Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: Are there banks/crypto companies immune to bank run?

news.ycombinator.com

Post reply on HN
Print view View original

31–40 of 51 posts

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#31

Post by jasontester45 »

jqpabc123 wrote: post #4

Banks earn money by investing and making loans. As a result, they don't have enough readily available cash to fully reimburse every depositor. This is called "fractional reserve" banking. The backstop in the USA in case of a bank run is FDIC insurance --- as applied in the case of SVB. The FDIC also applies rules and regulations to member banks designed to limit and mitigate the reasonably possible effects of a bank…

I just made this account and this is the first topic I seen. It's an interesting theory. I think that cryptocurrency is the future of all governments currency and I like the idea. I'm a business grad and my gf is a investment baker specializing in cryptocurrency. My question is if I could do this would you be willing to put your money in a account at my bank? This is basically what you pay a investment banker to do. I just wonder if people would want to use this service. I personally like the idea and probably would use it. Cryptocurrency has been on a huge bounce back and will continue to rise.

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#32

Post by jasontester45 »

I just started this account and this was the first topic I read. I like the idea implied. This is basically what you're paying a investment banker to do. I'm a business major and my gf is a investment banker. My question is would you use this service if I provided it? Currently it would be an impossible feat to get such a thing Fdic insured but I believe believe cryptocurrency is the future currency of the world's and since the Fdx scandal has bounced back nicely and is on a steady rise

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#33

Post by DANmode »

roflyear wrote: post #26
jejeyyy77 wrote: post #21

Earlier quoted context omitted.

Uhm, hate to break it to you, but you can only have a run on the bank as a result of fractional banking - which is systemic in the fiat banking system due to regulations only requiring they hold 10% of customers' deposits. You literally cannot have a bank run on USDC or BTC because they do not do fractional banking (i.e loan out the money you deposited).

You can't give out loans really without fractional banking either. I mean you can. But not really.

You could.

Banks, bolstered nightly with USD loans from this Fed, could not.

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#34

Post by quickthrower2 »

jejeyyy77 wrote: post #29
quickthrower2 wrote: post #27

Earlier quoted context omitted.

With stable coins you can have insolvency which is worse than a bank run probably (because no government insurance). Stable coins are the worse to keep cash - higher risk than a bank account but no interest. The only logical uses for them is online gambling and money laundering. You don’t own a USDC. Instead some random offshore company owes you a dollar.

How can a stable coin be insolvent if they have proof of reserves showing they have assets that match total deposit value?

1. Do they post daily proof of reserves?

2. Are their bank accounts locked down to strictly the blockchain activity?

Proof of reserves means everyone was safe yesterday, at best.

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#35

Post by alxmng »

roflyear wrote: post #26
jejeyyy77 wrote: post #21

Earlier quoted context omitted.

Uhm, hate to break it to you, but you can only have a run on the bank as a result of fractional banking - which is systemic in the fiat banking system due to regulations only requiring they hold 10% of customers' deposits. You literally cannot have a bank run on USDC or BTC because they do not do fractional banking (i.e loan out the money you deposited).

You can't give out loans really without fractional banking either. I mean you can. But not really.

The majority of business capitalization isn’t a loan, but invested savings in return for equity. All of venture capital, the stock market, small business using their own funds, etc.

Mortgages are collateralized, and business loans can be secured with assets or equity. I suspect the majority of bank loans are mortgages (?). Interest rates do not need to be high without fractional banking, since loans can be secured.

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#36

Post by roflyear »

DANmode wrote: post #33
roflyear wrote: post #26

Earlier quoted context omitted.

You can't give out loans really without fractional banking either. I mean you can. But not really.

You could. Banks, bolstered nightly with USD loans from this Fed, could not.

Well, you technically can, but few individuals will be issuing mortgages to the average joe.

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#37

Post by roflyear »

alxmng wrote: post #35
roflyear wrote: post #26

Earlier quoted context omitted.

You can't give out loans really without fractional banking either. I mean you can. But not really.

The majority of business capitalization isn’t a loan, but invested savings in return for equity. All of venture capital, the stock market, small business using their own funds, etc. Mortgages are collateralized, and business loans can be secured with assets or equity. I suspect the majority of bank loans are mortgages (?). Interest rates do not need to be high without fractional banking, since loans can be secured.

Who is going to issue mortgages, if not banks?

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#38

Post by jqpabc123 »

jasontester45 wrote: post #31
jqpabc123 wrote: post #4

Banks earn money by investing and making loans. As a result, they don't have enough readily available cash to fully reimburse every depositor. This is called "fractional reserve" banking. The backstop in the USA in case of a bank run is FDIC insurance --- as applied in the case of SVB. The FDIC also applies rules and regulations to member banks designed to limit and mitigate the reasonably possible effects of a bank…

I just made this account and this is the first topic I seen. It's an interesting theory. I think that cryptocurrency is the future of all governments currency and I like the idea. I'm a business grad and my gf is a investment baker specializing in cryptocurrency. My question is if I could do this would you be willing to put your money in a account at my bank? This is basically what you pay a investment banker to do.…

My question is if I could do this would you be willing to put your money in a account at my bank?

This investment banker stuff seems like a huge waste of time and effort.

In fact, so does working for money when anyone can just make the stuff out of electrons. This is the promise of cryptocurrency. I hear it is on a huge bounce back and will continue to rise --- expect BTC is currently down about 4.5% from yesterday.

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#39

Post by hd95489 »

jejeyyy77 wrote: post #29
quickthrower2 wrote: post #27

Earlier quoted context omitted.

With stable coins you can have insolvency which is worse than a bank run probably (because no government insurance). Stable coins are the worse to keep cash - higher risk than a bank account but no interest. The only logical uses for them is online gambling and money laundering. You don’t own a USDC. Instead some random offshore company owes you a dollar.

How can a stable coin be insolvent if they have proof of reserves showing they have assets that match total deposit value?

Same way you did with svb. A stable coin is basically a bank. They take in assets and generate tokens against them. If there is a mass withdrawal they would need to sell assets possibly at a loss to cover it. If they a duration mismatch then they eat the losses come withdrawal time. Go too fast and they depeg and boom

Re: Ask HN: Are there banks/crypto companies immune to bank run?

#40

Post by hd95489 »

roflyear wrote: post #37
alxmng wrote: post #35

Earlier quoted context omitted.

The majority of business capitalization isn’t a loan, but invested savings in return for equity. All of venture capital, the stock market, small business using their own funds, etc. Mortgages are collateralized, and business loans can be secured with assets or equity. I suspect the majority of bank loans are mortgages (?). Interest rates do not need to be high without fractional banking, since loans can be secured.

Who is going to issue mortgages, if not banks?

Banks only do community and jumbo in the us. Most mortgages are owned by the federal government
Post reply on HN