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From: Billy Tetrud <billy.tetrud@gmail.com>
Date: Fri, 9 Jul 2021 10:43:47 -0700
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To: Eric Voskuil <eric@voskuil.org>
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Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Proof of reserves - recording
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>  there is an unsupportable leap being made here

You think that because you're misinterpreting me. I'm in no way claiming
that any solvent company can prove it, I'm simply claiming that any company
can prove that they have bitcoin reserves to cover bitcoins promised as
account balances.

> Banks (lending institutions) do not operate under any such pretense

You seem to be saying that banks are under no legal obligation to serve
cash on demand to customers. While you might be right, again you're
misinterpreting me. Banks do in fact make claims to their customers that
they'll be able to get cash out of their account on demand. They're called
demand deposit accounts for a reason. And certainly customers expect to be
able to withdraw their cash on demand.

> With a 100% of investment cash hoard, there is zero lending and zero
return

I did say "pretend" did I not?

> =E2=80=9Crelate to=E2=80=9D is a far cry from 100% =E2=80=9Creserve=E2=80=
=9D

Indeed. Again, you seem to be misunderstanding me. You're putting the words
"100% reserve" in my mouth, when I never said any such thing. Proof of
80%/50%/20% reserves is still useful if that's the clear expectation for
the customer/client.

> Nonsense is English for =E2=80=9Cdoesn=E2=80=99t make sense=E2=80=9D

Literally, sure. But in actual use it carries a dismissive and rude
connotation.


On Fri, Jul 9, 2021 at 7:55 AM Eric Voskuil <eric@voskuil.org> wrote:

>
> > On Jul 7, 2021, at 01:20, Billy Tetrud via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
>
> > But people can certainly pull their money out of companies that can't
> show solvency.
>
> As I pointed out previously there is an unsupportable leap being made her=
e
> between a vault (money warehouse) and any company (including a bank).
>
> A company cannot possibly show that it has all of the money that every
> person has invested into it. At times a solvent company may even have zer=
o
> cash. It is also not possible for a company provide cryptographic proof o=
f
> its many necessarily non-crypto assets and liabilities. What is presumed
> here is a community-verified sort of crypto balance sheet, with no
> considerations of risk - a central aspect of business.
>
> As I said, if you want a vault, you can just use your own wallet. Solvenc=
y
> does not in any way imply 100% cash balance of the amounts invested.
> Raising money under such terms is pointless for both company and investor=
s
> (the owners of the company).
>
> > > Nonsense, any business can fail, regardless of temporal cash reserves=
.
> >
> > I agree that any business can fail. But a bank that pretends it can
> serve cash on demand is not a normal business,
>
> Banks (lending institutions) do not operate under any such pretense. US
> banks require 7 day time deposits for all interest bearing accounts (read
> your depositor agreement), and it should be clear that your uninsured
> balance is at risk. Banks are investment funds, not money warehouses (in
> Rothbard=E2=80=99s terminology).
>
> With a 100% of investment cash hoard, there is zero lending and zero
> return. This is true for all business.
>
> > and cash reserves absolutely relate to their ability to survive as a
> bank.
>
> =E2=80=9Crelate to=E2=80=9D is a far cry from 100% =E2=80=9Creserve=E2=80=
=9D. At 100% reserve an
> investment fund would most certainly fail. At 20% it would fail. Money
> markets (banks without a reserve requirement) don=E2=80=99t break the buc=
k, compete
> effectively with banks with reserve requirements (required by the taxpaye=
r
> who is insuring deposits and providing discount credit), and maintain
> around 10% reserve. This is consistent with a world of people with time
> preference that creates around a 10% interest rate (return on investment)=
.
>
> > Its honestly confusing to me how you could think otherwise.
>
> It=E2=80=99s confusing to me how anyone would put money into a business a=
nd expect
> (even want) it to sit there.
>
> > Also, calling my thoughts "nonsense" is rude, please check yourself,
> Eric.
>
> Check myself? Nonsense is English for =E2=80=9Cdoesn=E2=80=99t make sense=
=E2=80=9D. It=E2=80=99s not an
> insult.
>
> e

