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Full Financial/Banking System
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Author Topic: Full Financial/Banking System  (Read 2372 times)

NxtFreak

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Full Financial/Banking System
« on: December 03, 2014, 10:05:07 pm »

I am expert on economics too, so i got this idea of integrating a full banking system into the NXT world.

This is how it would work:
  • Many banks would exist (private enterprise,no monopoly,no trusts,healthy competition)
  • (A) investors would deposit their NXT into the Bank, and get X interest rate every weekend lets say (daily would be too quick as much people are not always online so weekly target is better) then the bank collects his money, and lends it out to (B) creditors/other people who would then use it for stuff (probably as leverage like mining/account leasing so that they are not allowed to consume it, otherwise the bank would lose money and the system would fail), then they are required to pay an interest rate back to the bank (through smart contracts or else you name it), which the bank will of course share with the (A) investors, while it would take the spread as his profit for the service
  • It would be a great incentive for both bankers to make a banking business and compete with other banks by lowering increasing spreads and interest rates as a market determined rate
  • Leverage would always be 1:1 meaning that the bank cant use borrowed money, only the money he gets in income, no fractional reserve banking sh*t like in real life, that would only destroy the habitat
  • No Central Bank/inflation/money printing stuff, NXT is very good for having limited coin supply, so that no inflation would ever occur, while also the poisonous effect of the Central Banks also destroy the financial system with the massive price controls that it imposes.No, here everything would be determined by the market, true free banking system like it has been never before
  • This would really improve the money making ability of everyone,as it would offer a fairly riskless enviroment for investments, just like real world banks do (more often than not nowadays,but the purpose is that), and the big positive effects would be that Leasers/Lenders of Account Forgers could really improve their speed of doing that by getting extra capital from this system
  • Interest rate spread always > Transaction Fee for obvious reasons

Here is an illustration how it would look like:



Any comments or observations are welcome, i would be happy if this great feature could be added!
« Last Edit: December 03, 2014, 10:24:16 pm by NxtFreak »
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NxtFreak

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Re: Full Financial/Banking System
« Reply #1 on: December 06, 2014, 01:43:31 pm »

bump!! c'mon nobody really into this? It would be the best system that any crypto currency would have seen !
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jl777

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Re: Full Financial/Banking System
« Reply #2 on: December 06, 2014, 06:00:00 pm »

bump!! c'mon nobody really into this? It would be the best system that any crypto currency would have seen !
Can you make it a bit more detailed?
Both the description and diagram arent quite enough for me to translate to code I can simulate in my head, so I cant evaluate it

James
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pt7

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Re: Full Financial/Banking System
« Reply #3 on: December 06, 2014, 07:00:04 pm »

bump!! c'mon nobody really into this? It would be the best system that any crypto currency would have seen !

How does the "Forced to Repay Debt" part work?  Is the diagram missing a "Leg Breaker" component? :-\
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2Kool4Skewl

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Re: Full Financial/Banking System
« Reply #4 on: December 07, 2014, 07:08:06 am »

Any comments or observations are welcome, i would be happy if this great feature could be added!

You could implement this right now.  Nothing needs to be added into the NXT core to allow you to do this.

How does the "Forced to Repay Debt" part work?  Is the diagram missing a "Leg Breaker" component? :-\

Lol... The bank would have to be very careful on to whom it extended credit.  This type of a system would work best if the loans were given out locally as opposed to internationally over the internet.  You could check credit and collect debts easier.
« Last Edit: December 07, 2014, 07:13:17 am by 2Kool4Skewl »
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NxtFreak

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Re: Full Financial/Banking System
« Reply #5 on: December 08, 2014, 07:21:49 pm »

bump!! c'mon nobody really into this? It would be the best system that any crypto currency would have seen !
Can you make it a bit more detailed?
Both the description and diagram arent quite enough for me to translate to code I can simulate in my head, so I cant evaluate it
James
How does the "Forced to Repay Debt" part work?  Is the diagram missing a "Leg Breaker" component? :-\
Either the credited sum would be locked (nobody can touch that) in another account (or that account), and then returned to the loaner bank later.

