Quote from: deisik on January 09, 2017, 11:18:53 AM

Quote from: ffe on January 09, 2017, 05:46:58 AM

I keep seeing people say things like "I don't understand why you would put your bitcoin in a bank". I think you are misunderstanding what a bank can do for people.

Most people HAVE NO BITCOIN. Most people do have collateral. A bank is able to judge the credit worthiness of people with collateral and loan them bitcoin. It would be a way to buy a house and have a mortgage denominated in bitcoin.

The value of banks is this ability to judge credit worthiness and give people who have no bitcoin access to bitcoin. The banks are willing to assume the risk. They are willing to pay interest to people who trust them and deposit bitcoin in banks

Obviously, you failed to account for something

Something which will render the whole idea of lending bitcoins unrealistic as of now. And it is not Bitcoin depreciation like what you mean with fiat that will make this idea fail. It is the exact opposite of that. I mean possible Bitcoin appreciation. i.e. its price rising. Let's assume a bank offers Bitcoin deposits at 1% and loans bitcoins at 5% interest rates annually. Now it takes collateral at, say, 120% dollar worth of the current Bitcoin price. Someone takes a loan from the bank and provides real collateral (let it be his house). Then Bitcoin price surges a few times within a year, and the borrower happily defaults on his loan buying a better house instead of his collateralized one and still having some bitcoins left in his pockets. But the bank can sell the house only for a part of the bitcoins it loaned out while it still has to pay interest on Bitcoin deposits it attracted, right? And from where will it get the bitcoins outstanding?

Actually, I completely agree with you. I can't see anyone borrowing in bitcoins any time soon, so the whole point of bitcoin banks is moot.

Still, I think the common sentiment should be 'we wish there were bitcoin banks that make loans to any trustworthy person who needs bitcoin' and of course carry the risk.

By the way, the technical side in a volatile market from the bank's point of view is clear. In case of default, the bank would repossess the collateral and sell it for bitcoin, of course. And just like the current system with home values that go up or down, banks would require the owner to hold plenty of equity in his collateral.

Banks could make a business of this. But, as you said, no one in his right mind would take on a bitcoin loan if his salary is in fiat and bitcoin is on a rising curve.

No banks here. Nothing to see. Move along please.