How To Stop Bitcoin Banking; Give It A BitLicense In New York #bitcoinbanks

Harley997

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Quote from: gonnafly on July 21, 2014, 04:02:36 AM

Quote from: 2good2betrue on July 21, 2014, 03:53:29 AM

Isn't FRB with bitcoin already possible and allowed for banks today? That will not change with this ruling. If it is prohibited in NY, it is allowed somewhere in the world, anyway. As I understand it, the ruling is for exchanges that do not want to register as a full bank license.

No, because you cannot print more Bitcoins. You can only print vouchers for Bitcoins, which will clearly be worth less than a Bitcoin.

This is not necessarily true as long as you are able to redeem the voucher with little/no delay for bitcoin to an address that you control.

What the regulations will do is prevent companies from having the same types of problems that GOX had.

12inchdick

newbie

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Quote from: Summer,69 on July 21, 2014, 03:29:00 AM

Do you want to ruin Bitcoin?
Because allowing fractional reserves would be a good way to ruin Bitcoin.
Too think off requiring 100% reserves as being anything other than one of the only positive requirements of these rules is nothing short of idiotic.

People should have a choice though. I would save 90% of my BTC in a "vault bank" and would take the other 10% and put it into a fractional reserve bank account hoping the interest payments made up for the risk.

ljudotina

legendary

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I don't really see this as a problem. Do we really want "start up" Banks? Really....do we need one more Gox? Do we want someone without of any background managing ppl's BTC? Do we, at all, want BTC banks? Shouldn't we take care of our own BTC at first place?

gonnafly

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Quote from: 2good2betrue on July 21, 2014, 03:53:29 AM

Isn't FRB with bitcoin already possible and allowed for banks today? That will not change with this ruling. If it is prohibited in NY, it is allowed somewhere in the world, anyway. As I understand it, the ruling is for exchanges that do not want to register as a full bank license.

No, because you cannot print more Bitcoins. You can only print vouchers for Bitcoins, which will clearly be worth less than a Bitcoin.

2good2betrue

newbie

Activity: 26

Merit: 0

Quote from: Summer,69 on July 21, 2014, 03:29:00 AM

Do you want to ruin Bitcoin?
Because allowing fractional reserves would be a good way to ruin Bitcoin.
Too think off requiring 100% reserves as being anything other than one of the only positive requirements of these rules is nothing short of idiotic.

Isn't FRB with bitcoin already possible and allowed for banks today? That will not change with this ruling. If it is prohibited in NY, it is allowed somewhere in the world, anyway. As I understand it, the ruling is for exchanges that do not want to register as a full bank license.

jc01480

hero member

Activity: 854

Merit: 500

Nope..

Cool. They should extend 100% reserves to the banking sector as well (doh!). Good for the goose, good for the gander. I'm not intimidated by regulatory attempts as we all should know the driving force behind it (big banking/finance). I've said it many times and I'll say it again: the big industry won't go down quietly without one hell of a war. I'm still waiting to see if oil industry will jump on board with crypto. Talk about a lot of people losing their piece of pie!

Summer,69

newbie

Activity: 50

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Do you want to ruin Bitcoin?
Because allowing fractional reserves would be a good way to ruin Bitcoin.
Too think off requiring 100% reserves as being anything other than one of the only positive requirements of these rules is nothing short of idiotic.

EnterReturn

newbie

Activity: 41

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Oh noes, you can't set up a fractional reserve scam! That was actually one of the only positive things in the regulations.

CokeCoin

member

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Quote from: GTA on July 21, 2014, 02:09:57 AM

Right... we don't want exchanges that use fractional reserve methods, but why do we explicitly (through regulation and force) want to exclude BTC backed banks that use fractional reserve methods?

Reserves and account holdings can be cryptographically proven with BTC... this actually gives a lot of room for fair fractional reserve banking methods... and in the case of exchanges we can prove that they aren't using them at all.

Free market and cryptographic solutions should be the aim, not regulation and force.

There has been some debate as to if any form of fractional reserve is even possible or beneficial using bitcoin--as its supply is limited, but that is a separate conversation. I guess when you say BTC backed you mean like the same way gold used to back fiat for traditional banks? But ya, we really don't need any of these regulations we can do them through the blockchain.

