Topic: How does bitcoin works with traditional banks to stabilise world economy? - page 2. (Read 396 times)

Bitcoin and other crypto currencies allows people to be their own bank. One can send the other one in safest possible way with crypto coins. People who need loans will use banks. Other than that, we do not need banks to rule our money anymore.

The two don't have anything to do with each other because they are just two different things. Probably, in the future we might see a project where these two works together but now i don't think there is. Since the arrival of cryptocurrency a lot of people have been doing little savings in the bank but instead putting their money into cryptocurrency where they believe that the future lies. And i most tell you, the banks do not seem to be welcoming this. More reasons why some banks banned the purchase of bitcoin with their credit cards.

I don't mind someone responding. That's the whole point.

I don't know what banks you're talking about reducing withdrawal terms or engaging in crackdowns as they go into insolvency. The banking sector is thriving in the US and bank profits have been high for several years. The banks are healthy in that they routinely pass stress tests and even the most at-risk banks have improved to the point where the Fed is approving expanded dividend and capital repurchase plans. Derivatives remain a systemic risk, but that has nothing to do with Bitcoin. There are Bitcoin derivatives as well (futures are derivatives).

I don't see he connection between Bitcoin and national debt. If the economy was denominated in btc, it would still be possible to have a national debt. That wouldn't solve anything. The fact that the government any control Bitcoin is why the economy will never be denominated in btc. Pretty sure it would be a bad idea anyway. We left the gold standard because it hampered economic growth.

I think you are essentially wrong here, and to prove I simply use myself as an exemple:

There are many "safe" ways to go without a bank, from cash under your pillow, to buying gold for small amounts and investing in infrastructure/productive assets if you have more resources.

The reason why I use the system is:
1. Comfort, while being system-dependent, banks makes the use of fruit of my work easy and has been pretty reliable in my experience. Also there are many perks coming with it, such as checks and balances by institutions (which doesn't happen in block-chain based companies, yet), ability to use credit (again, not a strong topic in the crypto-world, yet) and finally, the fact that it is easy to use.

2. There are many "safe" ways to go without a bank, from cash under your pillow, to buying gold for small amounts and investing in infrastructure/productive assets if you have more resources.

Ultimately the use and price of a currency (even if you speak about fiat or crypto), are defined by the acceptance it has. The actual volatility and lack of checks in cryptos makes it unapplicable to real life, with frauds, hacks and speculative excesses that makes in a terrible choice for a baker, a care seller or a plumber.

The biggest concern of a modern central bank is: Stable currency and Gvt debt management. That's why all countries try to have a small inflation (it is not only to reduce the debt but to induce artificial growth by taking from the fortunate to the socialwelfare system) but stable inflation. Even a country like Switzerland or Norway, which do not need to print money (both governments, for different reasons, make money each year) still want a stable currency and a small inflation. Switzerland makes huge efforts to devalue their money to stay stable and competitive.

In a world in which you can go buy bread at 10am for 2usd then go at 1pm and have to pay 2.5usd then go back at 4pm and have to pay 1.5usd, the administrative cost would be unbearable, and trading of any sort (including the trade of the baker) would be nearly impossible.

Bitcoin has not been created to be a world day-to-day currency, but more a speculative and reserve currency for the people ready to take the ride.

Sad to say, you need governance in a currency for it to be used broadly. The beauty of cryptos is that you can hard-code governance, the ugly part is that a small selection of people will end up by doing so (call it the Fed, call it federated miners..)

Bitcoin is a direct competitor to banks and their business but bitcoin isn't your average competitor because bitcoin isn't taking the customers of banks to another centralized solution, bitcoin transforms you in a bank so in theory every person in the world is a competitor against banks.

And once bitcoin is accepted globally and used everywhere and a person uses bitcoin as its main way to store his wealth it isn't likely he will use banks again, as such banks not only lose the client, banks lose the client forever.

There are two possible reasons why people use banks nowadays:

1. Because there isn't any other option;
2. Because they think their money is safe there.

With Bitcoin's introduction, people will have another option besides banks. But then it hits on the second point, security. Traditional banks are still considered safer than Bitcoin, so people will be in doubt about what to do... There are advantages and disadvantages on both sides and only time will tell what side people will take. Banks only need to worry if many people start moving their money to Bitcoin, and there is a chance it doesn't happen, taking people's fear in consideration.

And if people takes Bitcoin side, banks will have to offer an alternative more interesting for both parts, probably an alternative in parcery with local government, involving regulations and new rules to seem beneficial to bank's users at first impression, but that will be the same thing than before Bitcoin appeared... The same old fiat system with a new makeup.

The conflict is there, whether or not banks will seem to be friendly towards it. Those that seem to accept Bitcoin only recognize it as a currency, but do not recognize that they cannot control it. Look at all the banks dipping into crypto and blockchain. They are developing private blockchains, and centralized crypto, not even necessarily open source. Not decentralized, not public. All against the spirit of crypto. This is the internal conflict.

Like you said, I also do not see crypto banks happening even though several ICOs claim this. Reality is that, it cannot happen.

