Topic: When will Exchanges pay us interest for our risk? (Read 165 times)
I don't expect too much in exchanges, simply menghilankan fee for every transaction that is done is enough for me. I appreciate your opinion of how we are taking a big risk in this crypto world. and they, exchange, don't reward us for the risks we take and they still receive a fee from us every time we make a transaction.
Its sounds so funny! I see risky as a fee of transaction.exchanges cant pay us interest for what risky.life it self is a risky.exchange is not a bank.this is crypto world.
Why would exchanges pay us interest when they are providing us a service. Its on you whether you want to keep your coins on exchanges or not. Why would you keep your coins on exchanges when it is mentioned everywhere to do the opposite. Also do you know how hard and expensive it is to maintain the wallets and coins of an exchange.
it all comes down to what the purpose of the place you put your money is.
the purpose of the bank is to take your money and do something with your money. it can be loans and all that services banks offer with fiat that Franky also mentioned, it is also the fact that banks do invest your money in different places, it is a lot of short term and long term investments in other businesses short and big. so they make profit with your money officially and have to pay you back a fixed portion of it, risk-free.
but the purpose of an exchange is only to provide a platform where you meet other traders and exchange your assets with each other, nothing more. this platform offers to hold both of your assets and money while you do the trade and give it back to you when you want it. kind of like an advanced escrow. so YOU pay them to give you this service.
the purpose of the bank is to take your money and do something with your money. it can be loans and all that services banks offer with fiat that Franky also mentioned, it is also the fact that banks do invest your money in different places, it is a lot of short term and long term investments in other businesses short and big. so they make profit with your money officially and have to pay you back a fixed portion of it, risk-free.
but the purpose of an exchange is only to provide a platform where you meet other traders and exchange your assets with each other, nothing more. this platform offers to hold both of your assets and money while you do the trade and give it back to you when you want it. kind of like an advanced escrow. so YOU pay them to give you this service.
I can conclude from your explanation above is that if we invest in the bank then there is no risk of loss of assets, unlike we invested in crypto. the risk incurred if we invest in crpyto is the absence of legal protection if we lose assets.
and then if we invest to the bank, then our assets will be developed through another company different from crypto. if we are invest in crypto then the holders of our assets are plfatform / exchange, either those who sell or who buy.
essentially if we invest in crypto then all decisions taken is the right of the user with a high risk. if we invest in the bank then all decisions have been set by the bank and have no risk.
for emphasisi
people should learn not to treat exchanges as banks
people should learn not to expect exchanges to function like banks
people should not use exchanges as banks
people need to learn some self control. thats what private keys are for
people should learn not to treat exchanges as banks
people should learn not to expect exchanges to function like banks
people should not use exchanges as banks
people need to learn some self control. thats what private keys are for
Your emphasis, and repeating yourself verbatim isn't necessary. I'll agree with each of these things. But your comment that exchanges don't create money, is incredibly short sighted. They don't need to create money, all they need to do is make money...as in revenue, income...to be able to pay interest. And if they paid interest they'd generate more business and fees from transactions. It's a business model that gets more profitable with scale.
Freebitcoin faucet does not offer balance interest but rather it's a transaction fee, so it's not the same as bank interest.
any form of transaction decision is taken by the user which means there is no compulsion in taking transaction costs, in contrast to the bank. banks take interest every month which means we are forced to pay interest every month. so do not equate between the crypto with the bank.
any form of transaction decision is taken by the user which means there is no compulsion in taking transaction costs, in contrast to the bank. banks take interest every month which means we are forced to pay interest every month. so do not equate between the crypto with the bank.
