Quote from: DNotes on April 03, 2016, 12:44:44 AM

Quote from: RJF19 on April 03, 2016, 12:37:15 AM

Quote from: Dyna on April 01, 2016, 08:15:15 PM

That is an interesting headline and certainly caught my attention. In my opinion, what the author proposed is far from being a viable solution even if the bank is interested in Bitcoin. A full-reserve banking scenario for a single bank is hard enough to pull off; for the entire banking system is but a dream. It is always easier to write about a concept than to actually make it happened.

Bitcoin could be an interesting option to tackle full-reserve banking in the financial industry. The way this could work is by using Bitcoin as a hedge against banks, and assets could be accounted for on the blockchain. Transparency in full-reserve banking is of the essence, yet it is also one trait most banks are lacking right now.

Achieving this goal will be difficult, though, as banks have no apparent interest in Bitcoin.

The Viability of Bitcoin In A Full-Reserve Banking Scenario

Posted on7:00 pm March 27, 2016 AuthorJP BuntinxCategoriesBitcoin, News, Opinion

Bitcoin could be an interesting option to tackle full-reserve banking in the financial industry. The way this could work is by using Bitcoin as a hedge against banks, and assets could be accounted for on the blockchain. Transparency in full-reserve banking is of the essence, yet it is also one trait most banks are lacking right now.

Bitcoin is often referred to as being many things, ranging from a commodity to currency, and even a solution to solving all of the financial trouble in unbanked and underbanked regions. But very few people believe Bitcoin has the potential to change reserve banking altogether, allowing consumers to be no longer enslaved to the banking ecosystem. While there is serious doubt central bank-issued currency will ever disappear completely, Bitcoin could end up becoming a full-reserve banking solution.

Bitcoin is Financial Freedom
At its core, the Bitcoin protocol is designed to give consumers and business owners complete control over their finances at any given time. Although there is a lot of focus on the financial side of using Bitcoin technology, this point needs to be hammered until people understand Bitcoin is not just the technology, but it is a viable currency as well.

When getting involved in Bitcoin, the sole user is responsible for keeping their funds safe. There are no banks or governments involved, and this thought scares a lot of people. Up until this point, there has been a fair amount of handholding by these established financial players. However, everyone needs to remember banks and governments are the root cause of the financial trouble the entire world is in right now.

That being said, it is unlikely to see government-issued currencies going away anytime soon. Replacing the legacy systemand financial infrastructure all at once will be quite the challenge, even though a good amount of Bitcoin community members would like nothing more than for that to become a reality. However, there is a chance for both fiat currency and Bitcoin to complement each other, in a rather straightforward way.
Reforming Full-Reserve Banking
Reserve banking is an integral part of the fiat currency ecosystem and comes in two different forms. The version one Reddit user was interested in, is full-reserve banking. The way this principle works is by forcing banks to keep a portion of each depositors funds in cash, which can be withdrawn on demand. Some people may have noticed that depending on the amount of money they want to withdraw from an account, there is a waiting period involved.

Moreover, the funds deposited in these on-demand accounts would not be loaned by the bank to anyone else, as doing otherwise would be a violation of the legal requirements. It comes as no surprise to find out no country in the world requires full-reserve banking at this stage, despite monetary reforms advocating this change since back in 1935.

Bitcoin could be an interesting option to tackle full-reserve banking in the financial industry. The way this could work is by using Bitcoin as a hedge against banks, and assets could be accounted for on the blockchain. Transparency in full-reserve banking is of the essence, yet it is also one trait most banks are lacking right now.

Achieving this goal will be difficult, though, as banks have no apparent interest in Bitcoin. While they are exploring the boundaries of issuing their digital currencies in the future, they will not be suitable candidates for full-reserve banking. Bitcoin has many advantages, but it will take quite some time if ever until banks embrace this concept as part of the financial ecosystem.

Source: http://www.newsbtc.com/2016/03/27/viability-bitcoin-full-reserve-banking-scenario/

The author is putting the cart before the horse like so many others are doing these days. If something like that ever happens, it will be way in the future. Some folks forget Bitcoin is not the fix all, do all, "manna from heaven" invention. Lets keep working on getting people to use it or, even know what it is before we expect it to solve all the world's problems....

You are right on RJF, there is a lot of work left to do to make digital currency mainstream.

Perhaps we should work on getting spell checkers to recognize "bitcoin" before we declare it's ready for the world banking system... Grin