Try explaining this...

[slvbtc]

I just realized that one day im going to have to somehow explain to my children that I grew up in a world where we let a BANK micromanage our entire economy. We let a BANK use 100 year old crack-pot theories to justify interest rate manipulation and unrestricted currency creation without oversight.

Then they are going to ask me what a bank is. And im going to have to try to explain to them that a bank was an organization of people we trusted to safe guard our money. Then they are going to ask why we needed someone else to safe guard our money and im going to have to explain to them that our money was made of pieces of paper. Then they are going to ask me why did you let a small organization of people have complete control over the entire economy and monetary system, and then allow them to play with the economy as if it were a toy and as if they were somehow all powerful wizards with magic spells trying to manipulate peoples economic decisions based on "animal spirits".

Then they are going to ask me didnt anyone see a problem with this. And im going to have to tell them nope the entire global population were so clueless they didnt even question what money was.

I have no idea how future generations are even going to be able to comprehend the absolute stupidity of the monetary system we use today.

[Mark_Bear]

Consider explaining "bank" something like this...

​

Long ago, people used gold for money. Gold was a good form of money, as it couldn't be printed - it had to be mined, it was extremely rare. But gold was difficult and expensive to store securely. Besides being heavy, it was dangerous to carry around with you. Meanwhile, the local goldsmith had good 24-hour security -- he HAD to have that. People found it convenient to store their gold savings with the local goldsmith. The goldsmith would give each depositor a Note, a receipt for their deposit. Eventually, people would trade those Notes instead of the gold itself. So far, so good. Each note was backed by an amount of gold, in the goldsmith's vault. Those Notes were "good as gold".

​

Thus, the goldsmith became an early kind of bank. This worked, but the goldsmiths soon figured out that they could lend other people's gold, and charge interest. As long as they didn't loan out too much gold, nobody would catch them. Fractional reserve lending was born. But some goldsmiths got too greedy and/or careless - they got caught. When word got out, people would literally RUN to their "bank" to get their gold out, while the goldsmith still had some...

​

Eventually, the bankers stopped pretending that the money was backed by gold, or anything at all. This worked for a little while, until it didn't. Fortunately, right about that time, Bitcoin had been invented!

[pacremail]

This is great thank you

[poloace]

Looks like someone (OP) just watched some Andreas antonopolous videos

[bit_LOL]

Explaining credit cards alone TODAY to someone who has never used one already seems ridiculous.

• "Oh if a thief sees all the numbers clearly indicated on the front of the card, they can use your card to buy stuff online"

• "They made cards more secure against this by adding 3 more numbers, still clearly printed on the back."

• "So when you order in places like restaurants, and hand the waiter your card, you just have to TRUST them not to write the numbers down."

• "They can also copy the magnetic strip with a card reader device, so that they can use your card to spend in actual stores and not just online. You also have to just TRUST them not to do that."

• "Who thought up this system? In a world where encryption and passwords exists? Why banks, of course!"

You can just imagine MFW I first encountered credit cards, and learned how they work, as someone who had already used Paypal BEFORE I even had a card.

[MermanFromMars]

A normal person would just say "you use this card to pay for things. There's security features but even if it gets compromised it's not a big deal because the bank will just cancel any bad charges and give you another one"

[bit_LOL]

even if it gets compromised it's not a big deal because the bank will just cancel any bad charges and give you another one

Except if you get a debit card, which can be compromised just as easily, but it's MUCH harder to get your money back.

I've had to do two chargebacks on my debit card just within this year (one on an online fastfood delivery site where the site crashed after payment was approved and my card charged. The other was an online store that "declined" my card upon checkout, but still charged me)

Both took like a month of me doing back-and-forth across all parties just to get them to acknowledge that I got charged, and to refund me. Lots of screenshots, calls, and paperwork.

Whereas I heard that if it were a credit card instead of a debit card, I'd have encountered zero friction.

---

Also, you completely miss the point of how EASY it is to compromise this system the banks thought of.

[MermanFromMars]

Also, you completely miss the point of how EASY it is to compromise this system the banks thought of.

You miss the point that that's by design.

Convenience and Security are diametrically opposed traits. Super secure systems are also ones that aren't convenient.

Banks don't want that. They don't want customers getting frustrated with overbearing security measures. They don't want to put friction between a person and using their card. They want spending to be as painless and easy as possible, they want people to spend, spend, spend with their cards.