Bud, you're misunderstanding what Freebitcoin does. They pay YOU interest daily if you have a balance over 30,000 satoshi. You don't have to transact anything, you still get paid. They've been paying daily for over a year. The only reason I bring it up is because it's the only example I know of where interest IS being paid to balance holders in return for their trust and risk. And Freebitcoin is using some of the balances to generate more income, they also have a gambling business...so an additional revenue stream beyond what Coinbase is engaged in (for example).
it all comes down to what the purpose of the place you put your money is.
but the purpose of an exchange is only to provide a platform where you meet other traders and exchange your assets with each other, nothing more. this platform offers to hold both of your assets and money while you do the trade and give it back to you when you want it. kind of like an advanced escrow. so YOU pay them to give you this service.
but the purpose of an exchange is only to provide a platform where you meet other traders and exchange your assets with each other, nothing more. this platform offers to hold both of your assets and money while you do the trade and give it back to you when you want it. kind of like an advanced escrow. so YOU pay them to give you this service.
Totally agree with you, except for the implication that the only purpose of an exchange is what they provide us with today. Hell, if Satoshi or Hal Finney thought the same way we wouldn't even have Bitcoin.
It's the ability to think boldly about what else could be possible to make things better that really drives progress forward.
And if we expect use of cryptocurrency to expand to the masses we should expect that more and more people will rely on exchanges to serve as their cryptocurrency bank. Much of the population would see the managing of a private wallet as a barrier to entry. If new entrants to this market are going to rely on exchanges to manage their cryptocurrency, taking on that risk of handing over control of the private keys, they should demand some compensation for that risk. At a minimum it's a compelling way to spark adoption of the next significant market moving wave of growth.
I believe it's time we start to act on this - we can change the market by simply moving our balance off the exchanges.
People have been warning, "Don't store your coins on an exchange!" for years, but nobody listens.
Anyway, I don't see how removing money from exchanges will change anything since exchanges don't (or shouldn't) have much use for deposited coins. Therefore, they have no motivation to pay interest so I don't see this going anywhere.
it all comes down to what the purpose of the place you put your money is.
the purpose of the bank is to take your money and do something with your money. it can be loans and all that services banks offer with fiat that Franky also mentioned, it is also the fact that banks do invest your money in different places, it is a lot of short term and long term investments in other businesses short and big. so they make profit with your money officially and have to pay you back a fixed portion of it, risk-free.
but the purpose of an exchange is only to provide a platform where you meet other traders and exchange your assets with each other, nothing more. this platform offers to hold both of your assets and money while you do the trade and give it back to you when you want it. kind of like an advanced escrow. so YOU pay them to give you this service.
the purpose of the bank is to take your money and do something with your money. it can be loans and all that services banks offer with fiat that Franky also mentioned, it is also the fact that banks do invest your money in different places, it is a lot of short term and long term investments in other businesses short and big. so they make profit with your money officially and have to pay you back a fixed portion of it, risk-free.
but the purpose of an exchange is only to provide a platform where you meet other traders and exchange your assets with each other, nothing more. this platform offers to hold both of your assets and money while you do the trade and give it back to you when you want it. kind of like an advanced escrow. so YOU pay them to give you this service.
Freebitcoin faucet does not offer balance interest but rather it's a transaction fee, so it's not the same as bank interest.
any form of transaction decision is taken by the user which means there is no compulsion in taking transaction costs, in contrast to the bank. banks take interest every month which means we are forced to pay interest every month. so do not equate between the crypto with the bank.
any form of transaction decision is taken by the user which means there is no compulsion in taking transaction costs, in contrast to the bank. banks take interest every month which means we are forced to pay interest every month. so do not equate between the crypto with the bank.
