Banking Unbanked Bitcoiners
Yes, in a bitcoin S/L about a quarter point of the value will be unbacked bitcoin, the expected losses to savers and depositors when the bank goes belly up. What I mean is the market making risk of the currency banker is unbacked. But the total gain in efficiency will outweigh the risk by a wide margin.
Decompose the backing.
About five percent is the risky transfer of money from depositors to borrowers, pricing risk, normally absorbed by the agents.
There is risk of borrower bankruptcy, but the S/L has all the available methods to track the scofflaw and seek partial payment, so that risk is contained.
There is risk of borrower bankruptcy, but the S/L has all the available methods to track the scofflaw and seek partial payment, so that risk is contained.
The other risk is market making risk, the pit boss itself may go broke if it gets a depositor run. But, losing a quarter point? Not that big a deal. Remember, this is a profitless bank, collecting entry and exit fees or otherwise selling ads to offset costs.
Sandbox theory is great stuff, it is driving the modernization of the world at the moment and likely to lead to a singularity.
Sandbox theory is great stuff, it is driving the modernization of the world at the moment and likely to lead to a singularity.
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