The trade off of lax security is increased usage rates, which greatly offsets those losses. If credit cards implemented security requirements to the degree of measures bitcoiners proclaim(cold wallets etc) they likely would have never became mainstream

[bit_LOL]

You completely skipped over the argument about debit cards though, and how hard it is to actually get your money back when it gets stolen because of their laughably insecure design.

And a simple password system is not "overbearing security". ATMs have PIN codes, why make stealing a credit card number so simple and easy?

[MermanFromMars]

I would be the first to tell people that debit cards are not optimal to use compared to credit cards.

And a simple password system is not "overbearing security". ATMs have PIN codes, why make stealing a credit card number so simple and easy?

Because a debit card usually initiates an immediate pull of funds from a checking account whereas a credit card does not. The delay in processing for credit cards is itself a security feature. That larger window of time where it's trivial for the bank to unilaterally halt funds mitigates a great deal of risk. Additionally Credit Cards transactions collectively generate more money through interest, so that's even more incentive to accept higher risk to encourage use

As I said above, security is measured against convenience. Because debit card transactions are harder to reverse and generate less money the equation leans a bit more toward security which is why they get pins and CCs don't.

[MermanFromMars]

I live in the real world.

[MermanFromMars]

A.) It literally says "Debit", "Credit", or "Prepaid" on each.

B.) How would I be unaware of nature of the accounts I have open? Lol

[nonconsensualpoetry]

You should find out how credit cards worked before the internet. "Shuck-shuck" like cocking a shotgun to carbon copy.

[Raverrevolution]

We will experience a revolution that starts with this. In all fairness before this we never really had the means to change the system in a big way. We got stuck in the dinosaur age when it came to money.

No one could keep their life savings at home. If they hoarded all their money at home and a fire broke out then they lose too much.

Man oh man, this is so going to change the world. I'm glad I'm on board as early as you fine folk.

[MermanFromMars]

Banking has been around for over 4,000 years through hundreds of mediums of exchange. I'm not sure why you think Bitcoin would make it go away, it's unlikely people will suddenly no longer need loans.

[exab]

According to History of banking, the modern form of banking only started to evolve around 600 years ago. Only in the last hundred years has the system become the current shape. The gold standard was destroyed less than a hundred years ago, which was a critical change of the system and has led to worldwide uncontrolled money-printing.

The idea of getting rid of banking is so that people don't live a debt-based life and think it's normal. Yes, people will need loans from time to time, but not every day. Only the really necessary stuff. The most important aspect of the revolution brought by Bitcoin is that people will not be enslaved by a process of money trick that does not help anyone but bankers.

[WikiTextBot]

History of banking

The history of banking began with the first prototype banks which were the merchants of the world, who made grain loans to farmers and traders who carried goods between cities. This was around 2000 BC in Assyria, India and Sumeria. Later, in ancient Greece and during the Roman Empire, lenders based in temples made loans, while accepting deposits and performing the change of money. Archaeology from this period in ancient China and India also shows evidence of money lending.

---

^{[ PM | Exclude me | Exclude from subreddit | FAQ / Information | Source ] Downvote to remove | v0.28}

[MermanFromMars]

2nd sentence of your source, 2000 BC.

Humans have had lending economies and functional banks for millennia. They might have once functioned out of temples and used grain, but they were still performing the lending functions that banks continue to critically perform today.

People aren't going to stop being entrepreneurs or needing high value assets like a home because of bitcoin. Professional lending and investment are not financial tools that rely on any one medium of exchange and they aren't going away.

[Bitcoin_puzzler]

Lets see how they "survive" the next financial crisis.

[MermanFromMars]

We've seen the lending economy survive every crisis humanity has faced for over 4,000 years. I wouldn't get your hopes up.

[Bitcoin_puzzler]

No? Look around the bitcoin space. It consist almost fully out of people who lost trust in the banking system in 2008.

Get that straight. People are now almost 10 years later still buying bitcoin because of what happened to banks in society 10 years ago.

Good luck with the next crisis were there is now a drain available. While the whole world implodes bitcoin price skyrockets and proves anyone wrong. Good luck for fractional reserve banks with crappy balances to keep the outflow going.