We don't have to adopt the bad of the banking industry - the creating of money based on credit is a cancer on the wealth of society. There's no place for it in cryptocurrency.
exactly. and thats why exchanges are not banks. they do not create money to offer interest.
that faucet is a ponzi
in short the faucet is a HYIP(ponzi) SCAM.
without any contractual agreement for the funds receiver(faucet payout) to re deposit anything +interest to then repay the initial depositor
the faucet is a ponzi because its then a end game for those that initially deposited if no new depositers keep the ponzi alive
By your rationale and logic here every bank in the fiat world is a ponzi scheme because you and your bank don't have a contract that defines exactly how much interest they'll pay you on your deposits.in short the faucet is a HYIP(ponzi) SCAM.
without any contractual agreement for the funds receiver(faucet payout) to re deposit anything +interest to then repay the initial depositor
the faucet is a ponzi because its then a end game for those that initially deposited if no new depositers keep the ponzi alive
same with depositers you get a booklet of terms and conditions that lay out your interest rate returns on your deposits
.
banks get loanees to hand banks more money(or suffer consequences) to then use that (loan interest) as the pot of funds for the depositor interest
If you're going to attack me, do so via PM. Your off-topic rants aren't welcome on this forum. I have no vested interest in the faucet site I mentioned, and their 4% per year is hardly "High Yield". Let's keep our comments factual, thanks frank!
if talking about the faucet is offtopic. maybe you should take it out of your OP, and i wasnt comparing it based on % i was comparing it based on the mechanism of how HYIPS(scams) get the funds to pay out, which is not via money creationBanks started offering interest (150-200 years ago) to compensate depositors for the risk they are taking. Fractional lending is a perversion of the banking industry that didn't evolve until the last 100 years or so (since fractional reserve banking was introduced).
Cryptocurrency exchange depositors take on the greatest risk of ANY bank customer - these depositors give up the right to have private keys because they are uneducated about the system. These people should get compensation for taking on this risk, yet the exchanges offer nothing for us.
The exchanges aren't for the cryptocurrency industry when they aren't for rewarding customers for their trust.
Cryptocurrency exchange depositors take on the greatest risk of ANY bank customer - these depositors give up the right to have private keys because they are uneducated about the system. These people should get compensation for taking on this risk, yet the exchanges offer nothing for us.
The exchanges aren't for the cryptocurrency industry when they aren't for rewarding customers for their trust.
exchanges are not banks
exchanges do not create money out of thin air.
anyway.
people should learn not to treat exchanges as banks
people should learn not to expect exchanges to function like banks
people should not use exchanges as banks
people need to learn some self control. thats what private keys are for
in the fiat world
bank accounts/chequing accounts are insured and have the fractional reserve money creation and loan repayment mechanisms to be profitable and only able to do this due to depositors, so depositors deserve returns.
but in the fiat world
TRADING ACCOUNTS are not insured the way you think and are at risk of loss and do not earn interest and should not be treated as bank accounts between trades unless you day trade and its too much hassle to withdraw to a bank account and back to a trade account each day
in the crypto world exchanges are TRADING ACCOUNTS.
if you are trading daily then yes its easier to not withdraw after trading and deposit again tomorrow.but your funds are at risk between trades
for emphasisi
people should learn not to treat exchanges as banks
people should learn not to expect exchanges to function like banks
people should not use exchanges as banks
people need to learn some self control. thats what private keys are for
While I somehow agree to the said idea, we can't just simply demand a business to start rewarding us just for using their service.
If you deposit your money into a crypto exchange, you already know so well that you'll be using your funds not for safekeeping, but for trading. Banks offer some form of interest because they use the money you deposited for other ventures, and the ridiculuously small interest rate is like a simple 'thank you' from the bank for agreeing to lend your money to them. That's the risk that you're talking about. In the case of crypto exchange, you're gonna try to make some profit using your funds on a privately-funded platform. They aren't gonna use your funds in anything but they are gonna charge you something for every successfil trades you make since you are using their platform.
With regards to the hacks, I'm pretty sure most exchanges are secured to the teeth and are properly registered in the government, so nowadays, there's a slim chance that these exchanges would be 'hacked' by their own operators, so that risk, somehow, is eliminated, though that doesn't mean I'll blindly trust an exchange and keep all my funds there, lol.
