Topic: Why Bitcoin is ultimately doomed to fail (not today or tomorrow) - page 6. (Read 40866 times)

Seriously? (You keep adding "lol" so I guess you're not being serious. But I don't understand the joke.)

What is Northern Rock and what are all those people doing there (it seems they are doing nothing, lol)?

1) "We" means I in an academic parlance (don't take too personal, I didn't mean you, lol). 2) "exclude out of consideration" means leave out of consideration (if you are unfamiliar with the phrase, it is your problem really). 3) For the purpose of seeing that FRB would be just fine under these conditions. 4) It doesn't have anything to do with FRB (let alone its elimination, lol), that was my point exactly (see 3)...

Have I?



Looks to me like people are literally going to the bank. Maybe they drive nowadays rather than run, but that'd make it an anachronism, not a metaphor.

By the way, there are pretty low limits as to how much you can withdraw in one day from an ATM.

As you said it yourself, it is a metaphor, lol

Then why are there bank runs?

The whole point is that there are times when people don't trust their banks, and there are also times when people need cash. So sometimes there is a need to literally run to the bank.

With Bitcoin, the actual base currency can be transferred over the Internet.

Okay then

Yes, but every bank which I recently trusted my money to allowed to transfer funds to another account in another bank without a personal visit to the bank (i.e. remotely over the Internet or by the phone call). So, as you can see, there is no need to literally run to the bank...

No.

I don't see how it would be different with respect to fractional reserve banking. Do you get me?

Is that a joke or something?

To get cash, you have to go to a bank, or at least to an ATM. You can't download cash over the Internet.

Who is the "we"? What does it mean to exclude demand deposits "out of consideration"? Taking into account only term deposits for the purposes of what? What does it have to do with the elimination of FRB?

By "if we exclude demand deposits out of consideration (i.e. taking into account only term deposits)", do you mean "if we put an end to demand deposits"?


Without demand deposits you wouldn't have checking accounts. You see how that's different from what we have now, right?

You don't even need to run to the bank itself to withdraw your fiat deposits, either. In most cases, you can do so over the Internet as well (and then cash through an ATM), lol

I'm sure that you are unsure (but it seems to be primarily your problem, lol)

I see no difference between what we have now and the system where would be no demand deposits, in respect to fractional reserve banking. Before you ask why so, answer first why it should be otherwise (to me, FRB would work even better in this case, as it would with no reserve requirements at all)...

I don't think that alone qualifies as a bank run. But if you want to call it that, then whatever. Yes, in 100% reserve banking, people will sometimes make withdrawals. Sometimes they'll even run to the bank to do so. (Although, with Bitcoin, there's really no reason to run to the bank to make a withdrawal - you can do so over the Internet.)


I'm not sure what you're asking. If there are no demand deposits, I'm not sure whatever is left can be called fractional reserve banking. It'd certainly be much different from what is today known as fractional reserve banking.

Ultimately what I see is more of a lendingclub.com type deal if you want to lend bitcoin and earn interest. You lend money to the financial institution (e.g. Lending Club) who puts it into a pool which it uses to lend money to individuals. The financial institution takes a cut of the profits earned by the pool and distributes the rest to the investors. There's also the prosper.com version which is more direct, but I don't think most people will want that. In either version there's no demanding your money before it has been paid back.

People running to banks to get their money back (possibly out of the fear of losing the money, though there are other reasons as well). Nevertheless, if we exclude demand deposits out of consideration (i.e. taking into account only term deposits), will this also effectively put an end to FRB?

I don't think that's an accurate description of money creation in the United States. Among other things, note that the Federal Reserve doesn't actually print dollar bills.

Of course it isn't. It can be said to be created "out of thin air" though.

Wrong. Bit coin is not created out of thin air. Its created because you used a labor force to get a miner that has a value to you and everyone else, and used that miner along with electric power to produce BTC. Even if you are aiming to produce less worth BTC than you originaly estimate - dont worry. You just sell them more expensive to cover your mining costs. Thus you have increased the BTC price and it's available supply by the act of mining out of two reasons:
1. You made BTC more scarce to others because you have mined out some of the finite pool that will not be available anymore to mine and raised the difficulty of mining for all others (BTC value rises).
2. You used cosiderable amount of energy and resource (miner) to create BTC. The ammount of energy and valuable resources (miner) used at the moment of creation has value LESS than BTC price at the moment of creation BTC (BTC value rises and has to rise because labor was done).

Fiat currency is created in exactly oposite direction: First you create money and then you do the labor - slavery (this makes sense of course in the bigger relation picture like this: Banks (FED) -> Money user).
So by doing labor you are paying debt that FED (Banks) created for you. Here is how Fiat cureency works:
1. Print money and make them more available to others (value declines)
2. Energy used to produce money is less than the value of the new paper (value declines)

Keeping in mind that with BTC its the exact oposite. There is no debt to work for in the first place. Its just the fact who wants to have more BTC (or any other coin) that perpetuates its value. Of course there are many people that dont mine any coins and dont even cosider the fact that all world's fiat currencies are doomed to be destroyed by creation of cryptographic currencies. But its just a matter of time when they realize.

Regardless of whether or not BTC is eventually doomed to fall, there is nothing stopping us from riding this wave all the way until it's eventual crash into the shore.