Topic: Would you be interested in a Bitcoin Credit Union? - page 2. (Read 3417 times)
I am interested in Bitcoin Credit Union, but how to operate. Who are the stakeholders?
Both banks and credit unions alike make their money off of loans. This is their primary source of income.
You may have lower costs but would still have costs which would need to be passed along.
One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)
You may have lower costs but would still have costs which would need to be passed along.
One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)
Credit Unions are member owned, most will charge a membership fee up front of around $25. If we are able to get 500 people who are interested, an up front fee of $100 each would cover the start up costs...the recommended initial users of 3000 would only require a $20 up front fee.
The price given for yearly expenses by the NCUA is around $75,000. Without handling cash or loans this price would likely be lower. Say around $50,000 for simplicity sake.
So we could either get 500 new people per year at $100 each or 2500 people per year at $20 each. Or we charge a small percentage for exchanging from dollars to bitcoins.
With 500 people making the average US salary of around $50,000 per year we could charge .2% per direct deposit to cover costs. With 1000 people we could get the rate down to .1%...quite negligible.
And being member owned, the members get to decide the best route.
And if it had enough support I am sure a few early adopters would be willing to put up the initial $50k to get this set up.
Your .1 or .2% is quite high just to receive your money. These fees would need to be above what you would charge from exchange fees (that you would need to pass on). It would probably be cheaper to just get a free checking account from a large bank, get direct deposit, transfer money to bitstamp every two weeks (or however often you are paid) and buy on bitstamp "manually" the process would only take ~20 minutes each pay period and would save money over the long run.
Any time you add an additional middle man you are going to increase costs
some of the upfront costs are not needed.
credit bureau software..? honestly you dont need to run credit checks on people depositing fiat
cheque printing? again... not needed, well thats if i read the purpose of the credit buruea correctly
anything related to loads...? again not needed.
usually a credit union is very much in house, imagine it like a book club that people buy into where the funds are stored in the house owners personal safe (thats the most imaginative laymans version i can use, so dont judge). where no interaction happens with banks because most payments are cash in hand. many churches and schools have these 'savings clubs'.
in elwars links. the PDF only really explains that a credit union which wants a wider coverage and interaction with banks(for electronic direct deposit) are best suited to find debit card issuers, which would easily and cheaply allow customers to get a 'bank account' numbers branded to the credit union for employers to then direct deposit into.
maybe if elwar speaks to current bitcoin debit card businesses (obviously not the scam ones) and work with them to mitigate costs so that customers can easily get a card and have their employer deposit fiat into. which converts to bitcoin... and then the combined service of the bitcoin debit card who until now receives bitcoin to convert to FIAT. will mutually benefit each other. as 2 separate services under the same card issuer, so that swaps for bitcoin<->fiat can be done inhouse.
credit bureau software..? honestly you dont need to run credit checks on people depositing fiat
cheque printing? again... not needed, well thats if i read the purpose of the credit buruea correctly
anything related to loads...? again not needed.
usually a credit union is very much in house, imagine it like a book club that people buy into where the funds are stored in the house owners personal safe (thats the most imaginative laymans version i can use, so dont judge). where no interaction happens with banks because most payments are cash in hand. many churches and schools have these 'savings clubs'.
in elwars links. the PDF only really explains that a credit union which wants a wider coverage and interaction with banks(for electronic direct deposit) are best suited to find debit card issuers, which would easily and cheaply allow customers to get a 'bank account' numbers branded to the credit union for employers to then direct deposit into.
maybe if elwar speaks to current bitcoin debit card businesses (obviously not the scam ones) and work with them to mitigate costs so that customers can easily get a card and have their employer deposit fiat into. which converts to bitcoin... and then the combined service of the bitcoin debit card who until now receives bitcoin to convert to FIAT. will mutually benefit each other. as 2 separate services under the same card issuer, so that swaps for bitcoin<->fiat can be done inhouse.
I would imagine for the $50k upfront costs we could get some sponsors to help with that. Maybe sponsor the first 500 people's membership fees.