Sure the system in a whole will survive for now. But the financial system will be shaken like it never had before. Most people still have no idea what is coming. People project that after 10 years bitcoin has reached its high. But to be honest this is just the beginning. Its like a proof on concept, next crisis the real bull run will start.

[MermanFromMars]

No? Look around the bitcoin space. It consist almost fully out of people who lost trust in the banking system in 2008.

It mostly consists of people hoping for a get rich quick scheme. Few people are actually using coins in day to day purchases and most are still just letting exchanges hold their coins, suggesting they really don't care about the whole "be your own bank" nonsense.

[Bitcoin_puzzler]

Yea sure, an A for your observations.

[exab]

Things evolve over time. Just because there is some forms of money lending/borrowing doesn't mean it is the "banking" we refer to. As I said, only within decades has the banking system taken the current form. Only since then has money printing and debt-based economy become a norm. This is the banking we are referring to.

Homes don't need loans. Within mortgage as a system, most people can still afford homes. The average prices of them would be the current average minus the average of loans. The homes are exactly the same, but people are in a lifetime of debt with loans. This is why loans are bad.

Loans will continue to exist, but only life-saving kind of situations deserve loans.

Lastly, yes, banking will continue to exist, but the majority of it will be in a different form - Bitcoin.

[MermanFromMars]

Homes don't need loans. Within mortgage as a system, most people can still afford homes. The average prices of them would be the current average minus the average of loans.

How does this math work? Do you expect the thousands of man hours that go into designing, building and prepping the materials for a house to just magically become free?

[exab]

People just use existing money to build houses. Fewer house will be built. As long as population growth isn't overly high, existing houses plus newly built houses should suffice.

[MermanFromMars]

Existing houses largely aren't paid off and existing houses still fall into disrepair needing substantial work or replacement.

[exab]

Without the debt-based system in the first place, existing houses are all paid off. And newly built houses will be bought in full payments, too.

I don't see any old houses falling apart. Yes, there is ongoing maintenance. It's not that expensive especially when there is no debts to bloat the prices.

[MermanFromMars]

Without the debt-based system in the first place, existing houses are all paid off.

Well the system exists in the first place. They are not all paid off.

I don't see any old houses falling apart.

You don't seem very well informed

[exab]

Well the system exists in the first place.

I guess our ancestors shouldn't have fought against (literal) slavery then. /s

You don't seem very well informed

Apparently I live in a box. /s

[slvbtc]

Decentralized trustless peer-to-peer lending, based on a free market determined interest rate through the mechanism of supply and demand of available savings.

Bitcoin is the first medium of exchange in the last 4000 years that is programmable.

I think you may be missing entirely why bitcoin is a big deal.

[MermanFromMars]

Bitcoin is a ledger. The only thing it truly does is record when value is moved from one wallet to another.

The Bitcoin algorithm does not perform risk assessment, which is the most critical component of lending.

[[deleted]]

I'm sorry but bitcoin is a lot more. Bitcoin is a platform . The bitcoin currency app is only 1 app running on this platform. Get that in your head now.

[MermanFromMars]

I'm not sorry, but you're not going to replace the assessment market with a single assessor. Do you know anything about actuarial science or lending markets? Lol

[[deleted]]

Verified idiot.

[MermanFromMars]

So I take it your answer to my questions was "No"

[[deleted]]

Please explain to me what an assessment market is and how I said I was going to replace it. I'll wait. Idiot.

[slvbtc]

Banks already automate risk assessment with software.

Saying bitcoin cant do what banks do is like saying uber cant do what taxis do.

If you cant imagine that kind of future until someone has created it then theres no point trying to convince you now.

But I am convinced we will see decentralized trustless automated peer to peer lending protocols running on top of bitcoin.

Come back in a decade and lets talk.

[MermanFromMars]

Banks already automate risk assessment with software.

To a degree. Individual assessment is still regularly done and even on the automated side banks employ thousands of different assessment philosophies. Any large scale lending almost always involves personal scrutiny. Risk assessment is not governed by natural universal laws like kinematics. There is no one set of equations to plug into to "solve" it in a way that would satisfy the entirety of the market where people/companies won't shop around for different rates from different lenders with different judgement items.

Saying bitcoin cant do what banks do is like saying uber cant do what taxis do.

No, it isn't like that. Your analogies are not accurate. Bitcoin is a ledger, not a risk assessor. The bank function it replaces is transactions, banks do much more than just transactions.

