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Comment by ww520 | Hacker News Reader

So the issuing banks print a BerkShare, sells it for $.95US to the public, and got to keep the $.95US. Hmm, anything that I missed that would dampen my enthusiasm to be an issuing bank?

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Nah, you're required to exchange one for $0.95 later.

Taking printing and other administrative costs into account, you definitely lose as the bank.

How is that different from what you did as a founder? Say you create a company and issue 100M shares of worthless stock. Then after some time you end up selling 1M shares at $10/each. You get to keep $10MM that you created out of thin air?

Truth is, by creating the company, you created value. And the bank, by providing liquidity and reducing transactional friction does the same.

They are pegged against the dollar, meaning that the bank agrees to buy it back for what they paid for it. So basically, the issuer is taking out a zero interest loan from the users of the currency. Not a bad deal considering that the bank doesn't have to do any of the work involved in their typical source of zero-interest money (checking accounts).

Isn't it the other way around? The bank is issuing a zero interest loan to the currency user? What benefit does the bank get from there being more Berkshares out in the world?

The public can also sell a BerkShare to the bank for $0.95. I don’t see how the bank makes a profit from this, other than using it as a way to acquire customers. (EDIT: Or some interest on the float, I guess)

You just described cryptocurrency.

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