Breaking Dollar's Fungibility
In the modern public nosotros rarely brand a distinction betwixt the money inwards our banks, the currency inwards our pocket, or our residuum inwards a digital wallet similar PayPal - a dollar is a dollar, pretty much fungible. However, that's non actually the instance - money deposited inwards a banking enterprise agency the banking enterprise owes that money to you lot (it's non "your cash"), digital wallets too ain your money in addition to tin hand the sack easily freeze your balance. Transferring money from i banking enterprise to about other is ever done at par, fifty-fifty if that banking enterprise inwards interrogation mightiness go Lehman Brothers near to become downwards dorsum inwards 2008. Perhaps it is fourth dimension nosotros suspension the dollar's fungibility in addition to starting fourth dimension putting a cost tag on the credibility of banks?
Over 150 years agone inwards the "free banking era", whatsoever banking enterprise could number its ain banknotes. You would see a number of unlike notes inwards circulation - you lot could choose $2 from The Bank of Chattanooga, The County of Polk, or The Lawrenceburg Bank of Tennesee. Same in Canada. While it created a lot of hassle for anyone wanting to operate the currency, peculiarly if they would move beyond where those notes would go redeemable, it too allowed for a marketplace position to course of educational activity in addition to lay a existent value on the currency based on how credible the issuing banking enterprise was - skillful notes would go valued at par, bad ones - at a discount.
While banking nowadays is sure enough simpler in addition to safer amongst uniform currency issued past times i entity per country, FDIC deposit insurance to foreclose people losing money inwards instance a banking enterprise goes bust, etc. However, this agency nosotros too lost the powerfulness to evaluate bank's trustworthiness, usability, etc. in addition to arbitrage it.
In the Bitcoin world, it is fairly straightforward to approximate the wellness of an telephone substitution past times looking at its telephone substitution rate. Back when MtGox was going bust, its rates deviated from its competitors past times 15+% even early on. When withdrawals out of the telephone substitution became impossible, at that topographic point was fifty-fifty a secondary marketplace position that traded MtGox BTC for existent BTC past times using MtGox's inter-account transfer capabilities. You tin hand the sack rail arbitrage metrics today.
Setting upward such elementary metric for each banking enterprise would allow anyone to easily compare diverse banks in addition to lay that metric on everyone's mind. If i twenty-four hours your money would become downwards to 95 cents on the dollar, maybe you lot would inquire your banking enterprise "what is going on?" in addition to respect out that some people to demand all of their deposits to go covered 100% past times the government-issued currency, rather than allow for fractional reserve banking? Or maybe it would allow about people to movement their money to their local credit spousal human relationship to back upward the grassroot companionship in addition to earn 1-2% on the conversion rate.
Banking inwards the modern public is pretty homogeneous - currency dictated past times the government, fungible money no affair where you lot go. Perhaps it mightiness go useful to choose the marketplace position dorsum into the equation in addition to allow us to run into view the bank's worth past times checking the value of their dollars?
Sumber http://tpbit.blogspot.com/
Private notes
Over 150 years agone inwards the "free banking era", whatsoever banking enterprise could number its ain banknotes. You would see a number of unlike notes inwards circulation - you lot could choose $2 from The Bank of Chattanooga, The County of Polk, or The Lawrenceburg Bank of Tennesee. Same in Canada. While it created a lot of hassle for anyone wanting to operate the currency, peculiarly if they would move beyond where those notes would go redeemable, it too allowed for a marketplace position to course of educational activity in addition to lay a existent value on the currency based on how credible the issuing banking enterprise was - skillful notes would go valued at par, bad ones - at a discount.
While banking nowadays is sure enough simpler in addition to safer amongst uniform currency issued past times i entity per country, FDIC deposit insurance to foreclose people losing money inwards instance a banking enterprise goes bust, etc. However, this agency nosotros too lost the powerfulness to evaluate bank's trustworthiness, usability, etc. in addition to arbitrage it.
Bank arbitrage
In the Bitcoin world, it is fairly straightforward to approximate the wellness of an telephone substitution past times looking at its telephone substitution rate. Back when MtGox was going bust, its rates deviated from its competitors past times 15+% even early on. When withdrawals out of the telephone substitution became impossible, at that topographic point was fifty-fifty a secondary marketplace position that traded MtGox BTC for existent BTC past times using MtGox's inter-account transfer capabilities. You tin hand the sack rail arbitrage metrics today.
How would this apply to banks? Well, you lot could starting fourth dimension amongst the currency issued past times the authorities every bit the base of operations - i dollar hither would go redeemable to i dollar inwards banknotes (this is what MintChip aimed to do for example). Banks would operate that every bit their reserves for bankchain" to allow marketplace position for diverse banking enterprise debt to form. The cost divergence of the debt could stalk from diverse factors - how stable the banking enterprise is (FDIC insurance is all good in addition to good, but nobody wants to become through the stress of having your saving locked upward for who knows how long), how inexpensive in addition to tardily it is to transact to in addition to from a banking enterprise (say, USD-demoniated banking enterprise concern human relationship inwards Europe mightiness go valued less due to the extra cost of transferring money overseas), how accessible is the banking enterprise (branch opening hours in addition to how mutual they are), every bit good every bit how their customers portion the banks values (banking for millennials, sharia-compliant finance, etc.).
Setting upward such elementary metric for each banking enterprise would allow anyone to easily compare diverse banks in addition to lay that metric on everyone's mind. If i twenty-four hours your money would become downwards to 95 cents on the dollar, maybe you lot would inquire your banking enterprise "what is going on?" in addition to respect out that some people to demand all of their deposits to go covered 100% past times the government-issued currency, rather than allow for fractional reserve banking? Or maybe it would allow about people to movement their money to their local credit spousal human relationship to back upward the grassroot companionship in addition to earn 1-2% on the conversion rate.
Conclusions
Banking inwards the modern public is pretty homogeneous - currency dictated past times the government, fungible money no affair where you lot go. Perhaps it mightiness go useful to choose the marketplace position dorsum into the equation in addition to allow us to run into view the bank's worth past times checking the value of their dollars?
Related links:
- Singularity of Money
- MinuteEarth's videos on multifariousness - 1, 2
Sumber http://tpbit.blogspot.com/
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