<p>Saying people are hoarding bitcoins is out of focus: they are simply "not spending them" because there aren't enough ways to spend them.</p>

<p>Allowing loans wouldn't improve the situation, since there still wouldn't be many ways to spend those loaned bitcoins.</p>

<p>Finally, bitcoins already are a currency subject to deflation, and they are also (more or less) constantly gaining value against traditional currencies, so just holding them increases their value.</p>

<p>To sum it up, not a terribly good idea, and definitely not ground-breaking.</p>

CC BY-SA 3.0
2013-01-25T09:27:14.437Z
2013-01-25T09:27:14.437Z
o0'.
<p>Unfortunately, it's not simple. The problem is that such a bank would be terribly vulnerable to fluctuating exchange rates.</p>

<p>For example, say the value of a Bitcoin doubled over three months. Suddenly, a large number of people who have loans will not be able to afford enough Bitcoins to pay them back. A large number of their loans would go bad all at once. Banks can't function if their loans are correlated in this way -- that's part of why a collapse in the housing market led to bank failures.</p>

<p>Basically, to make the risk tolerable, you'd need enough people willing to take short positions against the value of Bitcoins going up. It's not clear where those people would come from.</p>

CC BY-SA 3.0
2013-01-25T18:50:48.893Z
2013-01-25T18:50:48.893Z
David Schwartz
<p>Let's assume a bank dealing in bitcoins is not any central of government bank that could control the money supply. </p>

<p>Instead, let's say there was a bank where the people would deposit money at some interest rate, and also the bank would give loans to the people at some interest rate.</p>

<p>The intention of the bank would be to keep the bitcoins in the circulation (by taking and giving benefits to the people with some interest rate) instead of hoarding, as we know hoarding may hurt the Bitcoin economy.</p>

<p>Or, suppose I deposit some BTC in HSBC bank (or some kind of reliable online bank), and HSBC will give the interest every month.</p>

CC BY-SA 3.0
2013-01-25T19:00:57.680Z
Related: http://bitcoin.stackexchange.com/q/408/516
Highly Irregular
CC BY-SA 3.0
2013-01-26T01:14:13.987Z
I would compare 'Bitcoin' to 'Linux', when a traditional bank is 'Windows'. Even though Linux is great, finally, it is the effort of companies like 'google' and 'canonical' that's pushing adoption.

We certainly need some kind of bank that would simplify Bitcoin stuffs and make it more accessible to people; like, buildings bank like abstraction layer around Bitcoin (accounts, login, 2FA, etc.).

It would give confidence to people because they already learnt to trust such central authorities.

It would solve many problems and as already said in previous answer, 'hoarding' is not one of them.
vi.su.
CC BY-SA 3.0
2013-01-26T02:58:36.547Z
Or, this Bitcoin bank could also just be a device, or smart phone, as well.
vi.su.
<economic-theory><banks><exchange-rate>
Can a bitcoin bank solve the problem of intensive value fluctuation caused by hoarding?
Rahman
# Can a bitcoin bank solve the problem of intensive value fluctuation caused by hoarding?

(Asked by: username_0 on 2013-01-24)

Let's assume a bank dealing in bitcoins is not any central of government bank that could control the money supply.

Instead, let's say there was a bank where the people would deposit money at some interest rate, and also the bank would give loans to the people at some interest rate.

The intention of the bank would be to keep the bitcoins in the circulation (by taking and giving benefits to the people with some interest rate) instead of hoarding, as we know hoarding may hurt the Bitcoin economy.

Or, suppose I deposit some BTC in HSBC bank (or some kind of reliable online bank), and HSBC will give the interest every month.

**Tags:** economic-theory, banks, exchange-rate

> **Comments:**
> **username_1**: Related: http://bitcoin.stackexchange.com/q/408/516  
> **username_2**: I would compare 'Bitcoin' to 'Linux', when a traditional bank is 'Windows'. Even though Linux is great, finally, it is the effort of companies like 'google' and 'canonical' that's pushing adoption.  We certainly need some kind of bank that would simplify Bitcoin stuffs and make it more accessible to people; like, buildings bank like abstraction layer around Bitcoin (accounts, login, 2FA, etc.).  It would give confidence to people because they already learnt to trust such central authorities.  It would solve many problems and as already said in previous answer, 'hoarding' is not one of them.  
> **username_2**: Or, this Bitcoin bank could also just be a device, or smart phone, as well.  

---

## 2 answers

### Answer by username_3 on 2013-01-25. Score: 3

Saying people are hoarding bitcoins is out of focus: they are simply "not spending them" because there aren't enough ways to spend them.

Allowing loans wouldn't improve the situation, since there still wouldn't be many ways to spend those loaned bitcoins.

Finally, bitcoins already are a currency subject to deflation, and they are also (more or less) constantly gaining value against traditional currencies, so just holding them increases their value.

To sum it up, not a terribly good idea, and definitely not ground-breaking.


---

### Answer by username_4 on 2013-01-25. Score: 3

Unfortunately, it's not simple. The problem is that such a bank would be terribly vulnerable to fluctuating exchange rates.

For example, say the value of a Bitcoin doubled over three months. Suddenly, a large number of people who have loans will not be able to afford enough Bitcoins to pay them back. A large number of their loans would go bad all at once. Banks can't function if their loans are correlated in this way -- that's part of why a collapse in the housing market led to bank failures.

Basically, to make the risk tolerable, you'd need enough people willing to take short positions against the value of Bitcoins going up. It's not clear where those people would come from.


---