Both banks and credit unions alike make their money off of loans. This is their primary source of income.
You may have lower costs but would still have costs which would need to be passed along.
One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)
You may have lower costs but would still have costs which would need to be passed along.
One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)
Credit Unions are member owned, most will charge a membership fee up front of around $25. If we are able to get 500 people who are interested, an up front fee of $100 each would cover the start up costs...the recommended initial users of 3000 would only require a $20 up front fee.
The price given for yearly expenses by the NCUA is around $75,000. Without handling cash or loans this price would likely be lower. Say around $50,000 for simplicity sake.
So we could either get 500 new people per year at $100 each or 2500 people per year at $20 each. Or we charge a small percentage for exchanging from dollars to bitcoins.
With 500 people making the average US salary of around $50,000 per year we could charge .2% per direct deposit to cover costs. With 1000 people we could get the rate down to .1%...quite negligible.
And being member owned, the members get to decide the best route.
And if it had enough support I am sure a few early adopters would be willing to put up the initial $50k to get this set up.
Coinbase has expanded to 13 countries in EU, just not Germany yet. 
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14
I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile.
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14
I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile.
I live in Germany but get paid in the US so I use a US bank account for my CoinBase account.
The $100k was off the top of my head after reading the NCUA site. Here is their break down of a typical credit union:
Estimated Pre-Chartering (Start-Up) Costs
Pre-Chartering Consultant/Organizer Fees: 35,000
Electronic Data Processing Computer Hardware: 2,800
General Ledger/Share and Loan Accounting Software: 4,000
Computer Installation & Training: 1,485
Check Writing Software (Laser): 500
Loan Delinquency Notice Printing Software: 220
Statement Printing Software: 275
Direct Deposit - ACH Software: 1,670
Enhanced General Ledger Software (Fixed Assets,
Prepaid/Deferred Expenses, Accrued Expenses): 250
Credit Bureau Software: 795
Credit Bureau Reporting Software: 330
Total Estimated EDP Computer Costs: 9,905
Furniture & Equipment - Desks, Chairs, File Cabinets,
Security: 4,000
Marketing/Surveying: 1,000
Total Estimated Pre-Chartering Costs: 49,905
Another chart shows -
Total Estimated Annual Operating Expenses: 76,781
These are taken from the NCUA website:
http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocument6-26-09.pdf
We would actually have lower expenses as we would be focused mainly on Direct Deposit - ACH with no need for loans or holding account balances, etc.
You may have lower costs but would still have costs which would need to be passed along.
One thing that you forgot to include as a cost is the 'cost of funds' as you would need to include the cost of the money that you invest while you are waiting to ROI on your investment, as if you did not invest in the CU then you could have invested it somewhere else and earned a return (potentially)
Coinbase has expanded to 13 countries in EU, just not Germany yet.
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14
I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile.
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14
I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile.
I live in Germany but get paid in the US so I use a US bank account for my CoinBase account.
The $100k was off the top of my head after reading the NCUA site. Here is their break down of a typical credit union:
Estimated Pre-Chartering (Start-Up) Costs
Pre-Chartering Consultant/Organizer Fees: 35,000
Electronic Data Processing Computer Hardware: 2,800
General Ledger/Share and Loan Accounting Software: 4,000
Computer Installation & Training: 1,485
Check Writing Software (Laser): 500
Loan Delinquency Notice Printing Software: 220
Statement Printing Software: 275
Direct Deposit - ACH Software: 1,670
Enhanced General Ledger Software (Fixed Assets,
Prepaid/Deferred Expenses, Accrued Expenses): 250
Credit Bureau Software: 795
Credit Bureau Reporting Software: 330
Total Estimated EDP Computer Costs: 9,905
Furniture & Equipment - Desks, Chairs, File Cabinets,
Security: 4,000
Marketing/Surveying: 1,000
Total Estimated Pre-Chartering Costs: 49,905
Another chart shows -
Total Estimated Annual Operating Expenses: 76,781
These are taken from the NCUA website:
http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocument6-26-09.pdf
We would actually have lower expenses as we would be focused mainly on Direct Deposit - ACH with no need for loans or holding account balances, etc.