Of course it will affect the traditional system which banks sit upon right now. But I don't think it will be doom and gloom and certainly I don't want Bitcoin to be the only currency in the world. If Bitcoin somehow usurps US dollar, Yen, and other currencies we are in for a world of hurt. We need to co-exist, have options, this is what Bitcoin is about. It is about giving power back to the people, not being a totalitarian currency that forces people into using it, that is what the other guys do .

Hi thar. I don't want to step on your toes by responding to your post with a dissenting view.

But if you want a different perspective, I can supply.  

For example, the concept of the economy being stable. There are current risks posted by investment banks with trillions of dollars in derivatives exposure. We saw this in 2008 with subprime mortgage derivatives wrecking the global economy. Bank bailouts began in 2008. They are still ongoing in 2018, as far as I know. Banks are limiting the degree to which insurance covers accounts, reducing withdrawal terms and engaging in other crackdowns as they go deeper into insolvency. There are many dangers and threats to economic stability lurking about which go unrecognized and unmentioned which bitcoin could provide an alternative to. Bitcoin provides economic stability in the form of it not being threatened by the EU being $16 trillion in debt or the USA having a deficit of $21 trillion. Its not that difficult to think of ways in which bitcoin and crypto currencies in general can contribute towards a more stable economy.

Similar might be said of those other points you made.

1) The economy is already stable. There is nothing to stabilize.
2) Why would bitcoin have any effect on the economy when it's such a minor blip in terms of nominal value compared to the overall economy?
3) Why would bitcoin have any effect on the economy considering it's an unstable store of value and a transactionally-limited currency?
4) What interest does a bank have in using Bitcoin, as opposed to Ripple (a crypto created for use by banks) or when they're only really interested in blockchain, and not even Bitcoin's blockchain, but a private one for internal use?

Answering these last three questions should help you determine that the answer to your question is that Bitcoin doesn't work with traditional banks to stabilize the world economy. Nor should anyone expect it to.

Bitcoin introduces competition into the banking industry. In theory this bolsters free markets: fueling innovation and progress, driving down prices and costs for consumers, leading to a more efficient and effective economy.

Bitcoin also has potential to introduce a more stable and reliable means of storing value. This could imply greater security and dependability over traditional fiat currencies or their cashless society alternatives. Bitcoin long term value appreciation could have potential to offset the wealth destruction of high inflation rates. Bitcoin also has the potential to store value in case of hyperinflation or government default on debt. There's a lot of potential as far as bitcoin goes, which is part of the reason for its massive price gains of 2017. Note: you will seldom if ever see the mainstream media mention any of this.

Whether any of these potential outcomes will see the light of day is anyone's guess. But yes it could definitely have widespread and large scale implications.

Banks and financial institutions usualy agree that blochchain is a great technology and they are willing to accept it in their spheres. But cryptocurrencies are usually position themselves as a strict opposition to traditionsl banks and I am not surprised that they are getting rejected. Cryptocurrencies hopefully will be implemented into the banking system. Financial sphere usually develops very fast and it is more likely to accept innovations but the issue about cryptocurrencies is more about populism and fear of loosing the competition between banks.

Bitcoin will not affect the existence of traditional banks, at the inverse, traditional banks had more activities and commissions thanks to the activity created by cryptocurrrencies.

It would be a problem for banks if it would be a complete eco-system that runs only on cryptos, but it is not the case yet. This being said two evolutions are happening at the same time:

- Further acceptance of blockchain and technology in traditional banking.
- Further involvement of Crypto-currency actors in the real economy.

Ultimately, the both will consolidate somehow when: Cryptos will be considered as "assets" and there is a legal background allowing the oversight of cryptos. You see that projects like Blackmoon, Bankera or MtPelerin are pushing the right buttons with the right regulatory benchmarks.

Time will tell)

I don't think BTC can work with Banks to stabilize the economy! There is a limit to the circulation of bitcoins, but it is an electronic gold of the Internet. Banks issue their own money!

BTC and bank are two contradictory sides!

People buy BTC through the bank, affect the profits of the bank, many Banks are national, which is equivalent to the loss of the country!

The decentralization and usage of bitcoin is a big threat for the banks since people will now withdraw their savings and investments in the banks in order for them to put in a digital wallet wherein they know that it is more secured and their money will not be lesses due to additional charges.

I don't know why people think that it will have a negative impact on the banks and stuff.
You know people always will cash out Bitcoins and.. all the transactions are no way possible without interference of fiat.
No matter what money will always exist and.. it will keep circulating in..the system.
Also you know banks and other sectors are charging high fee ... When you make payment from them kinda when you buy and sell Bitcoins.
Thus they are getting benefited only.

Many people talking about the conflict between banks and cryptocurrencies, although there are some banks adopt crypto but still the issue continue that there is a big negative effect of banks because of crypto business. There are also speculation about future banks of cryptocurrencies, but until now I didn't see any building of crypto banks. But the reason why crypto affects banks businesses, it is because of the value also, but it is not the total problem, because the people earn money from crypto are also transact business into banks, which the money deposited are gain from crypto business. So for me, there is no reason that banks has a big economic negative impact because of crypto, but instead banks are also benifited from cryptocurrency business.

Almost said that bitcoin will affect the existence of traditional banks. Is it true? Please share your ideas, so that people will not confuse about both of them.