Topic: Why There Should Be A Bitcoin Central Bank - page 13. (Read 18307 times)

Paper bitcoin ... just what the world needs.  

Central banks are the problem not the solution ...

Hey, there was a central bank, called MtGox, they used fractional banking all the time, yay!!  

Hmmm, wasnt the issue just that? That Gox had less than 100% reserves? How can that be a good thing?!? That article must have been written under Crystal Meth. 

Isn't the runaway ponzi scans kind of fbr without the bells and whistles ?

True, plus any time you buy credit on any bitcoin store.
Whereas I can understand that you can have better management of your own business you effectively ommit the trustless part.

+1

If there was a bitcoin central bank, all other bitcoin holders could have diluted the value of their own bitcoins in order to save a failing exchange. That way we could still have MT Gox. Perfect.

Oh noes, we cannot borrow our way to prosperity!

Agreed. I cannot believe so many "free market" people are against this idea. If this is what consumers want, someone should provide it, for a fee. More to the point, lending is important, especially when buying a house. Fractional reserves allows others to earn interest on their savings. Such a Bitcoin bank could still have proof of reserves, indicating how much money is being lent out vs. in reserve.
With Bitcoin, it is purely optional whether you work with such an institution. This is less easy in our current financial system.
Terminology may be bogging down a valid discussion. Central bank == insurance (as /u/PostOpticon pointed out) seems to be the crux of Mr. Mu's argument. I do agree the usage of "Central Bank" is inaccurate, but should not preclude a valid discussion.

The beauty about Bitcoin is that people could choose something retarded like this, but they don't have to.

The real essence behind the idea of bitcoin and cryptocurrencies is DECENTRALIZATION. What you are saying about the benefits of fractional reserve banking is pure nonsense. Fractional reserve banking is thievery and slavery. BTC is freedom.

Any time you do not personally control the private key you are accepting a "Bitcoin IOU" because you have deposited the BTC with someone else and they now owe you the BTC - and they control the private key.

Examples:  Coinbase, Localbitcoins, any Bitcoin bank in the future.

By making a deposit you have accepted a Bitcoin IOU for your Bitcoins.

Now they can lend them out, FRB is born.

For FRB to really get going people need to accept paper bills or checks or wire transfers or deposit acounts as Bitcoins - which they are not.  They are "Bitcoin IOUs" or transfers of "Bitcoin IOUs".

I also agree with you that it is certain to happen because people in general are scared to carry and possibly lose their cash/Bitcoins so they will "leave that to professionals" - certain, just a matter of time and wider adoption.

I don't know what you mean by "Bitcoin IOUs", but I believe that Bitcoin FRB is a certainty if Bitcoin becomes widely adopted. People will want loans, and banks will pay interest to depositors, and then loan out their money (assuming it is all legal).

I agree that is why I said:
It is limited by the population/market demanding the real thing.  If there is not a large market for IOUs including deposits of Bitcoins or only a small market for that sort of thing then Coinbase, Mt.Gox , etc. can only lend out so much of the real thing.  They are physically limited by the general mistrust for Bitcoin IOUs. For the FRB to really take off and get out of control you need the general population to accept and use Bitcoin IOUs as money.

My main point with respect to this thread is that unless/until that happens central control of Bitcoin banking is not needed.

I've always been against anything centralized, BTC central bank or BTC country. Neither is needed but more transparency could help. MyGox's failure was a surprise to most onlookers because they had no idea on how that company was managing its daily business. Had they been aware that the company was doing some risky business, they would have moved their bitcoins elsewhere.

Self-regulation can be as effective as a central bank is properly implemented.

You don't need "Bitcoin notes" or "Bitcoin IOUs" to have FRB. That seems to be a big misconception. You deposit your bitcoins at Coinbase and they loan them out. That's all it takes.

Yes being forced to participate in a ponzi and deciding by yourself is the greatest distinction that is being missed in the current system.
I dont know what an informed audience with a choice would do but personally having being subjected to a bail in I would go for the hot bitcoins in my pocket.

There are two possibilities when it comes to Bitcoin banking, fractional reserve and central banking:

1) People in general never accept Bitcoin substitues as money.  In otherwords, people want to have and to hold real Bitcoins in their hot little hands and do not use and accept Bitcoin IOUs as money (notes representing a future claim on an amount of BTC held on an account somewhere).

In this scenario:

     Bitcoin banking is relegated to "Bitcoin warehousing"
     Fractional reserve banking is somewhat limited
     Central banking (central control of the number of Bitcoin notes in circulation) is not really needed

2) People in general do accept Bitcoin substitues as money.  In otherwords, people do not really care if they have and hold real Bitcoins, they accept Bitcoin notes to be as good as or almost as good as the real thing and they accept Bitcoin IOUs as money.

In this scenario:

     Bitcoin banking can develop and grow
     Fractional reserve banking can develop and grow
     Central banking (central control of the number of Bitcoin notes in circulation) would probably be necessary to limit and control the fractional reserve Bitcoin banks - keep them from printing too many Bitcoin notes

Note that even in scenario #2 you personally can decide to not participate in the Bitcoin substitute market and demand and use only the real thing so even if a vast market in Bitcoin substitutes develops you personally do not have to participate in it.

The current bitcoin system works very well. However I do agree. This will prevent some long term inflation like it happened in year 2014.

this...  *scratches head*

Not sure if trolling or just really stupid

Eric Mu doesn't get grammar, either. How could anyone take this article seriously? I'm surprised Forbes let this op-ed run.