Bitcoin Union in every country.
With direct deposits people actually are given the option of never having a bank account ever again. I have no bank account in germany, if I need cash I sell on localbitcoins (bought a car that way last month). But I still need my US account for funding CoinBase.
Coinbase has expanded to 13 countries in EU, just not Germany yet.
http://blog.coinbase.com/post/97170793362/coinbase-expands-internationally-now-available-in-14
I see what you are suggesting. The target demo would be people who want to get paid by direct deposit in BTC but without bank accounts. This is a very limited case scenario as most people who have a job also have a bank account. Since the focus of this service is for such a niche client and the profits would be so small if any I don't see how the investment (100k seems cheap, perhaps that germany? ) would make it worthwhile.
Sorry, I finally get it. The 3 solutions I cited involve employers signing up which they probably won't do and what you are suggesting allows any employee to automatically receive direct deposits in a split between BTC and Fiat without the employer even knowing that is happening.
Couldn't this be accomplished simply with Coinbases tool to automatically buy BTC at set intervals or indirectly through their API with apps like Bitcoin Trader?
So if you want 30% in BTC and the rest in fiat you would merely make a recurring buy order for that percentage of your salary(most people have consistent salaries ) after the direct deposit went through/
Wouldn't that work?
Couldn't this be accomplished simply with Coinbases tool to automatically buy BTC at set intervals or indirectly through their API with apps like Bitcoin Trader?
So if you want 30% in BTC and the rest in fiat you would merely make a recurring buy order for that percentage of your salary(most people have consistent salaries ) after the direct deposit went through/
Wouldn't that work?
Not necessarily a split between BTC and fiat because that would require the Credit Union to hold fiat deposits which would just turn it into yet another bank account and make it more difficult to get approved and more costly to run.
Some employers allow you to withdraw different percentages to different bank accounts. But if we got the exchange price as close to 0% as possible (contracting with companies that need fiat for bitcoins) then it would be just like being paid in bitcoins. Then you could convert what you need in fiat via CoinBase or use a bitcoin debit card or the many other ways of getting fiat for bitcoins.
You can set up Coinbase to do an automatic buy, it would have to be timed the day you get paid and if your pay goes up or down it would not be able to fluctuate. Plus it takes several days for the transfer to go through. And you need a bank account for this, which would be more likely to freeze your account with no legal recourse as opposed to the government shutting down a whole credit union without any legal recourse.
With direct deposits people actually are given the option of never having a bank account ever again. I have no bank account in germany, if I need cash I sell on localbitcoins (bought a car that way last month). But I still need my US account for funding CoinBase.
Sorry, I finally get it. The 3 solutions I cited involve employers signing up which they probably won't do and what you are suggesting allows any employee to automatically receive direct deposits in a split between BTC and Fiat without the employer even knowing that is happening.
Couldn't this be accomplished simply with Coinbases tool to automatically buy BTC at set intervals or indirectly through their API with apps like Bitcoin Trader?
So if you want 30% in BTC and the rest in fiat you would merely make a recurring buy order for that percentage of your salary(most people have consistent salaries ) after the direct deposit went through/
Wouldn't that work?
Couldn't this be accomplished simply with Coinbases tool to automatically buy BTC at set intervals or indirectly through their API with apps like Bitcoin Trader?
So if you want 30% in BTC and the rest in fiat you would merely make a recurring buy order for that percentage of your salary(most people have consistent salaries ) after the direct deposit went through/
Wouldn't that work?
Setting up a physical location and going through the legal process is a multiple year project and involves millions of dollars in lawyer and regulatory fees. I just don't see the advantage in replicated the antiquated way people bank as a justifiable cost.
If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:
https://bitpay.com/bitcoin-payroll-api
Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?
If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:
https://bitpay.com/bitcoin-payroll-api
Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?
For a nationwide credit union a physical location makes no sense at all.
If there is another way that I can go to my employer right now and give them my direct deposit account number and get paid in bitcoins, I am all ears.
