> Anyway, the BTC-enthusiast argument to that is "Well, if BTC replace banks, imagine how much money that would save."
> That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system.
There are very good counterarguments to that as well.
The idea that the "banking system" functions primarily by shipping cash and gold around is nonsense. 99.9% of traditional banking nowadays happens on computer networks. The Visa network for example handles 150 million transactions per day (that is, 500x more than bitcoin) while using a tiny fraction of the electricity. When a bank in London wants to send money to a bank in New York, they don't ship a container full of gold, they send the money electronically using the SWIFT network. To the extent that cash is still physically shipped around, it's only because people still sometimes use cash to pay for things, and banks collect and distribute this cash and replace damaged bills.
And your estimate of labor is similarly flawed. To begin with, the "banking system" includes an enormous amount of services that Bitcoin doesn't provide (loans, mortgages, securities), and retail banks are part of that as well. The transactional parts of banking can be (and are being) largely replaced with mobile apps and ATMs. The other aforementioned parts of banking aren't replaced by Bitcoin, so all of that labor still needs to exist.
So the efficiency argument shouldn't be "what if BTC replaced banks", it should be "what if BTC replaced SWIFT, ACH, BACS, Visa network, etc." there is a value proposition here but it is much smaller than the one originally proposed.
The problems with ACH is that ACH takes 3 business days. If you want an "immediate" transaction, you do a wire transfer, and pay $30-60 for it, which is a hefty sum. That was one of the original "problem statements". Of course, BTC transactions are now very expensive, and that's an issue until lightning solves that.
As far as loans - the theoretical, grand idea there is that the loan market becomes global, e.g. Americans can loan to Sierra Leone, where they don't have access to a traditional, efficient banking system. Again, a pipe dream for now. Btw, there are other coins claiming to do loans based on reputation, but so far, I haven't seen them working well. And of course, there will be scammers.
>To begin with, the "banking system" includes an enormous amount of services that Bitcoin doesn't provide (loans, mortgages, securities), and retail banks are part of that as well.
This may be a lack of imagination on your part....Many companies already offer loans/mortgages using Bitcoin as collateral (at much lower interest rates than traditional banks). Not having thousands of idle bank employees sitting around in brick and mortar banks makes the financial system a lot more efficient...
I'm not sure you understood the point I was making, which is that you can't get a loan/mortgage from "bitcoin", you have to go to a separate entity that can offer you a loan/mortgage using bitcoin to mediate the transaction. A "bitcoin bank", if you will. The labor requirements are going to be similar either way.
> That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system.
There are very good counterarguments to that as well.
The idea that the "banking system" functions primarily by shipping cash and gold around is nonsense. 99.9% of traditional banking nowadays happens on computer networks. The Visa network for example handles 150 million transactions per day (that is, 500x more than bitcoin) while using a tiny fraction of the electricity. When a bank in London wants to send money to a bank in New York, they don't ship a container full of gold, they send the money electronically using the SWIFT network. To the extent that cash is still physically shipped around, it's only because people still sometimes use cash to pay for things, and banks collect and distribute this cash and replace damaged bills.
And your estimate of labor is similarly flawed. To begin with, the "banking system" includes an enormous amount of services that Bitcoin doesn't provide (loans, mortgages, securities), and retail banks are part of that as well. The transactional parts of banking can be (and are being) largely replaced with mobile apps and ATMs. The other aforementioned parts of banking aren't replaced by Bitcoin, so all of that labor still needs to exist.
So the efficiency argument shouldn't be "what if BTC replaced banks", it should be "what if BTC replaced SWIFT, ACH, BACS, Visa network, etc." there is a value proposition here but it is much smaller than the one originally proposed.