context. The most notable change I see happening is that banks will need to share more of the profits with the people who put their money on deposit, particularly those who put large amounts with the intent to keep it there for a while in exchange for a good rate of return. Banks today advertise savings account rates of less than 1 percent, and CDs for slightly higher. Well now I can hold DNotes in my DNotes Vault and get 6 percent. So hmmm, which way will I go? The main challenge right now is that DNotes will need to first show a consistent conservation of value, as in if I paid 7 cents for my DNotes, I can realistically expect to sell them for at least 7 cents, as 6 percent interest won't matter much if my principal loses half its value in terms of price. I don't see that being a huge problem for long, just the very current short term situation. Once DNotes demonstrates a stable and climbing value, then the banks will have to at least match that 6 percent APY in order to compete. I can hardly wait.
