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Technology to End Banking

posted by Dopefish on Monday February 24 2014, @11:00AM   Printer-friendly
from the money-in-the-mattress dept.

mrbluze writes:

"An interesting blog post by Charles Hugh Smith on Why Banks Are Doomed: Technology and Risk.:

The funny thing about technology is that those threatened by fundamental improvements in technology attempt to harness it to save their industry from extinction. For example, overpriced colleges now charge thousands of dollars for nearly costless massively open online courses (MOOCs) because they retain a monopoly on accreditation (diplomas). Once students are accredited directly--an advancement enabled by technology--colleges' monopoly disappears and so does their raison d'etre.

The same is true of banks. Now that accounting and risk assessment are automated, and borrowers and owners of capital can exchange funds in transparent digital marketplaces, there is no need for banks. But according to banks, only they have the expertise to create riskless debt.

...

One last happy thought: technology cannot be put back in the bottle. The financial/banking sector wants to use technology to increase its middleman skim, but the technology that is already out of the bottle will dismantle the sector as a function of what technology enables: faster, better, cheaper, with greater transparency, fairness and the proper distribution of risk.

There may well be a place for credit unions and community banks in the spectrum of exchanges, but these localized, decentralized enterprises would be unable to amass dangerous concentrations of risk and political influence in a truly transparent and decentralized system of exchanges.

It's still early days, but can new electronic currencies such as Bitcoin become mainstream without the assent of governments?"

 
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  • (Score: 1) by len_harms on Tuesday February 25 2014, @11:15AM

    by len_harms (1904) on Tuesday February 25 2014, @11:15AM (#6650) Journal

    I think bitcoin in 2014 is much bigger than you think it is.

    I made up a number. What you are telling me is there are people out there who hold huge sums of coin and could manipulate the exchange price. Right now they have no incentive to do so as it would hurt their value. What happened if a rouge state got a hold of one of those chains? Or some guy decided its just bits and worthless to him and he just wants to troll everyone?

    If those were the only two ways to attack your spending power in a fiat currency.
    Most ways of attacking a currency involve attacking the credibility of the money. like this we may need to use a bank now, but maybe not in the future. The upside to cash is I do not care about the history of the dollar I hold. Its value is immediate and no baggage other than space. A coin chain requires an exchange to validate the transaction.

    the consumer ends up footing the bill.
    That would be no different in the bitcoin world. Do you think people will stop loaning money out? Bitcoin is a holder of value. Not a magic way to fix fraud.

    I am optimistic about the future value of 1btc.
    Good for you. I am not. I see it as a classic speculation bubble. The middle game looks all roses until it pops. For example 1/5th the value was lost in the past 24 hours. That may come right back or spend months getting there. You do not know. People who invest in that sort of reckless way end up broke or wildly rich if they happen to guess the right time to get out. No one can see the future...

    You may have 0 real dollars in (aside from power costs). As you may have mined it yourself. Or you have 'invested' in it by buying asic hardware.

    People were pumping money into .com companies right up until that bubble burst too. To use a recent example.

    I have by using sound investing techniques turned my money into 5x what I started with. The bitcoin screams stay away to me. Oh I will watch from the sidelines though.

    http://qz.com/72118/yes-people-are-hoarding-bitcoi ns/ [qz.com]
    At some point the hoarders will realize they have bits on a disc and will want to buy cars/houses/etc with it... US dollars is just paper until you spend it... You are seeing the value of your coin go up because everyone is holding on. Dont be the guy who is holding the bag. Hope you make tons of $. Do not worry about maximizing profits as you can not see tomorrow. Sell and feel good about the amount you made for 'free'.

    http://blockchain.info/charts/market-price [blockchain.info]
    Last time I saw graphs like that people were investing in .com futures. And calling it a different world. The market reminded everyone about the average.