Author: ZmnSCPxj 2021-07-09 23:50:45
Published on: 2021-07-09T23:50:45+00:00
The discussion in this email thread revolves around the concept of full-reserve banking and the use of proof-of-reserves (PoR) to demonstrate solvency in Bitcoin exchanges. The argument is made that when money is saved in a bank, it is considered lending to the bank, as there is an expectation of interest. However, in the case of Bitcoin exchanges, there is usually no expectation of interest, and the exchange provides free warehousing services to facilitate their main business of earning from bid-ask spreads. Exchanges may not provide proof-of-reserves, but alternative methods like using multisig could be used for better security. The conversation also covers the stability and reliability of money market funds, which have had no reserve requirement and have a nearly spotless record of satisfying their obligations. While some argue that banks should educate people about the limitations of withdrawing money from their accounts, others believe that people have minds and free will and can read the contracts they are actually signing. It is argued that PoR is a fairly pointless exercise because there are no guarantees against hacks, insider or otherwise, bankruptcy, or state seizure, and that if one wants full reserve banking, they should use a wallet. Overall, the thread emphasizes the need for a deeper understanding of the concepts involved in these discussions.
Updated on: 2023-06-15T00:09:28.484369+00:00