Author: Billy Tetrud 2021-07-09 17:43:47
Published on: 2021-07-09T17:43:47+00:00
The conversation between Eric Voskuil and Billy Tetrud focuses on the topic of solvency in companies, particularly those dealing with Bitcoin reserves. While Tetrud claims that any company can prove they have Bitcoin reserves to cover promised account balances, Voskuil argues that it's impossible for a company to show that it has all the money invested in it. He emphasizes that solvency doesn't imply a 100% cash balance of the amounts invested, and raising money under such terms is pointless for both the company and investors. Regarding the banking industry, Tetrud points out that banks make claims to their customers that they'll be able to get cash out of their account on demand. However, Voskuil clarifies that banks, as lending institutions, don't operate under such pretenses. He further explains that with 100% investment cash hoard, there's zero lending and zero return, which is true for all businesses. When Tetrud mentions that cash reserves absolutely relate to a bank's ability to survive, Voskuil agrees but clarifies that "relate to" is far from 100% "reserve." At 100% reserve, an investment fund would most certainly fail, whereas at 20%, it would still fail. Money markets, which are banks without a reserve requirement, compete effectively with banks with reserve requirements and maintain around a 10% reserve. Lastly, Tetrud feels that calling his thoughts "nonsense" is rude, but Voskuil explains that "nonsense" is English for "doesn't make sense," and it's not an insult.
Updated on: 2023-06-15T00:09:15.412570+00:00