If you deposit your money into a crypto exchange, you already know so well that you'll be using your funds not for safekeeping, but for trading. Banks offer some form of interest because they use the money you deposited for other ventures, and the ridiculuously small interest rate is like a simple 'thank you' from the bank for agreeing to lend your money to them. That's the risk that you're talking about. In the case of crypto exchange, you're gonna try to make some profit using your funds on a privately-funded platform. They aren't gonna use your funds in anything but they are gonna charge you something for every successfil trades you make since you are using their platform.
With regards to the hacks, I'm pretty sure most exchanges are secured to the teeth and are properly registered in the government, so nowadays, there's a slim chance that these exchanges would be 'hacked' by their own operators, so that risk, somehow, is eliminated, though that doesn't mean I'll blindly trust an exchange and keep all my funds there, lol.
I would personally not demand for exchanges to pay interest, simply because of the added risk that comes with it. There is simply no direct correlation between the amount of money people deposit with them, and the amount of revenue they are able to generate. It makes no sense, since people storing a stagnant amount of bitcoin on an exchange doesn't mean that they will make more commissions. To generate interest, exchanges would be even more compelled to run a fractional reserve scheme.
That said, I would never keep my bitcoins on an exchange as a form of storage.
I would very much rather just store my bitcoins trustlessly, keep it on a desktop wallet or even cold storage, and get rid of all counter party risks this way. Bitcoin is different to banks in that regard, there are no concerns with fractional reserve banking.
That said, I would never keep my bitcoins on an exchange as a form of storage.
I would very much rather just store my bitcoins trustlessly, keep it on a desktop wallet or even cold storage, and get rid of all counter party risks this way. Bitcoin is different to banks in that regard, there are no concerns with fractional reserve banking.
They COULD certainly start doing those things. What I was saying is that based on their current model, it would be impractical for them to pay out interest. However, if there were to start value-added services like you mentioned then it would maybe become more viable.
We...the community...could start forcing these value-added services by demanding them directly or indirectly through the desire to keep deposits offline if exchanges don't pay interest on balances.
They will never pay the interest and all to the users mate. First you need to leave out of the banking usage who are scamming the users and taking their money to share market and other things mate.
You do not have the voice to ask them but you guys came here to ask exchanges to pay the interest since you are using it make the profit with the manipulation on trading site bro.
You do not have the voice to ask them but you guys came here to ask exchanges to pay the interest since you are using it make the profit with the manipulation on trading site bro.
Sorry friend, I refuse your immediate rejection of what's possible. Each of us has a voice, and we're louder when we're talking in unison. And our bitcoin deposits are even louder than our voice. A coordinated ban on exchanges in return for something as simple as interest for risk taken is certainly possible.
banks give interest because.
when someone deposits $1000 for a year
a bank is allowed to create $9000 as "credit" that year to give out as a loan which normally has a interest rate of 5%+
meaning the loan receiver lets say on a $9k loan over 9 years would have to pay back (pen and paper math) $1000+$450 in the first year
and from that $450 the initial depositor would get $50 (if their deposit account offered a 5% return)
but here is how bitcoin is completely different to banking
in bitcoin no one can CREATE new bitcoin based on deposits or individual credit agreement.
when someone deposits $1000 for a year
a bank is allowed to create $9000 as "credit" that year to give out as a loan which normally has a interest rate of 5%+
meaning the loan receiver lets say on a $9k loan over 9 years would have to pay back (pen and paper math) $1000+$450 in the first year
and from that $450 the initial depositor would get $50 (if their deposit account offered a 5% return)
but here is how bitcoin is completely different to banking
in bitcoin no one can CREATE new bitcoin based on deposits or individual credit agreement.