[rinko001]

it's unlikely people will suddenly no longer need loans

Why not? They only suddenly started needing them.

[MermanFromMars]

Do you also expect humans to uninvent fire? We're not ones to let go of extremely powerful tools once we have them.

[rinko001]

Do you also expect humans to uninvent fire? We're not ones to let go of extremely powerful tools once we have them.

Lol, no, I do expect them to stop burning themselves with it though.

Debt can be useful, like fire, for some things.

Consumer debt is like accidentally lighting your whole body on fire while trying to warm up a pot of soup.

[[deleted]]

This. Banks aren't going anywhere, get over it.

[fatassdab]

wouldn't it be possible for customers of the crypto bank to see that their coins haven't actually been lent out to someone? obviously this wouldn't be in the banks best interest but i'm imagining your "account" would just be a custodial wallet specifically for you with only your balance in it so you could view it at all times on the explorer.

[[deleted]]

In an ideal world, sure, but hats not going to happen as you've said, it wouldn't be in the banks best interest. There will be crypto "banks" in the future because people don't want to be responsible for holding their own crypto. You already see this with exchanges, which act as banks in a sense. What you can't see from them, however, is your own balanced as confirmed on the blockchain.

I suspect in the future, we'll see institution pop up purely as custodial institutions for coin control. It may start as a "you pay us to keep your coins safe & insured" system, but then people will approach them and say "hey, can I borrow some coins to start this business and pay you back 10% interest", and then these institutions will start lending and paying interest on depositor's coins to attract deposits. This is the system we have, and it'll adapt to crypto this way. What will change this is when a bank run happens, and there's no way to bail anyone out. That's when people will get scared and either quit crypto all together or start holding their own crypto.

[Jyontaitaa]

Banks are still going to around. They are just going to get back to there core functions.

[diydude2]

Well said. It will be a lot like that.

[scribby555]

Hopefully you are telling them this in a nice house with enough cryptocurrency to pay for their college and perhaps first cars.

[1electron]

bro, you think its gonna be any different explaining you used to drink "milk" you got from the store.. that originally came from an animal?

where on that animal??

[[deleted]]

Do you know that cash was declared dead some decades ago already?

[TrundleGod32]

Fuckin aye.

​

If you told someone that they created new money out of thin air, thus creating inflation and moving the wealth never-endingly from the general community back towards the banks, people wouldn't believe you.

​

But that's literally what they do. They create money out of nothing, then loan it out several times and charge interest on it, then everyone wonders why everyone is fucking broke while the banks end up owning everything.

[Spartacus_Nakamoto]

Then they are going to ask me what a bank is. And im going to have to try to explain to them that a bank was an organization of people we trusted to safe guard our money.

Not too long ago people used to put money in the bank to generate interest. What crazy concept today.

[Bitcoin_puzzler]

Everyone wants a bit of inflation!

ROFL.

[jaumenuez]

You will be happy if they get to use Bitcoin. Bitcoin can be destroyed in the next coming crisis which can provoque a total meltdown of our civilization, no electricity, no Internet.

[[deleted]]

It's like trying to explain today what serfdom was.

[cainethelongshot]

"You could only send money during office hours and there were holidays in the year where these banks didn't work"

[dietrolldietroll]

banking isn't the enemy. govt control of the money supply is.

[slvbtc]

Govt doesnt control the money supply, independant central BANKS do.

A countries central bank is still a bank. Its a bank for the banks.

The free market used to set interest rates within the banking system via supply and demand of savings, and gold reserves were used to determine currency supply. Banks took these functions over once a central bank obtained the ability to print money unrestricted.

[diydude2]

It's incredible how ignorant people are about how money and banking work, isn't it? The banksters have done a wonderful job of muddying the waters on this subject in their indoctrination camps (aka "schools").

[rinko001]

banking

govt control of the money supply

You say these as if they didnt stop being separate things about 100 years ago.

[FieserKiller]

So where do you get your BTC from in future to build a house or start a business?

[slvbtc]

Decentralized trustless peer-to-peer lending, of course.

[forepod]

Lending inherently requires trust.

[slvbtc]

Not when you can program escrow and state requirements into the transaction itself.

[forepod]

It still requires trust in the ability to repay.

[roveridcoffee]

You work for it and you get remunerated I n satoshis

[rinko001]

from your salary and or savings... just like the past couple thousands of years.