The point is that to make sure that the creditor repays the sum 100%, while still remaining anonymous (no personal information logged, nor ID card or such), the protocol itself should substract the credit from his account.

So obviously the current protocol that could set up this system is the forging feature, so that is the 100% guaranteed payment.If the bank could give out the credit to X account, while the money would get locked (X account cant move or steal the money and run with it) but, the income he would generate would also get subtracted by the credit interest rate, and after the credit period is over, the money gets returned back to the bank.

Let me illustrate in an example:
A = Investor has 10 NXT
B= Bank has 10 NXT (from previous investments or just his own money)
C= Creditor needs 10 NXT

  • A invests 10NXT into B (Bank).
  • B has 20 NXT
  • B promises 4% interest for the investor /week
  • C gets a loan (10NXT), B charges 5% interest
  • C cant steal the 10 NXT , also he cant use it up, it would get locked in his account, but he can gain income through forging.
  • C gets a weekly income of 6% through forging, he then pays back 5% to the B bank, and A Investor gains his 4% interest.
  • B profits 1% from spread, C profits 1% from forging difference, but he got the necessary leverage to gain more NXT (in nominal value)
  • C creditor could also buy assets, but he must be able to pay the money back no matter what, and he could not stole the funds and transfer it somewhere else.Perhaps some kind of insurance feature needs to be added in case he can't pay or he has no money in the account. So let's say all users of this banking system would have to pay into an insurance system, and whenever there is a creditor that bought assets and after the loan period is over he lost money with that investment (because this investment carried a risk, while the forging didnt), the lost cash would be returned to the bank by the insurer

Now perhaps the 5% is too much, but the interest rates would be market determined (No Central Bank). It would be a true decentralized banking system.
« Last Edit: December 08, 2014, 07:29:36 pm by NxtFreak »
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NxtFreak

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Re: Full Financial/Banking System
« Reply #6 on: December 08, 2014, 07:23:16 pm »

Any comments or observations are welcome, i would be happy if this great feature could be added!

You could implement this right now.  Nothing needs to be added into the NXT core to allow you to do this.

How does the "Forced to Repay Debt" part work?  Is the diagram missing a "Leg Breaker" component? :-\

Lol... The bank would have to be very careful on to whom it extended credit.  This type of a system would work best if the loans were given out locally as opposed to internationally over the internet.  You could check credit and collect debts easier.

Well i can't program Java, and i have no idea how the crypto system works in terms of programming, i can only program offline stuff, network programming is not my forte.So somebody else has to do it.
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NxtFreak

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Re: Full Financial/Banking System
« Reply #7 on: December 08, 2014, 10:46:12 pm »

Ok here is my revised idea, very detailed, and ready to be implemented! ( it took me 2 hours to draw the diagram :o)

Any questions/comments/suggestions/feedback are welcome!

« Last Edit: December 08, 2014, 10:59:23 pm by NxtFreak »
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NxtFreak

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Re: Full Financial/Banking System
« Reply #8 on: December 13, 2014, 10:24:02 pm »

C'mon guys anyone please pick up my idea and program it.

It would be a great implementation and i guarantee that it would attract new members to the NXT community, especially since that ethereum is launching soon, it would be a big competitor so we need innovations like this to keep the NXT running.

It would also raise the demand ,thus the price of the NXT since now it is really getting lower and lower by each week, and i would not like to see the NXT fade away, as it is a really new and very inspirational and innovative crypto coin.

Please do it for the community :)
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Najska

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Re: Full Financial/Banking System
« Reply #9 on: January 07, 2015, 11:03:40 pm »

We have already started working on this. Anyone can contact me for details, questions. We are also open for any kind of collaboration and cooperation.
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Re: Full Financial/Banking System
« Reply #10 on: January 21, 2015, 03:11:35 pm »

I would do this only with smart contracts in place...
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Najska

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Re: Full Financial/Banking System
« Reply #11 on: January 21, 2015, 04:31:27 pm »

Smart contracts cannot solve the liquidity problem. Black-Scholes model solves.
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