This doesn't apply if many of the transactions happen "off chain" to offer the reversibility benefits you mentioned before.
Basically, to get all of the trust benefits of the banking system, you are saying we have to essentially not actually use bitcoin, which makes me wonder what the point is. At that stage, why not have gold denominated credit cards? Less technology to depend on and the government still doesn't control supply.
I guess a similar gold vault problem is possible with private key control, but that is the same as verifying if the bank still has the keys to their gold vault, a much smaller problem.
In the EU: 2.5% of the value of your deposits the banks own in bonds.
In the US: complex, but let's give a simple, not that wrong answer : up to 10%.
In Australia: 0% required, but in practice the banks have a little bit.
That's all the banks have. In our current Bretton-woods economic systems, banks create (and destroy) money.
Large institutions as in banks for example who do make "on chain" transactions but I agree this was not the strongest argument. It is correct that transparency goes out the window as soon as your transactions are "off chain".
> Basically, to get all of the trust benefits of the banking system, you are saying we have to essentially not actually use bitcoin, which makes me wonder what the point is.
Yes, in the same way that you are not using "federal reserve notes" when using any of those services (Paypal, credit cards, wire transfers, etc.). Yet you seem to still see the point in USD, the currency.
> At that stage, why not have gold denominated credit cards? Less technology to depend on and the government still doesn't control supply.
It was the case for a long time that fiat currencies were backed by gold. To be honest, I'd be somewhat happy with that but I believe Bitcoin has several properties that make it superior to gold (e.g. it's digital).
Bitcoin should be seen as a currency first and a payment system second. Nothing should prevent the current banking system from adopting it as a currency while keeping all their existing checks in place. Credit cards could support BTC denominated payments and still have all of their chargeback policies in place.
In that world, doing a large Bitcoin transaction would be the analogous of moving trucks of cash around and keeping a large amount of Bitcoin would be like hiding tons of cash in under your mattress (reserved for experts). The majority of payments would be "off chain" while still allowing for people to opt out.
You might ask what's the point of Bitcoin then? Well, I think it would still have a couple of benefits over traditional currencies like USD:
- Supply of currency not controlled by any government or entity
- Easier to "opt out" from system than with physical cash
- Transparency (institutions that wish to do so could use the blockchain to be transparent about their finance)
- Efficiency (though there's been a lot of criticism about the energy consumption of Bitcoin mining, think of all the human capital, real estate and transportation cost that goes into physically moving and securing cash)