[polishninja]

| The weak point of the centralized bank is with z: The person that manages the bank. He has full control over all the balances of all the participants.

Is this really a problem of a bank that needs solving by building a distributed banking system? Generally, in the banking systems of today there is a dual control system that makes it hard for a single person to have complete control.

I know this is a theoretical article but I've noticed quite a few ideas for "blockchain" banking and similar new systems recently. They are interesting in theory but I'm not sure they are solving the right problems. I'd be interested to see some technology that can be implemented at banks today, in the real world.

[realcr]

I agree with you that having a centralized bank is not always a problem. I admit that I store my money on one of those good old usual banks. I don't really like my bank, but I'm generally happy with the service it gives me.

I live in a country where there are regulations on what banks can do, which is cool too. I don't really read the news, but I still get to hear every once in a while about some government backed bank that has decided to erase some people's debts. Money invented and gone, out of thin air. However, even those things are not the main reasons to create a decentralized bank.

Think about the following setting: You want to create a small internet like network in some place in the world. Maybe a place where you don't have banks you can really trust, or even a government that you can trust.

So you deploy some boxes, and you get a working network. Everybody on this network pays some kind of virtual money for his use of the network. (He just pays for the electricity, and the box does the real work). The balances are managed by the network itself, somehow. You don't need to find some external bank to make this work, and fulfil his arbitrary tax or other strange regulations. You don't have to trust an external bank. You just plug in the power and it just works.

I don't need the bank here to give me "buyer protection", insurance or the ability to invest in funds. I just want a tool to make sure that if one person sends more messages in the network than somebody else, than he needs to compensate the other person somehow.

Another important reason for which I believe decentralized banks are important is the ability to deal with micro-payments. One of our biggest problems these days is how a small amount of people, with limited amount of resources, can serve billions requests of people from all over the globe. Just check the job listings. They all search for people that can "Scale the backend".

I don't know if a regular bank can deal with transactions of "move 0.003 cents from Alice to Bob, for data transfer work". However, I think that a distributed bank can deal with it pretty well.

I hope that this relates to your question. Please tell me what you think if you are still around.

[nickpsecurity]

There seems to be a disconnect between the real world and Bitcoin write-ups. Reliability of currency, security of accounts, service, and so on is great at many banks with the negatives mostly happening at the greedier ones. There's also groups like credit unions. These currently have fewer problems than solutions like Bitcoin outside fees for processing, forex, etc.

Interesting enough, the fees are only a small percentage of many's revenue. They could be greatly reduced or even eliminated while the bank would remain profitable. A non-profit bank chartered to keep things no higher than X% would do fine. Procedural issues and incentives might be dealt with there to where possible to align bank's values with stakeholders.

I'm fine with research in distributed banking and such. I'm not for pretending current banks have problems they don't or ignoring straight-forward solutions where applicable. The centralized model with distributed checks is best for banking. Traditional currency is fine and governments would fight alternatives anyway. So, best to leverage and improve the proven model in the interim until P2P models solve their many problems. Side benefit: one could help many small businesses and poor people that way potentially.