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19

TL;DR: In the first instance, my belief is that a government would have to create their own brand of Bitcoin (i.e. a new version of the blockchain) and use that to trade against other currencies. This is a useful move because the government retains control over their currency (they set the mining rules) and they don't suffer a wealth drain in ...


16

No, you can't prevent fractional reserve banking technically. For example, IOUs can circulate just like Bitcoins and there's no technical means to stop it. Essentially, anything worth X Bitcoins (once risk and the like are factored in) can act just like X Bitcoins, even if it's not X Bitcoins. And since it's not Bitcoins, nothing Bitcoins can do can stop it. ...


14

Countries have AML (anti-money laundering) laws that limit activities that could enable money laundering. A Bitcoin exchange arguably can be used for money laundering. Even if the letter of the law doesn't say anything specifically relevant to Bitcoin, banks don't want to take chances. To be able to respect AML and other laws, banks do need to know a few ...


12

Please Take Note: Flexcoin has been hacked and is no longer operating. Original Post shown below: Right now, the closest thing you can find to a bank is Flexcoin. If you keep your money there, you will receive a variable interest (they call it discount for legal matters) every month. They also have a user defined cold storage service available for those ...


11

Well, all transaction between Bitcoin addresses are stored forever, and so are fully traceable. What this means in your case is indeed that the credit card company can trace the coins you bought from them. However, there are a few things to note. Bitcoin addresses don't have a name assigned. F.e. Bitstamp will not know that the Bitcoins are coming from the ...


10

It doesn't matter very much because the economy can trivially create substitutes for currency. Anything that has the same capabilities as currency (fungible, easily exchanged, limited supply) can also serve as currency. A good example would be a Mt. Gox code. Mt. Gox may or may not have 100% reserves, but it doesn't matter. A Mt. Gox code for 100 Bitcoins ...


9

In theory, such a thing could be created. 10 Bitcoins today is worth more than 10 Bitcoins tomorrow. If you don't see why, just ask yourself this: Would I rather have 10 Bitcoins today or 10 Bitcoins tomorrow. Obviously, you'd rather have the 10 Bitcoins today. Why? Because you can hold them for a day and have the 10 Bitcoins tomorrow. Plus, you have the ...


9

The limited money supply isn't actually an inherent problem for payment of interest. As long as the people being paid the interest are spending it back into the economy (presumably the banks, creditors, and investors have expenses, right?), then there will be an opportunity for the person who owes the interest to earn or buy it back and use it to pay down ...


9

The number of bitcoins in existence is limited to 21 million. This is the equivalent of M0, the monetary base. Whatever institutions do with it, creating M2, M3 etc. is not something that Bitcoin can or will control. Here is some more info on the Bitcoin wiki: Controlled Currency Supply


8

Currently, the most secure place to store bitcoins online appears to be the exchanges. There is some evidence that Mt. Gox is also hoping to become the default bitcoin bank as they are developing mobile payment applications for instant payment. http://mtgoxlive.com/mobile/ They have also reimbursed the losses of another bitcoin exchange. https://www.mtgox....


8

Speaking as someone who has worked on a blockchain project for a bank, I can tell you that banks are interested for several reasons. Banks know they are ripe for disruption Due to a combination of heavy regulation and incumbency (mixed with a variable level of collusion), banks have remained relatively protected from the technological disruption that has ...


6

There are a lot of online services where you can keep your bitcoins. You just need to choose what is more convenient for you, depending on what features do you need. All Bitcoin Exchanges can hold bitcoins and some of them allow you to instantaneously transfer bitcoins between users, which can be a big plus if you want to accept payments. Other popular ...


6

A nation State would never adopt Bitcoin willingly because the government would lose control over the ability to inflate the money supply. Inflation is nothing more than a tax. No government will ever willingly give up its primary means of stealing from the public. The inflation tax is the most insidious and the easiest for government to get away with. ...


6

In the U.S., the least expensive method is a Dwolla transfer to an exchange that accepts Dwolla (Mt. Gox, and Camp BX). Dwolla charges $0.25 per transaction when the amount transferred is over $10. Quite simply, depositing cash at a bank or 7-11, Walmart, CVS is going to be the fastest and easiest way. One method that was the least expensive, depositing ...


