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Comment by jtchang | Hacker News Reader

I know someone who was seriously trying to start a bank. After all his research he concluded that starting a bank from scratch was cost prohibitive. However buying an existing bank was way easier.

For the US the amount of regulation that banks have to comply with is enormous. I'm not entirely sure all of it is value add. In contrast bitcoin has almost no regulations or controls around it. Is there not anything in between?

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As they say, most safety regulations are written blood and banking regulations are written in lost gold.

Pretty much every regulation is there because at some point someone figured out how to steal money from someone else, and the regulation prevents that. I don't really think there can be an in between.

You either have a totally unregulated market like Bitcoin, where it's incredibly easy to steal from people with absolutely no recourse (not even the courts), or you have what we have now where your money is "safe" and if something happens anyway you can be made whole through the courts, which would then lead to new regulations to prevent that thing from happening again.

How is it incredibly easy to steal Bitcoin from someone?

i assume gp's talking about double spending

I didn't get that, but it's a legitimate problem. There's a chance that at some point some organization (say the Chinese government) will have enough resources to takeover the blockchain, at which point you're at the mercy of them, with no recourse.

Maybe "incredibly easy" isn't the right term for _stealing_ it - but once it's stolen it's easy to get away with it. This is especially true if you're managing your own wallet/private keys/etc.

If you're not careful with your machine, all it takes is some piece of malware lurking in the background to keylog your password, decrypt your wallet's private key, get the funds transferred from your wallet to the hacker's, and poof all your crypto is gone. That's game over. It's gone. No court or government can get it back for you unless they send a SWAT team to go steal the private key from the people who stole it from you.

If you're relying on Coinbase or another exchange to host your wallet for you, that's a different story, but at that point they're fulfilling a similar role that a bank does for you.. which to some is entirely what they're trying to get away from by using Bitcoin and such.

$5 wrench*

Far easier with bitcoin than in the olden days when you had to physically transfer cash (and then have the issue of laundering it)

* https://xkcd.com/538/

The amount thieves have gotten away with (several $100m+ crypto heists) is comparable to the total amount that has been legitimately spent using crypto for actual goods and services (not counting “investing”) in the entire crypto economy.

https://mobile.twitter.com/patio11/status/122957996277401600...

Remember that stealing isn’t just one person taking it from another. It’s also institutional theft. See Mt. Gox as a prime example. Lots of people lost a lot of bitcoins.

If that were a regulated bank, the government would make them whole.

I understand the concept, but that doesn't justify the level of government interference we have in the banking industry.

I'm in IT security for a financial institution, and we have regulators checking the permissions of our NTP configs and that IPV6 is disabled on our cloud instances.

Those are two trivial examples out of 10,000 I could give on how there is a cottage industry of regulators and consultants and auditors making things over complex, milking money from banks, and generally making it harder to do your job because one time, this one place had this one issue.

Frankly, I'd like to get out of the banking industry because of how stupid all this shit is - most auditors don't even know what they're talking about. It'd be like hiring some HN commenters to review the schematics of the 737 for safety.

What's the advantage of having IPv6 disabled?

If your firewall isn’t configured correctly then it’s really easy to directly access a host from the internet. It’s easier for the regulator to just make sure ipv6 is off (and all of the ipv4 are private addresses) instead of verifying the firewall config.

I see. Might as well just make sure everything is in a VPC.

Why do you need a banking license? There are lots of challenger banks that have no banking licenses. In between is a money transfer license and just dealing with anti money laundering and know your customer regulations. I don’t even think PayPal or square have a banking license. Neither does apple with their apple wallet cash functionality.

Banks make loans. Banks are expected to have sufficent cash reserves to service all of their customer accounts. If a bank fails, account holders dont get their money back aside from whats insured by the FDIC and only up to 250k$.

Bitcoins are literally just pieces of a digital ledger system. No loans and all units of account are depedant exclusively on the ledger.

Regulating a bank is required because banks take in capital from account owners and take on additional risk by loaning that capital to others which may or may not get paid back. If banks lose money from bad loans to a point they dont have the cash available to service customer accounts the only thing they can tell people trying to make a withdrawel is 'tough titty'.

You don't have that problem with bitcoin. You get many other problems with it, volatile pricing and a complete inability to control money supply, but that's not one of them.

I looked into this as well. The most amusing aspect in NYS is that to get a banking license at least one of your board members has to be a good ol’ boy.

What’s that mean? Someone on already another board?

Basically. The regulations are intentionally vague and I believe my phrasing most clearly captured their actual operational meaning.

Personally, had more problems in EU than in US

I'd be very interested in hearing you elaborate on this please.

are you kidding? starting a bank in the US is ridiculously easy compared to most countries.

That’s what I thought till I met someone who owned a bank.

That still doesn't mean that starting a bank in the US is harder (or at least as hard) than it is elsewhere, right? Or maybe that person owned banks all around the world?

From reading a little online, it sounds way easier to start a bank in the US than it is in Israel.

LOL then start one

Don't think that's really true, unless by "most countries" you mean countries where the financial system is exclusively state owned

https://cdn.ilsr.org/wp-content/uploads/2019/05/number-of-ne...

I was employee #3 at a startup funded in part by a guy who started a small local bank. I talked to him about his real estate investments and the bank. Upon my inquiry of how one actually starts a bank he replied, “owning property is a right, owning a bank is a privilege”. Meaning, merely being wealthy enough to start a bank does not mean one can do so. I wonder how many children he had to sacrifice to moloch to get into the club.

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