Good morning e, Okay, it seems to me that what you are saying is something like this:
> Proof-of-reserves would (partially) work for a "pure" warehousing service > (i.e. user pays some fee, service keeps money and provides proofs that money > is kept). > However, "pure" warehousing is not what a typical exchange does (else the > explicit fees in their exchanges would be higher), as it takes on risk due to > having to deal with non-Bitcoin monopoly money (by definition, since they are > *exchanges*). > Further, with Bitcoin you can be your own warehouse (including Green-like > multisig schemes where you own your own keys that are part of the scheme), > which is an alternative choice to hiring a "pure warehouse" (i.e. Safe > Deposit). Would that be a fair (if somewhat rough and undetailed) restatement? Regards, ZmnSCPxj > > Good morning e, > > Good afternoon Z. > > > > Any expectation of interest implies borrowing, in other words, a loan > > > to > > > > > > > the bank. > > Perhaps this is the key point of contention? > > I'm not sure, but from my observations it's long been a point of confusion in > Bitcoiner understanding of banking. > > To put a finer point on it, Rothbard's criteria is a vague in a couple ways. > Earnings that offset fees are also "interest" in the economic context - in > which he writes. So even a zero-interest account (or negative up to the full > cost of maintaining the account) qualifies under this criterion. Yet he is > careful to say "implies". The arrangement may of course be explicit, in which > case one no longer relies on implied contract, one relies on explicit > contract. Finally, one may "expect" no interest, and even pay fees, but it > may nonetheless be a loan. This is what contracts are for. > > If one contracts for warehousing service, such Safe Deposit, as opposed to a > time deposit, such as Certificate of Deposit, Savings Account, or Checking > Account, then one gets a warehousing service - full fees and a contractual > obligation to maintain 100% of the deposit. There are also money transmission > services that move money around for a fee. The inability to distinguish money > from credit (including money substitutes) and warehousing from investment > (including "banking") leads directly to false conclusions regarding money and > banking. Unfortunately a good number of self-described "Austrians" perpetuate > these errors. > > > In cases where Bitcoin is given over to an exchange, there is no expectation > > of interest, at least in the sense that there is no expectation that the > > number > > of Bitcoins deposited in the exchange increase over time. > > (There may be an expectation of an increase in the number of green-ink > > historical commemoration papers it can buy, but the point is that the number > > of Bitcoins held in behalf of the user is not expected to change) > > The expectation is that exchanges earn money from the difference between > > buy-price and sell-price, and the money-warehousing service they provide is > > simply provided for free to facilitate their main business (i.e. brokers for > > exchange). > > Thus, the expectation is that the exchange provides a warehouse service, > > not a bank service, and this service is provided for free since it enables > > their > > real business of earning from bid-ask spreads. > > I'm not aware of what are people's expectations, nor would I judge what > qualifies as someone's "real" business, but a warehouse that facilitates > trades for a fee is of course a possible business model. PayPal's intended > (real?) business model was to earn from the float. That didn't pan out, > because people didn't retain money in their transmitter service. > > Exchanges that deal in monopoly money must move this through traditional > finance. This incurs all manner of risk. When someone sends them monopoly > money, there is no crypto-surety possible. This is part of their "reserve" > just as is the other side of trades. > > What matters is what people contract for - agree to, voluntarily. > > > On the other hand, not your keys not your coins, so anyone who uses such a > > warehouse has whatever happens to the funds coming for them... > > One of the essential benefits of Bitcoin being that you can be your own > warehouse, and be your own money transmitter. > > But all production requires investment, which inherently entails letting go > of your money, producing something with it, and selling it to people for > other money. All investment is from someone's "reserve". Full reserve > investment (including banking) is an oxymoron. So whether through exchanges > or otherwise, there will be production, risk, loss and earnings. Otherwise > there will be nothing at all to buy, and all money will be worthless. This > idea of assuring that money is fully reserved applies only to that which one > does not invest (one's hoard); it does not apply to banks, or the capital of > any other companies. If it can help people feel better about their Safe > Deposit (warehousing), I'm all for it. But if one wants a 20% bitcoin > reserve, one can certainly place 20% into cold storage. > > > And of course exchanges need not earn money just from bid-ask spreads > > in practice, so they are unlikely to provide proof-of-reserves either. > > If they did not earn money as a bank, the explicit cost of their services > would be that much higher. Which people prefer is of course entirely up to > them. I don't know which is more likely. > > > Indeed, money warehousing may very well be provided by means other than > > proof-of-reserves, such as by using multisig the way Green wallet does, with > > better security. > > Right, this is an aspect of using your own wallet. > > > Perhaps "pure exchanges" would be more amenable to such a scheme > > rather than proof-of-reserves. > > Or simply pairing traders, which is of course an existing model. > > Best, > e > > > Regards, > > ZmnSCPxj _______________________________________________ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
