allinvain- Thanks for that. I don't doubt anything you said. Your understanding is more sophisticated than mine. I'm not now, nor do I ever intend to be, an active trader. To me it looks like a zero sum game with a slight negative bias due to transaction costs. I just want a "legit" financial institution to come in and make buying and selling bitcoins more like dealing with any other financial asset. Of course it's a tiny thinly traded market right now, but if it is ever going to get to the kind of market Citadel and PIMCO can trade in, it's going to need some kind of exchange that doesn't require you to transfer money through Dwolla, or mail checks to a PO box. If FNIB does it first then I'm their new biggest fan, and New Zealand is my favorite country. I hope a huge first mover advantage accrues to them and they make a ton of money doing it.
It is very much a zero sum game.
I agree a more liquid and faster loading exchange is a good idea, but you gotta keep in mind that even with a traditional brokerage firm you still have to deal with banks and other financial institutions as the intermediary. Transferring money still takes time unfortunately unless you can become a part of the ACH (automated clearing house) system the banks use.
AFAIK with this FNIB company you aren't actually tarding with BTC just that they're going to credit your account with the dollar equivalent of whatever BTC you deposited. This works like wonder for them because you gave them a currency that will likely increase in value yet your account has been credit with a rapidly depreciating currency - USD. This is a clever way for the brokerage firms to make additional profit and tap the potential explosive growth of the bitcoin system. I'm surprised I don't see many more forex brokerage firms taking on bitcoin. Since we have a very liquid exchange (mt gox) I don't see any risk on their part if they did - well there would be risk but its very small IMHO.