We don't have to adopt the bad of the banking industry - the creating of money based on credit is a cancer on the wealth of society. There's no place for it in cryptocurrency.
that faucet is a ponzi
in short the faucet is a HYIP(ponzi) SCAM.
and so the scammy faucet habBear is advertising
without any contractual agreement for the funds receiver(faucet payout) to re deposit anything +interest to then repay the initial depositor
the faucet is a ponzi because its then a end game for those that initially deposited if no new depositers keep the ponzi alive
in short the faucet is a HYIP(ponzi) SCAM.
and so the scammy faucet habBear is advertising
without any contractual agreement for the funds receiver(faucet payout) to re deposit anything +interest to then repay the initial depositor
the faucet is a ponzi because its then a end game for those that initially deposited if no new depositers keep the ponzi alive
By your rationale and logic here every bank in the fiat world is a ponzi scheme because you and your bank don't have a contract that defines exactly how much interest they'll pay you on your deposits.
If you're going to attack me, do so via PM. Your off-topic rants aren't welcome on this forum. I have no vested interest in the faucet site I mentioned, and their 4% per year is hardly "High Yield". Let's keep our comments factual, thanks frank!
how are they supposed to pay you interest they cant even invest those coins, no company contractor works and pays his employees with bitcoins, and no exchange is also an investmentbank, the risk would even get higher if the exchanges would have to lend it.
I'm not sure I follow you, any entity can pay any other entity (customer, employee, etc.) in Bitcoin or any other currency.
Banks started offering interest (150-200 years ago) to compensate depositors for the risk they are taking. Fractional lending is a perversion of the banking industry that didn't evolve until the last 100 years or so (since fractional reserve banking was introduced).
Cryptocurrency exchange depositors take on the greatest risk of ANY bank customer - these depositors give up the right to have private keys because they are uneducated about the system. These people should get compensation for taking on this risk, yet the exchanges offer nothing for us.
The exchanges aren't for the cryptocurrency industry when they aren't for rewarding customers for their trust.
In the world of fiat a bank pays a depositor interest on their balance, which corresponds to a balance between the risk the depositor is taking by leaving their money with the bank and market interest rates.
I don't know what country you're in, but depositor insurance in the states totally eliminates any risk of keeping your money in the bank. I don't think the interest rate has anything to do with risk. It has to do with the Fed interest rate, i.e., the rate at which banks can borrow money from the Fed. They lend it out at a higher interest rate, and the depositor earns an interest rate that is closer to the Fed's rate.Most stock brokerages don't even pay interest on deposited cash, because they're not in the business of making loans. Crypto exchanges aren't either, so I don't see why they'd pay interest. I think you've got some of these concepts a bit wrong.
While you do make some valid and compelling points OP, do we really want to follow the model the bank has previously used? I myself prefer discount on trading and kickbacks via altcoins like Binance Coin and KuCoin Shares provide. That to me is good enough interest, why do we need cold hard BTC in order to make this model work, I see no real reason for it other than giving an exchange a competitive advantage.
In the world of fiat a bank pays a depositor interest on their balance, which corresponds to a balance between the risk the depositor is taking by leaving their money with the bank and market interest rates.
In the world of cryptocurrency an exchange or only wallet doesn't pay the depositor anything, which is horrible! The cryptocurrency depositor is taking on significantly more risk, yet these exchanges don't offer any interest to compensate us for that risk and loyalty.
I believe it's time we start to act on this - we can change the market by simply moving our balance off the exchanges.
Freebitcoin faucet is the only online wallet offering interest on balances, they've set the market rate at 4% APR, paid daily. They've been paying reliably for over a year now and have developed a great system for minimizing or eliminating balance manipulation by the depositor.
It's a simple model for the exchanges to follow.
When will we demand we get paid for our risk?
In the world of cryptocurrency an exchange or only wallet doesn't pay the depositor anything, which is horrible! The cryptocurrency depositor is taking on significantly more risk, yet these exchanges don't offer any interest to compensate us for that risk and loyalty.
I believe it's time we start to act on this - we can change the market by simply moving our balance off the exchanges.
