Post
Topic
Board Bitcoin Discussion
Re: Banks are fundamentally unnecessary and actually dangerous for bitcoin
by
D.H.
on 02/08/2011, 07:08:02 UTC
Banks originated as goldsmiths who stored people's gold and gave out paper certificates representing the quantity of gold that was stored. This was a valuable service, because storing gold was hard, and paying people with gold was hard. Bitcoins are very different. Storing them is in principle easy, especially if you have a bitcoin-only device as I advocated here, and paying people with them is easy. All of the reasons for putting your gold in the bank are thus irrelevant for bitcoins.

First of all, to store bitcoins safely you need to educate yourself on how to do it. This takes a lot of effort for people who aren't tech-savvy so there is obviously a need for companies providing this service (safe storage).

Second, banks today aren't primarily about safe storage. You lend your money to the bank. They pay you some interest because they can use the money to earn more money (e.g. by lending it to someone else at a higher interest). This service makes just as much sense with Bitcoin as with central bank money and will naturally also exist in a Bitcoin economy.

Mods: Move this to Economics?