6

If someone will want to sell bitcoins for Rupees, they might list it on LocalBitcoins. It's a good start.


6

See Mahin's answer below for http://BuySellBitco.in If you want physical cash without going through a bank then you'll find many individual traders here: https://localbitcoins.com/country/in And there are offers to buy and sell posted in threads on the India board: http://bitcointalk.org/index.php?board=89.0 But as of December, 2012 there are no market ...


6

You don't need anyone's permission to use it. Nobody can freeze your account or charge back a payment after you received it. It's accessible to anyone with Internet access regardless of what country they're in. No single company can dictate its policy. It is almost free to use with no proportional fees.


5

As for Mt. Gox, they got their polish account when they bought up bitomat.pl, after it lost its private keys. They continue to support accounts from that other website, so they allow easy money transfers to that account (although it takes them a couple days to credit the account). As for Intersango, I presume they might want to cater to that part of the ...


5

I think there are a few problems with your assumptions. If you are depositing bitcoins in a bank, you certainly can determine whether the coins are being lent out, if the bank wants to support this feature - it simply assigns a specific address to you, and whatever is in that address is your balance. As long as the coins stay there you know they are not ...


5

I think your premise is flawed - when trading on Mtgox or other exchanges, there will only be transfers between you and Mtgox. If you're a day trader most trades will be internal on Mtgox and not be settled by the banks at all. Even if they do "send a notice to anti-laundering authorities", it doesn't mean the next day they will show up at your doorstep to ...


5

A Ripple gateway acts much like a bank. They compete based on trust, convenience, and cost. They hold other people's money. They promise to handle that money according to their customer's instructions. One difference is that there's no formal barrier to entry to becoming a Ripple gateway. Someone can open a gateway anywhere in the world and have equal ...


5

Blockchains are best used when there are multiple entities that don't necessarily trust each other. So within one bank, a blockchain really isn't useful. However between bank transfers could use the blockchain. Right now, in order to send between banks, banks use centralized systems (ACH, SWIFT, etc) operated by a third party. With federated blockchains, ...


4

I believe the Swedish government would be less likely to crack down on Bitcoins. I believe they have a political party called the "Pirate Party", which as far as I know, got elected as a reaction to the crackdown on Pirate Bay. I would love for someone to comment, in order to confirm this.


4

I think your question is based on the false assumption that there is some 100% safe way to store money that doesn't cost anything. Mt Gox can't stuff your money in their mattress, and even if they did someone could come along and steal the mattress. They have to sensibly balance risk and cost -- zero-risk is not a sensible or achievable goal and is not ...


4

Banks do lend out more money than they have. This concept is referred to as Fractional Reserve Banking. Government regulation is supposed to impose a minimum of reserves they need to keep, limiting the amount of money they may create. The difference between Bitcoin users and banks is that banks can lend out more money than they have, because they can just ...


3

The important answer is on https://support.mtgox.com/entries/20568322-all-eur-transactions-will-be-temporarily-suspended-within-europe-with-immediate-effect quote : "While Bitcoin at a European level is so far not directly impacted by this decision, the Bank de France (France's central bank) has confirmed that because of European banking rules, ...


3

I don't think a bank offering that would/should be trusted right now, because the bonds market is too shallow. The way I see it, we have to see a large increase in the bonds market beforehand. There will be a lot more bonds, some riskier/boarderline scams, and some more "serious" (e.g. Gavin or Mt. Gox issuing for a bond would probably not be treated as a ...


3

That would probably be either Bitcoin OTC or Local Bitcoins, as you are trading directly between people. This way you can barter for better rates and you don't have to pay a fee.


3

Saying people are hoarding bitcoins is out of focus: they are simply "not spending them" because there aren't enough ways to spend them. Allowing loans wouldn't improve the situation, since there still wouldn't be many ways to spend those loaned bitcoins. Finally, bitcoins already are a currency subject to deflation, and they are also (more or less) ...


3

Unfortunately, it's not simple. The problem is that such a bank would be terribly vulnerable to fluctuating exchange rates. For example, say the value of a Bitcoin doubled over three months. Suddenly, a large number of people who have loans will not be able to afford enough Bitcoins to pay them back. A large number of their loans would go bad all at once. ...


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