CokeCoin

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Quote from: GTA on July 21, 2014, 02:09:57 AM

Right... we don't want exchanges that use fractional reserve methods, but why do we explicitly (through regulation and force) want to exclude BTC backed banks that use fractional reserve methods?

Reserves and account holdings can be cryptographically proven with BTC... this actually gives a lot of room for fair fractional reserve banking methods... and in the case of exchanges we can prove that they aren't using them at all.

Free market and cryptographic solutions should be the aim, not regulation and force.

Well, that's true with the power of cryptographic solutions, we don't need any of this external regulation, so I guess as long as an exchange (btc bank?) disclosed the fact that they were not keeping 100% of reserves on hand in order to do x, y, and z and we could verify that through the blockchain, I guess I have no problem with that. Personally, I would only want to use exchanges that keep all customer deposits on hand down to the last satoshi, but if others want to use ones that did not and were aware of it that's fine too.

GTA

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Quote from: CokeCoin on July 21, 2014, 01:21:31 AM

Exactly what I was thinking--so the writer of this article read the regulations and thinks the worst part about them is that bitcoin exchanges will not be able to do fractional reserve banking? Are you kidding? That is like the one part that makes sense. C'mon. Does this guy know anything about bitcoin? I mean we can't know for sure--but fractional reserve banking--may have contributed to enabling the whole Mt. Gox fiasco in the first place.

Point out the fact that you need to register in order to create an alt-coin (which is really just communication protocol that uses math/cryptography). As if they have the right to demand me to get their permission to copy and paste the code of bitcoin with a change or two and post it online. Ridiculous. Point out the fact that third party wallet providers such as Blockchain, Mycelium, or Green Address would potentially have to identify customers and attempt to keep records of incoming/outgoing transactions. Point out that creating tip bots so people can send around a few bits to each other potentially requires registration.

The whole "bitcoin exchanges are kind of like banks" notion came about simply because it is another party storing your money temporarily, to suggest that we would want (or that these exchanges aim to) operate like traditional banks would be utterly ridiculous and against the whole point of bitcoin. What I want from an exchange is simply to be able to buy some bitcoin, maybe trade a bit, and know that they will have it on hand for when I will inevitably will withdraw it (ideally using cryptographic solvency methods). I don't want any interest in exchange for them leveraging my money out many times over and gambling in a giant casino. Give me an f'n break.

Free market and cryptographic solutions should be the aim, not regulation and force.

GTA

member

Activity: 90

Merit: 10

Quote from: CokeCoin on July 21, 2014, 01:21:31 AM

Quote from: Catmoonglow on July 20, 2014, 11:14:17 AM

Right conclusion for the absolute wrong reason

Exactly what I was thinking--so the writer of this article read the regulations and thinks the worst part about them is that bitcoin exchanges will not be able to do fractional reserve banking? Are you kidding? That is like the one part that makes sense. C'mon. Does this guy know anything about bitcoin? I mean we can't know for sure--but fractional reserve banking--may have contributed to enabling the whole Mt. Gox fiasco in the first place.

Point out the fact that you need to register in order to create an alt-coin (which is really just communication protocol that uses math/cryptography). As if they have the right to demand me to get their permission to copy and paste the code of bitcoin with a change or two and post it online. Ridiculous. Point out the fact that third party wallet providers such as Blockchain, Mycelium, or Green Address would potentially have to identify customers and attempt to keep records of incoming/outgoing transactions. Point out that creating tip bots so people can send around a few bits to each other potentially requires registration.

The whole "bitcoin exchanges are kind of like banks" notion came about simply because it is another party storing your money temporarily, to suggest that we would want (or that these exchanges aim to) operate like traditional banks would be utterly ridiculous and against the whole point of bitcoin. What I want from an exchange is simply to be able to buy some bitcoin, maybe trade a bit, and know that they will have it on hand for when I will inevitably will withdraw it (ideally using cryptographic solvency methods). I don't want any interest in exchange for them leveraging my money out many times over and gambling in a giant casino. Give me an f'n break.

Right... we don't want exchanges that use fractional reserve methods, but why do we explicitly (through regulation and force) want to exclude BTC backed banks that use fractional reserve methods?