Freebitcoin faucet is the only online wallet offering interest on balances, they've set the market rate at 4% APR, paid daily. They've been paying reliably for over a year now and have developed a great system for minimizing or eliminating balance manipulation by the depositor.
It's a simple model for the exchanges to follow.
When will we demand we get paid for our risk?
how are they supposed to pay you interest they cant even invest those coins, no company contractor works and pays his employees with bitcoins, and no exchange is also an investmentbank, the risk would even get higher if the exchanges would have to lend it.
They will never pay the interest and all to the users mate. First you need to leave out of the banking usage who are scamming the users and taking their money to share market and other things mate.
You do not have the voice to ask them but you guys came here to ask exchanges to pay the interest since you are using it make the profit with the manipulation on trading site bro.
You do not have the voice to ask them but you guys came here to ask exchanges to pay the interest since you are using it make the profit with the manipulation on trading site bro.
However, I think we also need to look at it from the exchanges point of view. Whilst I do like your idea I think to be fair to the exchanges there are a few things we need to take into consideration.
Now if we look at just these 3 points, we will notice that banks have way more revenue streams than an exchange and they make way more money from our deposits so it makes sense that they are able to pay interests on our balances.
Now if we look at just these 3 points, we will notice that banks have way more revenue streams than an exchange and they make way more money from our deposits so it makes sense that they are able to pay interests on our balances.
This is fair, what's in it for the exchanges? After all, business needs to make money.
Cryptocurrency exchanges DO make money on fees.
Cryptocurrency exchanges COULD be involved in mining, using a fractional portion of deposits to fund a mining operation which would fund (in part) the interest due on deposits.
Cryptocurrency exchanges COULD get involved in lending. And given that they're probably require collateral for the loan, the market could avoid the ability to conduct fractional lending. The risk to the exchange of going out of business is much greater than that of a fiat bank (at least today), there's no insurance for an exchange to hide behind. They only get one shot to fail...unlike the biggest fiat banks in the world.
The greatest benefit for the cryptocurrency exchange is the loyalty that would come with paying interest, especially now while most exchanges aren't offering such a benefit. If Coinbase started paying interest they'd see bitcoin, ether, and bitcoin cash "repatriate" back to their wallets!
They COULD certainly start doing those things. What I was saying is that based on their current model, it would be impractical for them to pay out interest. However, if there were to start value-added services like you mentioned then it would maybe become more viable.
that faucet is a ponzi
people put funds in and the faucet owner uses those funds to give other people "interest" hoping not everyone does a bank run and gets all their funds out again for the faucet(ponzi) to collapse
in short the faucet is a HYIP(ponzi) SCAM.
and shocking to see habBear advertising a scam under the pretense of a topic about exchanges.
banks give interest because- edited for realistic numbers
when 10 people deposits $10,000 each for a year ($100k) offering 2% return for example
a bank is allowed to create $90k as "credit" (90% of deposits) that year to give out as a loan demanding 5% APR
thus from the time the loanee signs a loan until they spend it. they bank has $190k on its accounts(assets). AND $90k debt(liability)
it does not want depositors to remove all $190k in one go(bank run) because it puts the bank into minus $90k and the bank is dead.
so only allows customers to withdraw ~$500 a day from ATM's per day to prevent mass bank runs of full deposit removals.(amungst other tactics)
back to the loan signing
the liability is then put into the loanees name
the loanee would have $90k to spend.. AND $112500 DEBT(plus interest) to repay ($90k ex interest)
so would have to pay back (pen and paper math) $10k+$4.5k in the first year($14.5k)
the bank draws down the loanees debt by $14.5k(or $90k to $80k ex interest) thus destroys the $10k ex interest liability
and from that $4.5k 'profit'.. the initial depositors would get $200 each (if their deposit account offered a 2% return)
the bank keeps $2.5k as PROFIT
thus although deposit interest is 2%.. loan interest is 5%.. inflation($2.5k generated money retained) is only 2.5%
......
