Fair enough, modus vivendi.

PS, please forgive my growing number of typos, but they are inversely proportional to the volume of whisky still in the bottle. 

The volatility of the bitcoin is due to speculations and illiquidity. That doesn't mean it doesn't have an intrinsic value. Like the dollar (which isn't worth a dollar from one moment to the next by the way; see inflation) bitcoin is a fiat currency who's value is decide by market efficiency (a fancy way of saying we say its worth what its worth, tautological, I know). Since a bitcoin can be used to buy goods and services direclty, it isn't dependent on any other fiat currency, dollars, euros, or tulips. It can be converted into those other currencies and commodities, and since those other currency and commodities are also convertible into eachnother, in an efficient market the the conversation factors would all be reconcilable. We don't live in an efficient market, so they're are discrepancies in the conversion factors. Your business model is simply arbitrage is taking advantage of the discrepancies, aka skimming off the top - which debases the currency. See superman III for more information.

I wish you luck with your venture, it's not the bank for me though, as its not really any different than the royal bank of-JP-citi-SBC-ice-Scotland, inc

Mayhaps an example.... Pick your favorite commodity, how's tulips, I like tulips.

I deposite a bitcoin in your bank, which on the day I deposit it happens to be worth a tulip bulb. You charge me a fee. You take my fee and, with some black box inhouse currency mumbo in the middle, buy something less than a tulip bulb (you only have less than my deposit in fees, and my deposit is worth a whole bulb, so you can't possible buy a whole bulb). Over time, your less than a whole bulb appreciates and becomes worth a whole bitcoin. You sell your bulb, and now have a bitcoin.  You pay me a share of the gains in interest.  I now have a bit coin and then some.  Sadly, my bitcoin and then some can't buy a whole bulb anymore. So even though I have more bitcoin than when I started, I can't buy as many bulbs, and as I said, I like tulips.  

A'ite, bear with me here, cause I'm struggling to follow your business plan. So no fractional reserve lending. Fair enough. Reading through you're other responses I've ascertained you (correct me if I am wrong) intend to pay interest by

• charging fees and returning a portion of that income as interest
• investing a portion of that income in real assets and commodities which you hope will appreciate in value and return some of the capital gains as interest

So to point one, the sum of all fees must exceed the sum of all interest, ergo your clients are net losers if we view point one in isolation. If we include point two, you are making the claim that real assets and commodities will gain value relative to bitcoin. That is another way of saying bitcoin will lose value relative to those assists/commodities.

The above being true, what your are counting on is (through your doing or the pressures of the market place) bitcoin will depreciate relative to goods and services. You will then arbitrage the difference and pay a proportion of that arbitrage to your clients. Meanwhile, your clients will have lost a (necessarily larger) portion in depreciated coin. So at best, you're cushioning the depreciation with interest. At worst, you've some scheme in mind to cause the depreciation. Either-way, it's not clear to me how your clients end up with more value over time, even if they end up with more coin.

I am curious; how do you pay interest without engaging in fractional reserve lending or otherwise debasing the currency through the money multiplier effect? Doesn't this undermine Bitcoin's raison d'etre?

Fair enough. I'll chock it up in the easier-said-than-done wishful thinking column. Still, I'm going to dream of a glorious future where, one day, proving you're not spam involves donating a few clock cycles to a good cause.

It took me half an hour to figure out how to post, I'm not going to creating an alternate coin anytime soon. Nor would I want to, I like this one just fine. That said; ideally someone, or someones, much more clever than me can reconcile the needs of the Bitcoin system and making the network's work productive while preserving the proof-of-work attributes.

Hey, hi, so, Bitcoin, brilliant. That's great. I was reading up on how stuff works though....

Unless I'm mistaken, there is an entire network of super awesome computers performing calculations en masse for the sole purpose of slowing the system down. That makes sense, except, there is no reason the calculations need be meaningless. Why aren't the crypto-hash-puzzles something more productive; searching for near earth objects, fiddling with the human genome project or patrolling the sky's for ET, curing cancer etc. Surely the miners could be earning their coin for something more productive than wasting computer clock ticks? Smart People, you could make this happen, right?