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Old 02-03-2019, 06:29 PM
Northern Piper is offline
Charter Member
Join Date: Jun 1999
Location: The snow is back.
Posts: 28,391
Interesting comments - thanks all.

A couple of things that occurred to me as I was reading.

One is, as others pointed out, calling this a "currency" isn't really accurate. It behaves more like an e-security, where people invest in it for speculative purposes.

Over time, my guess is that the policy of government regulation of securities is going to be applied to these crypto-currency "banks", in response to cases like this one. Consumer protection laws don't care so much about "buyer beware". They care about regulating the conduct of people who hold large amounts of other people's valuables, whether that's money, gold, shares and bonds, or valuable bytes.

If one negligent person's death means the customers lose $180,000,000 in assets, "Regulation is coming." Libertarian ideology be damned.

The other thing I'm not quite sure about - as a practical matter, does this bitcoin bank have to have access to the "cold wallet" every day, to make transactions to the " hot wallet"? Or is it only something needed every couple of weeks or months?

In other words, could this business model work if the "cold wallet" laptop is kept in a bank vault and only taken out now and then? Or do they need to be able to access it daily?

Because if it's the latter, they need to have their own physical security system equivalent to protecting an asset worth over $100,000,000.