Reserves and account holdings can be cryptographically proven with BTC... this actually gives a lot of room for fair fractional reserve banking methods... and in the case of exchanges we can prove that they aren't using them at all.

CokeCoin

member

Activity: 235

Merit: 10

Quote from: Catmoonglow on July 20, 2014, 11:14:17 AM

Right conclusion for the absolute wrong reason

The whole "bitcoin exchanges are kind of like banks" notion came about simply because it is another party storing your money temporarily, to suggest that we would want (or that these exchanges aim to) operate like traditional banks would be utterly ridiculous and against the whole point of bitcoin. What I want from an exchange is simply to be able to buy some bitcoin, maybe trade a bit, and know that they will have it on hand for when I will inevitably will withdraw it (ideally using cryptographic solvency methods). I don't want any interest in exchange for them leveraging my money out many times over and gambling in a giant casino. Give me an f'n break.

CokeCoin

member

Activity: 235

Merit: 10

Quote from: Catmoonglow on July 20, 2014, 11:14:17 AM

Right conclusion for the absolute wrong reason

Point out the fact that you need to register in order to create an alt-coin (which is really just communication protocol that uses math/cryptography). As if they have the right to demand me to get their permission to copy and paste the code of bitcoin with a change or two and post it online. Ridiculous. Point out the fact that third party wallet providers such as Blockchain, Mycelium, or Green Address would potentially have to identify customers and attempt to keep records of incoming/outgoing transactions. Point out that creating tip bots so people can send around a few bits to each other potentially requires registration.

CokeCoin

member

Activity: 235

Merit: 10

Quote from: Catmoonglow on July 20, 2014, 11:14:17 AM

Right conclusion for the absolute wrong reason

Exactly what I was thinking--so the writer of this article read the regulations and thinks the worst part about them is that bitcoin exchanges will not be able to do fractional reserve banking? Are you kidding? That is like the one part that makes sense. C'mon. Does this guy know anything about bitcoin? I mean we can't know for sure--but fractional reserve banking--may have contributed to enabling the whole Mt. Gox fiasco in the first place.

ipnone5only

newbie

Activity: 37

Merit: 0

Quote from: annoyingorange on July 20, 2014, 03:07:37 PM

Read the Forbes article. The BitLicense requires Bitcoin banks to have 100% reserves ... just like Murray Rothbard and Hans Hoppe have called for.

It's a gol' darn anarcho-libertarian godsend!!!

I don't think that's the part people are annoyed about. I think it's about:

1)Identifying customers to prevent the bullshit crime of money laundering.

2)Demanding that businesses outside of NY prevent NY customers from accessing or using their services like it's their fucking job to perform free police work for NY.

3)Pay a bunch of money to get a bitlicense

4)Stifle things which clearly aren't (fiat <-> BTC) exchanges: hot wallets, mining pools. BTC->BTC doesn't need reserve proofs because the blockchain is the proof.

oceans

sr. member

Activity: 406

Merit: 250

I think one of the biggest problems with insuring bitcoin, is that there cant be a charge back. If money is stolen or lost, the bank wouldn't be able to reverse it and get it back.
If the same were for fiat, the insurance would go through the ceiling with how much money is just lost and gone. There are so many things that would have to be taken into account, and I think it will be at least a year or more they figure out how to "control" coins, if its even possible.

annoyingorange

member

Activity: 72

Merit: 10

Read the Forbes article. The BitLicense requires Bitcoin banks to have 100% reserves ... just like Murray Rothbard and Hans Hoppe have called for.

It's a gol' darn anarcho-libertarian godsend!!!

doggieTattoo

full member

Activity: 209

Merit: 100

Traditional banks today must meet strict capital and lending standards. They are also insured by the FDIC so there is basically no risk to deposit holders.

There is no such insurance fund for bitcoin related banks making anyone who deposits bitcoin at a exchange that operates on a fractional reserve system to be at risk.

Catmoonglow

full member

Activity: 147

Merit: 100

Right conclusion for the absolute wrong reason

Topic: How To Stop Bitcoin Banking; Give It A BitLicense In New York #bitcoinbanks (Read 1477 times)