Payments are only relative small function of financial sector. Much more important is to act in credit markets, i.e take deposits and issue loans. How did you think that crypto removes need for fees (interest rate) and trust in those applications?
Recourses:
- Backed up dat file - Backed up wallet password - Recovery phrase
There, now you have 3 separate ways to not lose your btc!
All the more incentive to not lose them!
In other words, banks multiply money right now, but you cannot multiply cryptocurrency.
It's much more honest and clear.
If I do, there is practically zero difference how banks would work with crypto and fiat. And that promise can be used as money just like it can now with fiat. Thus banks would be able to monetarily multiply crypto at will as well.
If not, well, how exactly are you planning to stop me and my bank making such a contract? You know, the bank can pay me some interest on my savings is I let them lend the money forward, so both banks amd my incentive is to allow the lending of my deposit.
We use bank money now because it's more convenient than paying with gold. But imagine that paying with gold was more convenient and preferred. In that case, we would see money in the bank as an investment, not as a wallet.
Your employer does not wire transfers money to your bank, but to your wallet. He pays you "in gold" so to speak. Same when you go shopping etc. There is no bank involved in transferring money anymore.
If you put money on the bank, you cannot use those credits to pay other people, as you are able to do now. Because people expect "gold", not bank credits.
You are correct that in a cryptocurrency world, banks could still have fractional reserves. But the main difference is that there will be a clear distinction between "real money", which is cryptocurrency, and "bank notes", which are a promise of the bank to pay you cryptocurrency. Right now, you cannot make the distinction between the two.
This is also the reason why they were able to let the gold standard disappear, because nobody would notice. If everyone trades in gold, the gold standard cannot just be abolished.
Basically a cryptocurrency world is a gold standard, where gold is the preferred way of paying.
This would also mean that banks will go back to how they operated when there was no central bank. And even further back than that, because payments are more conveniently made with "gold".
The reason nobody does this is because there is no good reason to -- banks in the US are extremely reliable and trustworthy.
What if my real employer doesn't live close to me because he's in a different country? Should he send cash in an envelope? Which cash? The one from my country? From his country?
What if you live in Venezuela, would you still trust the government money?
So no, this is not possible with USD bills.
> banks in the US are extremely reliable and trustworthy
https://en.wikipedia.org/wiki/List_of_banking_crises#21st_ce...
"Massive bail-outs of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world financial system."
If cryptocurrencies ever become mainstream, banking services will be built on top of them, just as they were originally built on top of gold.
The only thing I can think of that cryptos let you do cheaper than banks is rapid, relatively frictionless funds transfer, so I’ll admit their utility there. But other than that, what banking services do cryptos give you?
Besides, you're paying for the legal and institutional protection anyway. If crypto made money transfer more efficient, they'd use it and still have the value add of a large institution backing transactions.
$80M DAI issued so far...
They can also try to outlaw bitcoin, but they have a bit more trouble stealing it.
Can I transmit my gold in any quantity that I want to anyone in the world with an Internet connection for a few dollars in fees?
Because your alternative is to trust the crypto infrastructure, which is far less trustworthy.
actually banks have failed in the past, this infrastructure not yet
Man, what are you talking about? There's a new "$100 million in coins go missing" story every 6 months.
Coins go missing from exchanges, which break the basic private key rule. People use exchanges for convenience because as clever as cryptocurrency is, it has no answer to the exchange problem.
Bullshit. No "religious" following of rules can protect you against a zero day exploit somewhere in your system.
Actually, there are smart contracts which act as exchanges. Not for all currency pairs yet, but it's on the way.
As of now, paying for goods and services with cryptocurrencies is relatively risky; it's hard to get recourse if you're scammed; and the standard credit card infrastructure with chargebacks and fraud protection is comparably more trustworthy.
As of now, storing cryptorcurrencies is risky. And I'm not even talking about the shady brokers/exchanges that can steal or lose their customer's money. You can store it yourself as well as you can - but, as it turns out, most people aren't that good at storing it securely, so all kinds of risks and breaches (e.g. hacking your devices to get access to your secrets) are more common than for bank accounts but, also, the consequences are more severe - if your bank account gets drained in an identity theft attack, very often these funds are recovered or compensated, not so with crypto. So again, the existing financial infrastructure with regulation, FDIC or similar insurance in case of fraud or insolvency, mandated consumer protection in case of scammed credentials - it's more trustworthy than the commonly used processes&procedures&infrastructure of crypto storage.
https://www.coindesk.com/crypto-exchange-zaif-hacked-in-60-m...
In reality most of the exchanges and sites dealing with crypto were (and probably still are) built by absolute amateurs with no checks and balances on their apps from a security perspective. Its scary as hell that people trust those sites with their actual money.
What was stored on the encrypted laptop was all of the cold storage wallets containing the majority of the digital assets.
No less idiotic, but an important factual distinction.