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<div dir=3D"ltr">&gt;=C2=A0

there is an unsupportable leap being made here<div><br></div><div>You think=
 that because you&#39;re misinterpreting=C2=A0me. I&#39;m in no way claimin=
g that any solvent company can prove it, I&#39;m simply claiming that any c=
ompany can prove that they have bitcoin reserves to cover bitcoins promised=
 as account balances.=C2=A0</div><div><br></div><div>&gt; Banks (lending in=
stitutions) do not operate under any such pretense</div><div><br></div><div=
>You seem to be saying that banks are under no legal obligation to serve ca=
sh on demand to customers. While you might be right, again you&#39;re misin=
terpreting me. Banks do in fact make claims to their customers that they&#3=
9;ll be able to get cash out of their account on demand. They&#39;re called=
 demand deposit accounts for a reason. And certainly customers expect to be=
 able to withdraw their cash on demand.=C2=A0</div><div><br></div><div>&gt;=
 With a 100% of investment cash hoard, there is zero lending and zero retur=
n</div><div><br></div><div>I did say &quot;pretend&quot; did I not?</div><d=
iv><br></div><div>&gt; =E2=80=9Crelate to=E2=80=9D is a far cry from 100% =
=E2=80=9Creserve=E2=80=9D</div><div><br></div><div>Indeed. Again, you seem =
to be misunderstanding me. You&#39;re putting the words &quot;100% reserve&=
quot; in my mouth, when I never=C2=A0said any such thing. Proof of 80%/50%/=
20% reserves is still useful if that&#39;s the clear expectation for the cu=
stomer/client.=C2=A0</div><div><br></div><div>&gt; Nonsense is English for =
=E2=80=9Cdoesn=E2=80=99t make sense=E2=80=9D</div><div><br></div><div>Liter=
ally, sure. But in actual use it carries a dismissive and rude connotation.=
=C2=A0</div><div>=C2=A0</div></div><br><div class=3D"gmail_quote"><div dir=
=3D"ltr" class=3D"gmail_attr">On Fri, Jul 9, 2021 at 7:55 AM Eric Voskuil &=
lt;<a href=3D"mailto:eric@voskuil.org">eric@voskuil.org</a>&gt; wrote:<br><=
/div><blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex;bo=
rder-left:1px solid rgb(204,204,204);padding-left:1ex"><br>
&gt; On Jul 7, 2021, at 01:20, Billy Tetrud via bitcoin-dev &lt;<a href=3D"=
mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">bitcoin-dev=
@lists.linuxfoundation.org</a>&gt; wrote:<br>
<br>
&gt; But people can certainly pull their money out of companies that can&#3=
9;t show solvency. <br>
<br>
As I pointed out previously there is an unsupportable leap being made here =
between a vault (money warehouse) and any company (including a bank).<br>
<br>
A company cannot possibly show that it has all of the money that every pers=
on has invested into it. At times a solvent company may even have zero cash=
. It is also not possible for a company provide cryptographic proof of its =
many necessarily non-crypto assets and liabilities. What is presumed here i=
s a community-verified sort of crypto balance sheet, with no considerations=
 of risk - a central aspect of business.<br>
<br>
As I said, if you want a vault, you can just use your own wallet. Solvency =
does not in any way imply 100% cash balance of the amounts invested. Raisin=
g money under such terms is pointless for both company and investors (the o=
wners of the company).<br>
<br>
&gt; &gt; Nonsense, any business can fail, regardless of temporal cash rese=
rves.<br>
&gt; <br>
&gt; I agree that any business can fail. But a bank that pretends it can se=
rve cash on demand is not a normal business,<br>
<br>
Banks (lending institutions) do not operate under any such pretense. US ban=
ks require 7 day time deposits for all interest bearing accounts (read your=
 depositor agreement), and it should be clear that your uninsured balance i=
s at risk. Banks are investment funds, not money warehouses (in Rothbard=E2=
=80=99s terminology).<br>
<br>
With a 100% of investment cash hoard, there is zero lending and zero return=
. This is true for all business.<br>
<br>
&gt; and cash reserves absolutely relate to their ability to survive as a b=
ank.<br>
<br>
=E2=80=9Crelate to=E2=80=9D is a far cry from 100% =E2=80=9Creserve=E2=80=
=9D. At 100% reserve an investment fund would most certainly fail. At 20% i=
t would fail. Money markets (banks without a reserve requirement) don=E2=80=
=99t break the buck, compete effectively with banks with reserve requiremen=
ts (required by the taxpayer who is insuring deposits and providing discoun=
t credit), and maintain around 10% reserve. This is consistent with a world=
 of people with time preference that creates around a 10% interest rate (re=
turn on investment).<br>
<br>
&gt; Its honestly confusing to me how you could think otherwise.<br>
<br>
It=E2=80=99s confusing to me how anyone would put money into a business and=
 expect (even want) it to sit there.<br>
<br>
&gt; Also, calling my thoughts &quot;nonsense&quot; is rude, please check y=
ourself, Eric. <br>
<br>
Check myself? Nonsense is English for =E2=80=9Cdoesn=E2=80=99t make sense=
=E2=80=9D. It=E2=80=99s not an insult.<br>
<br>
e</blockquote></div>

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