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Comment by aazaa | Hacker News Reader

> “If cryptocurrency exchanges want to be the banks of the future, we need to make sure people can have confidence in these systems,” she [Deputy Attorney General] said during an interview at the Aspen Cyber Summit.

You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future. The entire idea behind Bitcoin is money without banks or the baggage they bring.

Ironically, the harder the US and other countries push exchanges - to tax, to fight the endless wars on drugs and terrorism - the more likely it is that users will implement the behaviors that will obviate the need for exchanges in the first place.

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"You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future."

That's not fair. Crypto Exchanges being regulated does not affect how Bitcoin works. I cannot do bank transactions without using the bank. But you'll still be able to do Bitcoin transactions without exchanges, even if they get banned.

> But you'll still be able to do Bitcoin transactions without exchanges, even if they get banned.

Exactly. But a ban seems highly unlikely. Instead, exchanges are more likely to be regulated and subverted to the point of being useless. You're right, Bitcoin would continue on its merry way because exchanges are peripheral to using Bitcoin past a point.

If that transition never happens, Bitcoin will have failed.

you can physically mail someone cash if you want to, the question isn't if you can, the question is if it makes sense for the vast majority of users, which is really the yardstick things should be measured against.

> You'll know Bitcoin has failed if cryptocurrency exchanges become the banks of the future. The entire idea behind Bitcoin is money without banks or the baggage they bring.

the 'entire idea' is a monetary system that isn't controlled by a central party, doesn't have an inflationary supply and thus can't be rigged for cantillon insiders; banks existed before both of these things and the basic function of lending money and returning interest on savings is not objected to by this worldview

How can banks work without a fractional system? What is the purpose and value of banks in that scenario?

There's no reason you can't operate a fractional reserve lending operation with bitcoin. You also don't need a central bank or other authority either. It's as simple as taking a deposit and loaning out some of it. And hoping you get payments or more deposits before people want their deposits back.

There's even value in not taking deposits, but just loaning out founder/investor's capital. Although maybe that's just a weird deposit.

I'm not sure how to make deposits useful without lending out some of them, though. I guess just money is less likely to be stolen in a bank than under your pillow, but probably not in a cryptobank.

The value is in that the bank has more capital than you.

Consider the case of islamic banking, for example. You could think that lending money without charging interest is completely bonkers and it’s impossible to make a business that way. However, by thinking out-the-box you can get an arrangement which is favorable to all involved parties.

The quote is so indicative of how locked into the dominant paradigm these people are. Smart contracts are the banks of the future. Programmable money will tax, loan, finance, and govern. It will supplant much of the state apparatik with math that obliviates the need for external coercive force for many applications. As smart money matures and proves it’s superiority to the average member of society, it will leave these dinosaurs blinking in confusion.

> the more likely it is that users will implement the behaviors that will obviate the need for exchanges in the first place.

So double ironically, the US cracking down on Bitcoin, is good for Bitcoin.

The state needs to step in to restore legitimacy to a pure capitalist enterprise that is in crisis lol

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