[beefield]

> Why would I pay middlemen (banks) when there is no need to? Also why would I trust them, when there is no need to?

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?

[koonsolo]

I see this as a disadvantage of using banks. They act as if you can freely access your money in your account, but actually you can't. That money is loaned out for the most part, and it's a trick that keeps the current system going. But once you have a bank run, reality will kick in on how banks really work. At least the cryptocurrency that you own is really yours today. The numbers on your bank account are yours some day.

[rmah]

Most people I've spoken with about crypto prefer the way banks work. The idea that losing your keys means losing your money, with no recourse, terrifies them.

[j0ba]

> no recourse

Recourses:

- Backed up dat file - Backed up wallet password - Recovery phrase

There, now you have 3 separate ways to not lose your btc!

[RugnirViking]

you also have 3 ways for someone to steal it !

[omarchowdhury]

> The idea that losing your keys means losing your money, with no recourse, terrifies them.

All the more incentive to not lose them!

[beefield]

So, how would you then like to arrange your mortgage if banks are not allowed as intermediaries managing the credit risk between depositors and yourself?

[koonsolo]

Banks could still lend out cryptocurrency, but in that case you know it is lended out (because you don't have it).

In other words, banks multiply money right now, but you cannot multiply cryptocurrency.

It's much more honest and clear.

[beefield]

But I would still as a depositor have the promise from the bank that the bank will give me back my cryptocurrency when I want?

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.

[koonsolo]

In practice, there would be 1 big difference: payments are made in cryptocurrency, not in bank credits. And this difference has an impact on all the rest.

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".

[umanwizard]

Basically everything you just said is already possible with USD instead of Bitcoin. You could demand your employer pay you real cash instead of bank credit, and so on.

The reason nobody does this is because there is no good reason to -- banks in the US are extremely reliable and trustworthy.