Oddbean new post about login | logout On this day in 2008, Lehman Brothers went bankrupt. When I am asked why I am in Bitcoin I always answer, out of dignity. It is a good time to explain how fractional reserve banking works and its ability to create money, not only the central bank can create money, there are different ways. Fractional reserve banking is a system in which banks are only required to hold a fraction of their customers' deposits as reserves. This means that they can lend or invest the rest of the money deposited. How does it work? Initial deposit: A customer deposits $1000 with the bank. Mandatory reserve: If the bank is required to keep only 1% of deposits, it will keep $10 as a reserve. Loans: The bank can lend the remaining $990 to other customers. Deposit and loan cycle: The borrowed $990 can be deposited in the same bank or in other banks, which in turn will keep 1% ($9.90) and lend the remainder ($980.10). With an initial deposit of $1000 and a reserve ratio of 1%, the total money that can be created is $100000. In January 2012 the ECB established that the reserves of European Banks should be 1% of their total deposits. In March 2020 the FED established that the reserves of US banks should be 0% of their total deposits. Yes, you read that right, 0%. Do you understand why I am in Bitcoin? DIGNITY.
On this day in 2008, Lehman Brothers went bankrupt. When I am asked why I am in Bitcoin I always answer, out of dignity. It is a good time to explain how fractional reserve banking works and its ability to create money, not only the central bank can create money, there are different ways. Fractional reserve banking is a system in which banks are only required to hold a fraction of their customers' deposits as reserves. This means that they can lend or invest the rest of the money deposited. How does it work? Initial deposit: A customer deposits $1000 with the bank. Mandatory reserve: If the bank is required to keep only 1% of deposits, it will keep $10 as a reserve. Loans: The bank can lend the remaining $990 to other customers. Deposit and loan cycle: The borrowed $990 can be deposited in the same bank or in other banks, which in turn will keep 1% ($9.90) and lend the remainder ($980.10). With an initial deposit of $1000 and a reserve ratio of 1%, the total money that can be created is $100000. In January 2012 the ECB established that the reserves of European Banks should be 1% of their total deposits. In March 2020 the FED established that the reserves of US banks should be 0% of their total deposits. Yes, you read that right, 0%. Do you understand why I am in Bitcoin? DIGNITY. nostr.oxtr.dev
In this case the fraction is approaching or equal to zero. 2008 will come again.
It's because the FED backs their guarantee, why? Because they can simply print their way pit of it in a "bail out" Someone has to pay, and it's the tax payers nostr:nevent1qqswntz20knee2awakyx8sst3u2w9x43pkx0zlpdhtjwmz0dnctc6qcpzdmhxue69uhk7enxvd5xz6tw9ec82c30qgs0eac2gh86s9l24qfmnw52xawhz0f3d862yleaetpafygjmanaxlsrqsqqqqqpg57prf
Cool post. Thanks man.
Fractional reserve banking doesn't create money. Not sure where this absurdity came from. Banks create promises, that's fine everyone creates promise, I can promise you I'll help you with moving house next weekend for sure. Sometimes I don't keep my promises and sometimes bank don't keep theirs. https://en.m.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank
The cashu/ecash that some bitcoiners promote is exactly the same thing btw.
What about FediMints
The fuck I know. I'm not into crypto, remember.
Ok. It seems better than cashu because there's multiple custodians supposedly, idk how it works but there's far less support than cashu. Only mutiny wallet and fedi support it, mutiny wallet is shutting down..
I meant to say mobile wallets, there's some command line tools but I can't be bothered with that
0xChat has an integrated mint wallet. Your sats remain on your device. I've been playing with it and it's pretty cool. Probably one of the better features of 0xChat.
This is what I mean. Cashu has lots of support, but not FediMints. There's a single custodian that can steal your coins. FediMints has multiple custodians, so it seems clearly better, but it has very little support. I might be missing something, but it seems very weird.
The more I play with 0xChat the more I'm realizing that it's just another Nostr client with some enhanced messaging capabilities. It's kinda crazy that people are seriously talking about it like it's some revolutionary private messaging platform that's destroying the competition. People are making me way too mad today! Lol
The developer has said they think SimpleX is more private, but I think Nostr clients in general need to add some big text with warning symbols and sirens to warn about the insecurity of DMs. Also, this should be added: https://github.com/retrnull/garnet/issues/8 ⚠️🚨
It would be great if Nostr included some sort of support for SimpleX links. I think it would be beneficial for both Nostr and SimpleX to have a harmonious relationship.
Sadly a lot of the developers see it as competition rather than something that can coexist. I believe it would be beneficial for both platforms too. User safety is being put at risk with the current system.
That's a shortsighted, glib perspective. SimpleX isn't a Nostr competitor, and Nostr isn't a private messaging platform, despite 0xChat. They would be better serve the community by recognizing exactly what Nostr is and is not, and working in harmony with private messaging platforms to create an experience that benefits all. Nostr is never going to be a premier private messaging platform, and the sooner they accept that the better.
I completely agree, this is what I meant, I probably shouldn't write stuff when I'm tired. I don't think Nostr private messaging and SimpleX can coexist without users' safety being harmed. The ones who already are aware go out of their way to avoid Nostr DMs, and a lot even put links in their Nostr profiles. This means the only people who are using Nostr DMs are people who don't understand the lack of privacy and security, which is very dangerous.
Nostr and SimpleX can coexist. One as a publishing, or "social media" network, the other as the most private and secure communication network.
I don't agree; private Nostr will become a thing. Giftwrapped event, private relay, MLS on Nostr, and more to come.
They're spreading themselves thin by trying to make Nostr into all things for all people rather than focusing on their core model, and making it the best social media and publishing platform. The problem with trying to turn nostr into a ubiquitous Swiss army knife is that the needs, and best practices of one thing will necessarily conflict with the needs and best practices of other parts. Invariably, there must be compromises, and the whole project will suffer. The needs of a global social media platform are in inherent conflict with the needs of a secure, private messaging platform, and so one or more parts of whole will suffer.
On this day in 2008, Lehman Brothers went bankrupt. When I am asked why I am in Bitcoin I always answer, out of dignity. It is a good time to explain how fractional reserve banking works and its ability to create money, not only the central bank can create money, there are different ways. Fractional reserve banking is a system in which banks are only required to hold a fraction of their customers' deposits as reserves. This means that they can lend or invest the rest of the money deposited. How does it work? Initial deposit: A customer deposits $1000 with the bank. Mandatory reserve: If the bank is required to keep only 1% of deposits, it will keep $10 as a reserve. Loans: The bank can lend the remaining $990 to other customers. Deposit and loan cycle: The borrowed $990 can be deposited in the same bank or in other banks, which in turn will keep 1% ($9.90) and lend the remainder ($980.10). With an initial deposit of $1000 and a reserve ratio of 1%, the total money that can be created is $100000. In January 2012 the ECB established that the reserves of European Banks should be 1% of their total deposits. In March 2020 the FED established that the reserves of US banks should be 0% of their total deposits. Yes, you read that right, 0%. Do you understand why I am in Bitcoin? DIGNITY.
When a Bank gives a loan, it creates credit. So the money handed out to the customer is fresh printed money not someone elses deposit. Depending in the risk level the Bank has to deposit a fraction of the loan amount at the central bank (can be 0%). The Bank may loose this money if the load is not repayed.