but here is how bitcoin is completely different to banking
in bitcoin no one can CREATE new bitcoin based on deposits or individual credit agreement.
so to offer interest. the initial depositers funds would need to get used to pay other people.(ponzi)
and so the scammy faucet habBear is advertising
without any contractual agreement for the funds receiver(faucet payout) to re deposit anything +interest to then repay the initial depositor
the faucet is a ponzi because its then a end game for those that initially deposited if no new depositers keep the ponzi alive
anywahy. back to the exchange "interest" part of the topic.
people should only deposit funds into an exchange for more then a day. if they are to use the exchange daily to trade for profit. because withdrawing and redepositing each day becomes a hassle.
but if your not trading each day. DONT treat a trader 'account' (exchange) as a bank/wallet.
its like stocks and shares. your not suppose to use a trader/exchange as a bank account. your funds ARE at risk and you can lose them. in bitcoin and in fiat its the same thing.
a fiat trader account does not have the same 'depostor' insurance as a normal bank account.
so only use an exchange if you intend to use an exchange for its purpose.. to exchange.
and the 'interest' part of the argument. well bitcoins dflationary nature (2016 >$300, 2017>$900 ,2018 >$6000) means youll get back more that you initially had, even without having to use and exchange.
then if you want to risk your funds for more greed. then day trade for a few percent.
in short
dont trust third party services to hold your funds and have them give you empty promises of profit, while you do nothing but just leave the funds in thier possession. rmember they are probably just as greedy and lazy as you. and would happily take your funds and leave you without.
people put funds in and the faucet owner uses those funds to give other people "interest" hoping not everyone does a bank run and gets all their funds out again for the faucet(ponzi) to collapse
in short the faucet is a HYIP(ponzi) SCAM.
and shocking to see habBear advertising a scam under the pretense of a topic about exchanges.
banks give interest because- edited for realistic numbers
when 10 people deposits $10,000 each for a year ($100k) offering 2% return for example
a bank is allowed to create $90k as "credit" (90% of deposits) that year to give out as a loan demanding 5% APR
thus from the time the loanee signs a loan until they spend it. they bank has $190k on its accounts(assets). AND $90k debt(liability)
it does not want depositors to remove all $190k in one go(bank run) because it puts the bank into minus $90k and the bank is dead.
so only allows customers to withdraw ~$500 a day from ATM's per day to prevent mass bank runs of full deposit removals.(amungst other tactics)
back to the loan signing
the liability is then put into the loanees name
the loanee would have $90k to spend.. AND $112500 DEBT(plus interest) to repay ($90k ex interest)
so would have to pay back (pen and paper math) $10k+$4.5k in the first year($14.5k)
the bank draws down the loanees debt by $14.5k(or $90k to $80k ex interest) thus destroys the $10k ex interest liability
and from that $4.5k 'profit'.. the initial depositors would get $200 each (if their deposit account offered a 2% return)
the bank keeps $2.5k as PROFIT
thus although deposit interest is 2%.. loan interest is 5%.. inflation($2.5k generated money retained) is only 2.5%
......
but here is how bitcoin is completely different to banking
in bitcoin no one can CREATE new bitcoin based on deposits or individual credit agreement.
so to offer interest. the initial depositers funds would need to get used to pay other people.(ponzi)
and so the scammy faucet habBear is advertising
without any contractual agreement for the funds receiver(faucet payout) to re deposit anything +interest to then repay the initial depositor
the faucet is a ponzi because its then a end game for those that initially deposited if no new depositers keep the ponzi alive
anywahy. back to the exchange "interest" part of the topic.
people should only deposit funds into an exchange for more then a day. if they are to use the exchange daily to trade for profit. because withdrawing and redepositing each day becomes a hassle.
but if your not trading each day. DONT treat a trader 'account' (exchange) as a bank/wallet.
its like stocks and shares. your not suppose to use a trader/exchange as a bank account. your funds ARE at risk and you can lose them. in bitcoin and in fiat its the same thing.
