THE ECONOMY

Slothrop

Tight but Polite
Just at a basic, abstract level, distributing a system, and in particular distributing it between a load of people who don't entirely trust each other, is a way of making it much, much, much more expensive to run. The situations where blockchains are worth the extra effort are exactly the situations where you don't have a trusted party to keep score for you. You might argue that this applies to banking if you don't want central banks or governments or other big organizations or their representatives to keep the score, but that's about who you want to have some degree of control over the system, not how efficient it is.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
But why do bank transfers take so long? I think they could be instant for the customer of the bank wanted them to be. They create a period of limbo in which the money is in neither the sender or receiver account - it is earning interest for the transferring entity. Add this together for every transaction and it makes a lot of money.

Hawala bank transfers are basically instant so why not wire transfers?
Yeah somehow this didn’t register to me, but it does make sense now that it has.
 

IdleRich

IdleRich
Do you know how banks profit from long transaction times?
I think that some money leaves account A and turns up in account B three days later. That was the historical time for cheque clearing or whatever and so they stick needlessly to that schedule, but in those three days when the money is not in A or B, the bank has it and is earning interest on it.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
By “earning interest in it” you mean it is functioning as additional liquidity for the loans they are giving out? As in, the central incentive for banks to allow depositors to earn interest, because the bank can charge greater interest on loans?
 

IdleRich

IdleRich
Oh you've seen it now, I'm repeating myself, whatever.

But you know this hawala thing? Say you've got a guy wants to send money to someone in, I dunno, say Morocco, he goes to the hawala guy in London and says give my mate in Morocco fifty quid or whatever and he pays the London branch fifty plus some sort of transaction fee I guess, and the London branch phones the Morocco branch and says Dave wants to transfer fifty to Sid, I've got the money from him so it's all good, go ahead, and then the Morocco branch gives Sid fifty from their own stash. So Dave has transferred fifty to Sid in Morocco almost instantly... in a sense, although no money has actually moved.

But if two guys with a phone can debit one account in London and credit one in Morocco instantly, there is no fucking reason on earth why a colossal banking titan such as HSBC can't do the same.
 

IdleRich

IdleRich
By “earning interest in it” you mean it is functioning as additional liquidity for the loans they are giving out? As in, the central incentive for banks to allow depositors to earn interest, because the bank can charge greater interest on loans?
I thibk I mean that they just put it in an account that pays interest, and they do that every day with a million transactions, so even though each sum is only there for a short while, the balance is always high and the interest earned is significant.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
I thibk I mean that they just put it in an account that pays interest, and they do that every day with a million transactions, so even though each sum is only there for a short while, the balance is always high and the interest earned is significant.
But I’m pretty sure the whole paradigm of commercial banks is that they give loans at a given rates, then kick back a portion of that as interest paid to depositors, with the banks pocketing the difference after service costs.

As a depositor you help the bank by increasing their liquidity, expanding the pool they have to back up the loans they give, hence the risk involved in granting the bank custody over your funds, risk largely covered by FDIC in the US, maybe some equivalent in other countries.

Not that I’m assuming you don’t know this, I’m just breaking down my own understanding, so that any incorrect understandings I have can be identified.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Whereas settlements with crypto have been significantly faster, in my experience. Just depends on the block time of the given blockchain, if I understand correctly.
 

IdleRich

IdleRich
But I’m pretty sure the whole paradigm of commercial banks is that they give loans at a given rates, then kick back a portion of that as interest paid to depositors, with the banks pocketing the difference after service costs.

As a depositor you help the bank by increasing their liquidity, expanding the pool they have to back up the loans they give, hence the risk involved in granting the bank custody over your funds, risk largely covered by FDIC in the US, maybe some equivalent in other countries.

Not that I’m assuming you don’t know this, I’m just breaking down my own understanding, so that any incorrect understandings I have can be identified.
The thing to me is this, most people are happy enough with a bank lending and borrowing at different rates, they see it as something like a shop buying goods at one price and selling at another, they gotta make a profit somehow right?

But, on top of that, banks accidentally on purpose unnecessarily delaying your transfers by three days so they can use your money for their own profit while it's in transit... did you sign up for that, is it in the model? Bit annoying that these bloodsuckers have to inconvenience you to make even more profits on top of the obscene profits they already make ain't it?

I'm pretty sure that any delays that exist these days are entirely unnecessary. Though Wild Greens is right, I think most of those delays have vanished now anyway.
 

version

Well-known member
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