A simple credit union can be started for less than $100k. Focusing first solely on direct deposit would bring the price much lower.
The BitPay payroll is trying to get companies to sign up to pay their employees in Bitcoin. But matching companies that pay in Bitcoin and people who want to be paid in Bitcoin will be a small number.
The price may be as low as it is because so many people are clinging on to the fiat world so much that the concept of getting paid in Bitcoin and converting to fiat for those few things they need to pay for is a scary concept.
I, for one, get paid in dollars and live on euros in Germany. I wish I could drop my US bank account but I need it for direct deposit to convert to bitcoins.
I like what you are thinking. So these are physical locations ?
No, it would serve only one purpose. Direct deposit to your Bitcoin address. There is no need for any physical location other than what is required for a main office address.
Here are two more companies offering payroll services in addition to Bitpay -
https://www.bitwage.co
http://wagepoint.com
But yes, the more competition the better.
https://www.bitwage.co
http://wagepoint.com
But yes, the more competition the better.
Setting up a physical location and going through the legal process is a multiple year project and involves millions of dollars in lawyer and regulatory fees. I just don't see the advantage in replicated the antiquated way people bank as a justifiable cost.
If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:
https://bitpay.com/bitcoin-payroll-api
Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?
If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:
https://bitpay.com/bitcoin-payroll-api
Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?
competition is good.. thats why coinbase works well alongside bitpay.. afterall we dont want just 1 company running the bitcoin planet. choice's options and decentralisation is key.
but i agree physical locations is not needed (after all bitcoin is digital) all that is needed physically is bitcoin ATM's which we can franchise out to others to manage for us.
Setting up a physical location and going through the legal process is a multiple year project and involves millions of dollars in lawyer and regulatory fees. I just don't see the advantage in replicated the antiquated way people bank as a justifiable cost.
If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:
https://bitpay.com/bitcoin-payroll-api
Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?
If there is no physical location I do see it at a useful stepping stone. What has me confused is the fact that Bitpay is already doing it in a test market that is ready to expand:
https://bitpay.com/bitcoin-payroll-api
Perhaps you are suggesting something different than this, or simply want to replicate this as to create competition?
a credit union has purpose and passes the test of time of a 5 year lifespan. thus worth achieving. and it can be an integral part of bitcoin growth and adoption.
it does not need physical locations in every town. as bitcoin ATM's dotted around can fill that gap
id say once credit unions are set up, for those employees wanting bitcoin or even just wanting a 'account' to receive wages into. we then push for more merchants to accept bitcoin as a customer payment method. seriously concentrating on the 'home basics' of life, rather than luxuries.
then and only then is it ready to push the mass adoption of average joe to convert to bitcoin either directly from merchants accepting bitcoins or through merchants sending fiat to credit union.
this allows a period of time from starting the credit union and refining it, before mass adoption.
the merchant push inbetween is critical, and i hate people that simply think USER adoption in 2014 is key.
so in 2014-2015 i see the credit union being small and stable growth of existing userbase. which is good and practical. then once people can live on bitcoins we really push the mass adoption in 2015+
another thing that would also help the community was if we pooled in all the bitcoin ATM people and instead of them individually paying for money transfer licences each. that thy work as 'agents' /franchisee's of the credit union. thus they still do what they do but instead of 20 people in one state paying 1 licence each. they payjust 5% and be still licenced, as they are under the umbrella of the credit union brand.
food for thought
it does not need physical locations in every town. as bitcoin ATM's dotted around can fill that gap
id say once credit unions are set up, for those employees wanting bitcoin or even just wanting a 'account' to receive wages into. we then push for more merchants to accept bitcoin as a customer payment method. seriously concentrating on the 'home basics' of life, rather than luxuries.
then and only then is it ready to push the mass adoption of average joe to convert to bitcoin either directly from merchants accepting bitcoins or through merchants sending fiat to credit union.
this allows a period of time from starting the credit union and refining it, before mass adoption.
the merchant push inbetween is critical, and i hate people that simply think USER adoption in 2014 is key.
so in 2014-2015 i see the credit union being small and stable growth of existing userbase. which is good and practical. then once people can live on bitcoins we really push the mass adoption in 2015+
another thing that would also help the community was if we pooled in all the bitcoin ATM people and instead of them individually paying for money transfer licences each. that thy work as 'agents' /franchisee's of the credit union. thus they still do what they do but instead of 20 people in one state paying 1 licence each. they payjust 5% and be still licenced, as they are under the umbrella of the credit union brand.
food for thought
I agree, but there are no options such as coinbase, bitpay, bitstamp, etc to do so.
