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Until about 100 years ago, money was backed by tangible assets; if the Bank of England wanted to have 1,000,000 £20 notes printed, they had to have £20,000,000 worth of gold stashed away somewhere. The King, if he decreed anything, didn't so much decree money as decree taxes to raise the money, which meant somebody else had to have the gold.Pat Farrell wrote:. . . Before the US existed, Kings would decree money. . . .
Campbell Ritchie wrote:Until about 100 years ago, money was backed by tangible assets; if the Bank of England wanted to have 1,000,000 £20 notes printed, they had to have £20,000,000 worth of gold stashed away somewhere. The King, if he decreed anything, didn't so much decree money as decree taxes to raise the money, which meant somebody else had to have the gold.
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Paul Anilprem wrote:Minting of bitcoins is a small part in the whole scheme of things. Its power comes from the fact that it cannot be inflated or deflated by any one. Second, it has no dependency on banks.
Pat Farrell wrote:
Paul Anilprem wrote:Minting of bitcoins is a small part in the whole scheme of things. Its power comes from the fact that it cannot be inflated or deflated by any one. Second, it has no dependency on banks.
I can't understand why we still have banks. It is not clear to me what they do. I have one for two things: I have a safety deposit box for keeping critical paperwork like my marriage documentation, deed to my house, heirloom jewelry, etc. and they accept cash deposits. My broker-checking account doesn't offer those two services. Other than that, I don't see any value in what they do.
I also do not understand why the US has so many banks. Back when I worked with banks a lot, in the late 20th century, we had about 10,000 banks in the US (bank brands, not offices) while all of Canada had six. So if six is enough for Canada, its hard to see why we need more than say 100 in the US. Why do we have a hundred times that many? What unique offerings do they bring to the marketplace?
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Paul Anilprem wrote:Well, nothing wrong with having more number of banks. Whatever work banks do, they are paid for that work by the customers. More banks means more competition for that work and therefore better rates.
Pat Farrell wrote:
Paul Anilprem wrote:Well, nothing wrong with having more number of banks. Whatever work banks do, they are paid for that work by the customers. More banks means more competition for that work and therefore better rates.
I strongly disagree with this. Sure, in a pure market world, more competitors means better rates. But banks don't compete on rates. And consumers have no clue what they are buying or how to compare costs. US banks are essentially an appearance of a market, with a 10,000 leg octopus, each leg having a sign indicating that its unique. But its more of a Borg.
There is next to zero innovation in US banking. They are all sheep, doing what the other banks do
They are all sheep, doing what the other banks do
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Mohamed Sanaulla wrote:I still don't understand how the bitcoin value changes? I read that its value increases the greater it is transacted in the market.
@Paul Do you have the link to the original paper?
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Paul Anilprem wrote:You are mixing two things. Banks deal in moving money. Money, which is produced by the govt. Innovation in money (manipulation i.e.) is the domain of the govt. Banks don't and can't do that. But they definitely do innovate in how that money touches people.
Pat Farrell wrote:
Paul Anilprem wrote:You are mixing two things. Banks deal in moving money. Money, which is produced by the govt. Innovation in money (manipulation i.e.) is the domain of the govt. Banks don't and can't do that. But they definitely do innovate in how that money touches people.
Banks don't move money, computers move money.
Pat Farrell wrote:
I worked at CyberCash, we invented internet commerce. We made instant movement of money between merchants and consumer banks happen. The banks hated it, because they took 3 to 7 days to "move" the money, charging interest all along the way. While CyberCash is long go, PayPal is here. Most folks pay by electron, my house pays nearly all bills automatically, there is no need for human interaction at all.
I see zero innovation in banking at all. Woweezowee, US banks added smartchips to credit cards in the past year or so, something Euro banks had last century.
Please be specific, I am not following your generalized claims of innovation
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Randall Twede wrote:would you work at your job in exchange for bitcoin? you cant go to the supermarket or fill up your tank can you? that's the only problem i have with it.
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Innovation in money (manipulation i.e.) is the domain of the govt. Banks don't and can't do that.
Norm Radder wrote:
Innovation in money (manipulation i.e.) is the domain of the govt. Banks don't and can't do that.
I think banks do create money in the sense that they give mortgages. The value of the mortgages a bank issues is greater than the number of fed notes it has in its vaults.
Although cash typically refers to money in hand, the term can also be used to indicate money in banking accounts, checks or any other form of currency that is easily accessible and can be quickly turned into physical cash.
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Paul Anilprem wrote:
That is incorrect.
The bank must have that cash before it can give it to the person.
There are only two hard things in computer science: cache invalidation, naming things, and off-by-one errors
Randall Twede wrote:would you work at your job in exchange for bitcoin? you cant go to the supermarket or fill up your tank can you? that's the only problem i have with it.
fred rosenberger wrote:
Paul Anilprem wrote:
That is incorrect.
The bank must have that cash before it can give it to the person.
This is not technically true - at least in the U.S. The Fed sets a minimum cash reserve. So if a bank has say a total of $100 in deposits, it only has to keep $10 cash on hand. As a simple example, lets assume there is only one bank and everyone uses it.
So the bank has loaned out the $90 it can, which lets it keep the 10% reserve on hand. That $90 goes out to new people, who then deposit it into the bank. The bank now has $190 in deposits. It has to keep $19 on hand, and loans out $171, which gets depositied, giving the bank $362 in deposits...and so on...
Yes, this is an oversimplified example, but my point is that a bank actually CAN loan out more money than what it has on hand.
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There are only two hard things in computer science: cache invalidation, naming things, and off-by-one errors
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