a fiat trader account does not have the same 'depostor' insurance as a normal bank account.
so only use an exchange if you intend to use an exchange for its purpose.. to exchange.
and the 'interest' part of the argument. well bitcoins dflationary nature (2016 >$300, 2017>$900 ,2018 >$6000) means youll get back more that you initially had, even without having to use and exchange.
then if you want to risk your funds for more greed. then day trade for a few percent.
in short
dont trust third party services to hold your funds and have them give you empty promises of profit, while you do nothing but just leave the funds in thier possession. rmember they are probably just as greedy and lazy as you. and would happily take your funds and leave you without.
However, I think we also need to look at it from the exchanges point of view. Whilst I do like your idea I think to be fair to the exchanges there are a few things we need to take into consideration.
Now if we look at just these 3 points, we will notice that banks have way more revenue streams than an exchange and they make way more money from our deposits so it makes sense that they are able to pay interests on our balances.
Now if we look at just these 3 points, we will notice that banks have way more revenue streams than an exchange and they make way more money from our deposits so it makes sense that they are able to pay interests on our balances.
This is fair, what's in it for the exchanges? After all, business needs to make money.
Cryptocurrency exchanges DO make money on fees.
Cryptocurrency exchanges COULD be involved in mining, using a fractional portion of deposits to fund a mining operation which would fund (in part) the interest due on deposits.
Cryptocurrency exchanges COULD get involved in lending. And given that they're probably require collateral for the loan, the market could avoid the ability to conduct fractional lending. The risk to the exchange of going out of business is much greater than that of a fiat bank (at least today), there's no insurance for an exchange to hide behind. They only get one shot to fail...unlike the biggest fiat banks in the world.
The greatest benefit for the cryptocurrency exchange is the loyalty that would come with paying interest, especially now while most exchanges aren't offering such a benefit. If Coinbase started paying interest they'd see bitcoin, ether, and bitcoin cash "repatriate" back to their wallets!
I think you make an interesting point there.
Perhaps that is an option that new exchanges could explore to give themselves some leverage over the more established exchanges.
However, I think we also need to look at it from the exchanges point of view. Whilst I do like your idea I think to be fair to the exchanges there are a few things we need to take into consideration.
1.) Banks charge insane services fee's, take forever to clear funds (not because they can't but so that they can hold on to our money as long as possible so that they can make as much money of it as possible)
2.) Banks make money from our money (fractional interest - they lend out our money that we deposit into our accounts and they make 10 times that amount in profit or more.
3) Many banks also charge a monthly account service fee
Now if we look at just these 3 points, we will notice that banks have way more revenue streams than an exchange and they make way more money from our deposits so it makes sense that they are able to pay interests on our balances.
A reserve only makes money from our transactions, they don't lend out our money or anything of the sort. So their revenue is limited to transactions fees, because of this I think it would be unfair to group them into the same category as banks when it comes to paying interests on peoples balances.
Perhaps that is an option that new exchanges could explore to give themselves some leverage over the more established exchanges.
However, I think we also need to look at it from the exchanges point of view. Whilst I do like your idea I think to be fair to the exchanges there are a few things we need to take into consideration.
1.) Banks charge insane services fee's, take forever to clear funds (not because they can't but so that they can hold on to our money as long as possible so that they can make as much money of it as possible)
2.) Banks make money from our money (fractional interest - they lend out our money that we deposit into our accounts and they make 10 times that amount in profit or more.
3) Many banks also charge a monthly account service fee
Now if we look at just these 3 points, we will notice that banks have way more revenue streams than an exchange and they make way more money from our deposits so it makes sense that they are able to pay interests on our balances.
A reserve only makes money from our transactions, they don't lend out our money or anything of the sort. So their revenue is limited to transactions fees, because of this I think it would be unfair to group them into the same category as banks when it comes to paying interests on peoples balances.
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