Even if an employer wanted to do so they would have to jump through plenty of hoops to make it work.
Even if an employer wanted to do so they would have to jump through plenty of hoops to make it work.
There are options, but do indeed need to be refined. Why don't we work on that directly as a community vs a brick and mortar institution that can be corrupted by the state. Isn't that what we are trying to get away from?
That is exactly what this is for, getting away from brick and mortar institutions. Right now you need a bank account to get paid in fiat so you can send that fiat to an exchange.
What we need to move forward is for people to get paid in Bitcoin.
We have merchants accepting Bitcoin but they are paid in bitcoins and immediately convert it to fiat.
We need people who get paid in fiat to immediately convert to bitcoins. The other side of the chicken and egg.
easiest thing to do rather than a credit union of bank account numbers, is for merchants (who know their employee's tax brackets) pay the 60-90% in bitcoin to employee's and the other 10-40% is converted to fiat for tax.
a push on merchants to not convert as much bitcoin and only do it when really needed. then employees wont even need 'union accounts' just bitcoin addresses. i think thats what inbitwetrust is trying to say.
YET thats the philosophy of a 100% world bitcoin takeover.. which can take decades, if at all.
i think a credit union to make employers lives easier so that employers that have not even adopted bitcoin and prefer fiat can just send funds to employee's 'accounts' in the current banking system. is the interim objective here.
but then we run into the hurdles of bitcoin usefulness. as bitcoin is still young and not everyone can successfully live 100% bitcoin lives (walmart/7-11/mcdonalds/starbucks/jcpenny) dont accept bitcoin.
so it summary,
elwar is planning and thinking about the goals of 2015-2020 and inbitwetrust is thinking about goals of 2020+
now the chicken and the egg:
1) we set up a credit union for the fiat loving merchants and those merchants still clinging onto fiat to pay staff who want bitcoin without merhants realising the payments are converted. (gives the 'unbanked' staff a method to get paid)
2) we get more merchants to accept bitcoin from customers
3) we get merchants suppliers to accept bitcoinso that merchants can pay direct without conversion
3) merchants that will help peoples daily 'survival' (minimal daily needs(food, clothing landlords, toiletries, home repair))
4) we get merchants to KEEP bitcoin, to then pay staff (as average joe adoption grows)
5) by this point alot of merchants will pay staff direct in bitcoin without need of credit union. but fiat still exists and a credit union still has usefulness
I like what you are thinking. So these are physical locations ?
No, it would serve only one purpose. Direct deposit to your Bitcoin address. There is no need for any physical location other than what is required for a main office address.
No, it would need to handle cash as we'll. I can't think of any user that can pay all of their bills in bitcoin. So in the ideal situation, one would set up an account, designate a percentage of their pay to be converted to bitcoins, while the rest remains as cash in their account, accessible via ATM or check.
If you're not willing to go all the way and offer fiat banking services as well as bitcoin services, then there's really no advantage to this credit union idea compared to just getting paid as normal and having coo base make regular purchases from you linked bank account. If anything the later would be easier, since, again, people, do need a certain amount of fiat to survive. Having all their pay converted to bitcoi would just result in them needing to convert back to fiat immediately in order to pay their bills.
So do you want to go all the way? Set up a credo union that handles/accepts cash, check, ATM cards and bitcoin? Because otherwise there's just not a purpose IMO.
So, what is the point?
Why do we need this, and how is this different from what we already have?
Why do we need this, and how is this different from what we already have?
Jump to: