Create two fiat currency banks in Puerto Rico that operate with both fiat and decentralized crypto c

John Congdon

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Proposal: Create two fiat currency banks in Puerto Rico that operate with both fiat and decentralized crypto currencies. Funding needed: US$1,500,000.

Creating a fiat bank can better be thought of as a free expansion for Dash brought on by a very favorable exchange rather than being thought of as an expense. Why? Because it will involve using assets of the Dash community that can continue to function as they are currently being used. Only about $50-70,000 in application fees and legal expenses will actually be spent to set up the two banks, the rest will be used to meet initial reserve requirements of Puerto Rico which as a territory of the US falls into its general banking jurisdiction. Dash’s investment in the banks can be immediately multiplied by a factor of seven or eight. That multiplication factor of capital funds can in turn be directed by the Dash community, in either fiat or Dash, to expand its services as long as it does not compromise the fiduciary responsibility of the banks. It’s a complete win-win situation.

In more detail the benefit to the Dash community and Foundation can be whatever the community would like to make of it. With the investment of the $1.5 million the banks will be able to finance for Dash around $11 million in projects. The requirement regarding projects besides being of benefit to Dash is only that the project must be sufficiently successful to pay for itself over a designated time period.

Suggestions of possibilities could be a physical headquarters for the Foundation and core team that will serve as a Dash HQ where the people that are conveniently available and would enjoy such an environment can physically work together as a team. The building can be built large enough to plan for growth and in the interim unused spaces could be leased to synergistic enterprises. The HQ could include a large mining operation that could mine selected currencies which can serve as a basis for a Dash exchange and also profit center for paying employees.

Software for handling Visa and Master Card accounts can be acquired that make holding Dash until the time of a purchase in fiat a practicality. Likewise merchants can be enabled to accept Dash directly in a Dash system yet when they need to make payments in fiat can do so seamlessly through their debit accounts. Strategically acceptance by businesses is the most important criteria for growing the use of Dash or any crypto currency.

The setup expenses of the banks would be funded by the development budget. The Dash assets to capitalize the banks can come from the master nodes. This could be accommodated by a simple change to allow the 1,000 Dash requirement held by a master node to be met at least in part by shares in the bank or a separate Dash account in the bank. All investment in the banks will be offset by owning shares in the bank including the legal and application fees mentioned above. Owning a bank is perhaps the safest investment that one could make because a well-managed bank is a literal fiat money making enterprise having the legislated power to multiply its capitalization many times over, currently up 12.5 times in the US.

There is a white paper attached below that explains in greater detail about the other functions of the banks and why there are to be two banks. Briefly the banks are to be held in a non-profit holding entity called the Golden Rule Network, or GRN, “grin” for short. The banks are identified as the Golden Rule Trust, or GRT, “great” for short; and will function as a public utility for creating sustainability in the world through sustainable green investments similar to the concept of green banks.

The banks will employ a unique strategy to raise funding for financing sustainable development on a large scale. Shareholders will be able to enjoy the appreciation of the increase in the value of the stock price as more and more sustainable projects are added.

IMPORTANCE TO THE DASH COMMUNITY:

The CIA reports that currently there is a bit more than $80 trillion in bank issued fiat currencies worldwide. This figure includes savings but does not include credit card debits which also act as money. Nor does it include bonds which are widely traded and can act as currency reserves and savings. The total amount of crypto is currently valued under $90 billion which is something to cheer, but represents only 0.001% compared to the fiat money supply. That as yet is not in any manner even a blip on the world economic stage. Crypto in actual use as money is still far less.

Obviously there are some very good reasons to move away from national currencies. In part due to their continuous devaluation by government overspending but more to their high costs of use and control by special interests that do not represent the broad spectrum of society. However the current characteristics of the crypto currency scene make it more of a decentralized stock market rather than functional decentralized currencies. That is something with which we need to come terms if crypto is to be accepted as money as opposed to shares of stock held for appreciation or traded in and out for short term financial gain.

The purpose of currency or money is to facilitate exchange, to represent a stable value and be spendable. End of story. There are desirable characteristics that can make money more useful as well as characteristics that make money less useful or can cause problems. The stability of the value of a currency is typically important for businesses as they don’t want to expose themselves to additional risk. If a currency is going to change value due to volatility it creates risk and businesses are already facing enough risk that they will be quite reluctant to assume more.

We might at times think if the value is going up that’s great, especially if we happen to be in possession of that currency. Yet that will tend to inhibit the use of a currency and in the case of crypto, its easy adaption as a viable fiat alternative. First, who will want to spend the currency if they believe that it will have greater value shortly? Better to hold on to it. A second part is that for businesses the buying of new supplies as well as internal operating costs will become more than budgeted. That can be a major problem and even disaster for a company as all of their contracted and supply expenses, that’s all of their COGS, increase beyond their anticipated budgets.

Future markets were specifically created to offset the risks associated with price change of widely used key products due to such volatility. Trading in currency futures or FX is a highly beneficial market in international trade primarily existing to offset the risks to commerce associated with currency price changes. Volatility is not a desirable trait for any currency even if it is a steady increase in price. This point cannot be ignored if one wants to replace fiat currencies.

There is a law in economics that also applies and it states that bad money drives out good money. It means that when given a choice people will want to spend that which appears to be of lesser value and hoard that which is perceived to be of greater value. History is replete with examples of this law at work. It is a powerful influence to be noted in the desire to create a functional currency.

While crypto is growing rapidly in relation to its current size, to make a significant change in the world and enter mainstream economics, seamless fungibility between crypto and fiat will certainly be of utmost importance. That will need to take place before its acceptance in the everyday commercial needs of businesses and the general public. One of the easiest ways to accomplish this will be to establish a fiat currency bank with international branches and decentralized access that simultaneously deals with and holds crypto currency as well as fiat.

Realizing that this is a major proposal to be considered for adoption I welcome any questions and comments as well as requests for additional information. There remain a number of details that will need to be fleshed out so the proposal can be approached with ideas of flexibility and expansion. It’s quite possible that the fiat banks could assist considerably with the planned release of Evolution.

The creation of money has been an interest of mine for several decades so substantial attention has been given in the study thereof. I am very pro decentralization as making the world a better and sustainable place in which to live so I find the blockchain and Dash a wonderful addition to achieving that goal. My contribution will be much more in strategy and planning than in technical abilities.

REGARDING IMPLEMENTATION:

The issuance of a banking license in Puerto Rico is said to take 4-5 months. There is an application fee of $5,000 for each bank proposal thus two banks will be $10,000. There will also be legal and consulting fees for preparing and filing the application. When the application is approved there are two deposits that need to be made, one of $250,000 for initial capitalization and another of $300,000 to be a guarantee to be held by the central bank. That amounts to $1,100,000 for the two banks. Then there is a $5,000 yearly licensing fee or another $10,000.

Puerto Rico places some simple conditions as this is a program to create economic development in Puerto Rico. That is to have an office in Puerto Rico and to have at least 4 employees employed full time. There is a tax saving plan whereby the income tax rate for the financial entity on net income will be 4% for 15 years and additional extensions may be requested for two more 15 year extensions for a total of 45 years.

Due to the significance of the investment for Dash it would be appropriate that Dash can appoint a director to both GRN and GRT. Another possibility is that I could join the Dash core team during implementation of the project so that all progress and development events are coordinated with the core team. Of course trustless contracts can implement the banking structures as well as be used in account creation.

I want to emphasize that this will be an investment whereby all funds invested will be accounted for by receiving shares in the banks. Management expenses of the banks will be kept to normal management salaries comparative with a cooperative or savings and loan association. Again the banks are to be run as a public service project. The shareholders will receive the benefit of increase in the share value. It is expected that the majority of shareholders will be in the middle class property owners. The banks themselves will operate as though they were non-profit entities. The whitepaper explains the banks’ purpose in addition to assisting Dash in more detail and is attached below.

John Congdon
 

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TroyDASH

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Jul 31, 2015
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Why in the world should we pay $1.5m to meet the reserve requirements?

Imo, we should pay for doing what it takes to ADD Dash. If you were starting a bank with no crypto you would still need 1.5m for that.
 

halso

Active Member
Apr 27, 2016
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Hi John,

Welcome to the Dash forum.

Our primary goal at the moment is to perfect statoshi's key innovation - i.e. the decentralised, anonymous, exchange of value.

Once we achieve this goal, we expect to see less banks, not more.

For that reason, i don't think this proposal is consistent with our long term vision.
 

Instacoins

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May 27, 2017
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Whats the advantage for dash apart from having 2 none profit banks? We dont need it in order to create more budget for investments. We already have pretty deep Pockets.
 

ilia_2s

Active Member
Oct 3, 2015
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I totally support an opinion that we need to pay only for cooperation with any real bank that have a good experience and positive feedback. We also must research attentively for legal risks and laws of selected county.
 

John Congdon

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May 24, 2017
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Why in the world should we pay $1.5m to meet the reserve requirements?

Imo, we should pay for doing what it takes to ADD Dash. If you were starting a bank with no crypto you would still need 1.5m for that.
One is not "paying"to meet the reserve requirement, those are funds that belong to the bank and are part of the capitalization of the bank. Funds that are held are akin to an escrow account. If you will read the attached whitepaper document Golden Rule Network essay proposal you will understand better what is fractional reserve banking as the basics are explained there. Very few people, maybe 0.1% of the population understand fractional reserve banking. In a sense it has been a closely reserved secret. It is not taught in general economics and even most economists don't know how it actually functions. Hence understanding this proposal will be something of an education opportunity for most of us. The US$ is not created by the government printing money as is generally thought, rather by private banks making new loans that operate on the fractional reserve system.

As stated the fees for starting the two banks are in the $70,000 range, perhaps less. Those fees will be credited to Dash through stock shares in the 2 banks. All the rest of the money will be credited to Dash also through stock shares. The Dash community will be the initial owner of the banks through the Foundation and individual MNs that are investing a portion of their holdings in the banks. Banks have the legislated privilege of creating new credits, that are currently called dollars in the US system, currently up to 12.5 times their capitalization. Technically the Dash community could create up to 12.5 (1,500,000) = $18,750,000 in new credits from the $1.5m. Usually a bank does not want to max out it's credit creating ability. My suggestion is to start with 7 times and grow from there. That means Dash would have 7(1,500,000) = $10,500,000 in credit to use for creating projects that can repay that credit created plus the operating expenses of creating the credit. I have given some suggestions as to how those credits could be used to advance Dash.

There is a definite and large advantage to Dash to create the banks. Dash can be the beneficiary of the new credit creation.
 

John Congdon

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What are regulatory and compliance risks?
The banks will be compliant with current US bank regulations and KYC. The purpose of the banks for Dash is to have a seamless interface with the vastly larger fiat system in order to serve its current and future business clients that at least for now must interface with that system.
 
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John Congdon

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Whats the advantage for dash apart from having 2 none profit banks? We dont need it in order to create more budget for investments. We already have pretty deep Pockets.
The purpose of the banks for Dash is to have a seamless interface with the vastly larger fiat system in order to serve its current and future business clients that must interface with that system. That IMO will be one of the main benefits to Dash.

Yes, Dash's pockets are getting bigger. However the banks also have the ability to multiply the depth of those pockets many times in order to have a more immediate and expanded physical presence in the world. The banks can finance any project to promote the presence of Dash in the world that has the ability to sustain itself, i.e. can repay over time the credit issued. There are MANY uses that can be developed. We just need to think expansively.
 
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John Congdon

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Why should we need 1.5M x 12.5 in loans. The current budget is not even maxed out.
Think expansively. I mentioned having a physical campus and center as being one, even multiple centers worldwide. Interfacing with with Visa, MC and Discover is another as well as Asian systems is another. Having broad exchange capabilities between fiat and Dash. All of these and much more can give Dash a sounder footing. For example, Google mainly exists on the internet yet has a large physical footprint. dash will also need that.
 
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John Congdon

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Hi John,

Welcome to the Dash forum.

Our primary goal at the moment is to perfect statoshi's key innovation - i.e. the decentralised, anonymous, exchange of value.

Once we achieve this goal, we expect to see less banks, not more.

For that reason, i don't think this proposal is consistent with our long term vision.
If you want to perfect exchange of value that actually has significance in the world at this time you will need to have a means of interacting with that world. The vast majority of that world does not need to be anonymous. For example the blockchain has the ability to end corruption by not being anonymous. Corruption in government and in society is a far greater problem than the lack of anonymity faced by the general public. By deciding that the long term vision must be restricted to anonymity you greatly curtail the functioning of decentralization and exchange and their benefits. This in no way signifies that Dash needs to end anonymity, as yes that also has value. If you actually want to change the economics of the world it cannot be limited to anonymity.

It's fine to have less banks in the world and I'm all for that. However you will not achieve that goal by excluding the vast majority of transactions that take place in the world.
 

ilia_2s

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Oct 3, 2015
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Trust, DASH developers and community members, master-node owners, crypto-libertarians are high-educated people. They know about loan rate and bank's partial covering. But I suppose that we need a crypto to fiat converting system that free verily from bank and government control. Some time ago I learn an internal rules of international payment systems. All of them was founded by banks, and entirely follows KYC and other suck rules. IMHO, it will be a big mistake to play with system that destroy a base freedom principles.

ADD: Do you know about AdvanceCash corp.? What sort of main advantages do you propose?
 

TroyDASH

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Jul 31, 2015
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One is not "paying"to meet the reserve requirement, those are funds that belong to the bank and are part of the capitalization of the bank. Funds that are held are akin to an escrow account. If you will read the attached whitepaper document Golden Rule Network essay proposal you will understand better what is fractional reserve banking as the basics are explained there. Very few people, maybe 0.1% of the population understand fractional reserve banking. In a sense it has been a closely reserved secret. It is not taught in general economics and even most economists don't know how it actually functions. Hence understanding this proposal will be something of an education opportunity for most of us. The US$ is not created by the government printing money as is generally thought, rather by private banks making new loans that operate on the fractional reserve system.

As stated the fees for starting the two banks are in the $70,000 range, perhaps less. Those fees will be credited to Dash through stock shares in the 2 banks. All the rest of the money will be credited to Dash also through stock shares. The Dash community will be the initial owner of the banks through the Foundation and individual MNs that are investing a portion of their holdings in the banks. Banks have the legislated privilege of creating new credits, that are currently called dollars in the US system, currently up to 12.5 times their capitalization. Technically the Dash community could create up to 12.5 (1,500,000) = $18,750,000 in new credits from the $1.5m. Usually a bank does not want to max out it's credit creating ability. My suggestion is to start with 7 times and grow from there. That means Dash would have 7(1,500,000) = $10,500,000 in credit to use for creating projects that can repay that credit created plus the operating expenses of creating the credit. I have given some suggestions as to how those credits could be used to advance Dash.

There is a definite and large advantage to Dash to create the banks. Dash can be the beneficiary of the new credit creation.
I know what fractional reserve banking is. The reason I said "pay for" is because we are taking equity that previously belongs to the network, and now it belongs to the owners of your bank. Even if the dash foundation and/or individual dash friendly investors are the sole owners, what reason is there to provide the equity for this venture? If somebody needs a loan in order to do a Dash project, why can't they just get a loan from some other bank? And if they want to ask for funding (as opposed to a loan), then they would come to the dash treasury, not your bank unless you plan on giving it away? The total amount of potential loans available already at other banks with billions of dollars backing them, far exceeds the 12.5x on the 1.5mil that your bank could lend out.
 

oaxaca

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John Congdon

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I know what fractional reserve banking is. The reason I said "pay for" is because we are taking equity that previously belongs to the network, and now it belongs to the owners of your bank. Even if the dash foundation and/or individual dash friendly investors are the sole owners, what reason is there to provide the equity for this venture? If somebody needs a loan in order to do a Dash project, why can't they just get a loan from some other bank? And if they want to ask for funding (as opposed to a loan), then they would come to the dash treasury, not your bank unless you plan on giving it away? The total amount of potential loans available already at other banks with billions of dollars backing them, far exceeds the 12.5x on the 1.5mil that your bank could lend out.
Providing the equity for the banks does not really change the ownership of the equity. Essentially the equity is pledged to assist the network, it does not "belong"to the network. It belongs to the people who have pledged it. I am not proposing to take the equity out of the network, only to change its location, it is still to be utilized for the network and can be under the control of the network. The reason to do this is to provide seamless exchange between fiat and Dash's business clients who still need to operate in the fiat system because as yet 99.999% of all exchanges take place in that system. Any business that wants to use Dash still needs to interact with the fiat market place. The purpose is to facilitate business use of Dash, to grow the Dash clientele.

Regarding the loans, the bank can determine the rate of interest that it charges which with the proposed banks is enough to cover service costs; which could probably be around 1%. The loans in this case would be determined by the Dash community to expand and stabilize the use of Dash
 

John Congdon

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halso

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Counter Proposal - We should buy this land. 113 acres is PLENTY big enough for a campus, and it has a water slide.
http://www.landleader.com/land-for-sale/geothermal-riverfront-nature-park-hot-springs
I was thinking just yesterday about establishing a Dash property DAO. The rental income could be converted to dash and publicly burned on the blockchain each month. Similar to how counterparty burned bitcoin when they created their coin.

Then every quarter MNs could be asked whether they want to retain the property, or sell it, with any sale proceeds also converted into dash and burned.

But if the property had a water slide, i would never vote to sell. ;-)
 
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John Congdon

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I was thinking just yesterday about establishing a Dash property DAO. The rental income could be converted to dash and publicly burned on the blockchain each month. Similar to how counterparty burned bitcoin when they created their coin.

Then every quarter MNs could be asked whether they want to retain the property, or sell it, with any sale proceeds also converted into dash and burned.

But if the property had a water slide, i would never vote to sell. ;-)
The proposed banks would be ideal for doing such a transaction.
 

TroyDASH

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Providing the equity for the banks does not really change the ownership of the equity. Essentially the equity is pledged to assist the network, it does not "belong"to the network. It belongs to the people who have pledged it. I am not proposing to take the equity out of the network, only to change its location, it is still to be utilized for the network and can be under the control of the network. The reason to do this is to provide seamless exchange between fiat and Dash's business clients who still need to operate in the fiat system because as yet 99.999% of all exchanges take place in that system. Any business that wants to use Dash still needs to interact with the fiat market place. The purpose is to facilitate business use of Dash, to grow the Dash clientele.

Regarding the loans, the bank can determine the rate of interest that it charges which with the proposed banks is enough to cover service costs; which could probably be around 1%. The loans in this case would be determined by the Dash community to expand and stabilize the use of Dash
I don't think it's good enough for the equity to be pledged to assist the network. If we wanted to do that then we might as well just give the Dash foundation an open ended million dollars to do whatever they want with. When the dash network pays out from the budget, any control over those funds is ultimately ceded from the masternode owners to the bank equity owners, who are not obligated to do what the Masternodes want. I have no interest in becoming a shareholder or using budget funds to make the dash foundation or any other entity a shareholder in this startup. If the value here is to provide a service where businesses using dash can have easier access to the Fiat market, that is completely different to me than providing equity for loans which anybody can get from any bank.

I have an open mind of course, am willing to continue to listen to your proposal and what the other MNOs have to say.
 
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John Congdon

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I don't think it's good enough for the equity to be pledged to assist the network. If we wanted to do that then we might as well just give the Dash foundation an open ended million dollars to do whatever they want with. When the dash network pays out from the budget, any control over those funds is ultimately ceded from the masternode owners to the bank equity owners, who are not obligated to do what the Masternodes want. I have no interest in becoming a shareholder or using budget funds to make the dash foundation or any other entity a shareholder in this startup. If the value here is to provide a service where businesses using dash can have easier access to the Fiat market, that is completely different to me than providing equity for loans which anybody can get from any bank.

I have an open mind of course, am willing to continue to listen to your proposal and what the other MNOs have to say.
The MNOs would remain the owners of their portions, the Foundation would own the stock from from the $50-70,000 setup expenses which come from the treasury. Part of the idea of the use of the MNs portion would be to create liquidity for Dash / fiat conversion for business owners that need to continue to use fiat for their supply purchases which still need to be done in fiat. Thus businesses will not need to worry about accepting and holding Dash in quantity. It is an extension of the MN responsibility, however easy fungibility (seamless) of Dash with fiat IMO will be essential for broad acceptance in the market place.

The agreement of only a few of the MNs, for example 22 putting 1/2 of their current value will be enough to capitalize the bank, or 44 putting 1/4, can make the project happen. How the funds would be applied or used within the banks activities can be made subject to the MNs agreement or voting so that control over their funds would be maintained. As an example if it is decided to set up a debit card payment system those MNs that think that is important could vote to do that. An advantage is that the holdings of the MNs can be leveraged to do those projects as well, as long as the profit from the projects will pay for the extra credit granted. The basic idea is to integrate decentralized digital cash into the current fiat system to create complete ease of use. A bank has a very big advantage to accomplish that. Perhaps it will be very helpful for the Evolution project; it is very much in line with the objective of Evolution..
 
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Instacoins

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The MNOs would remain the owners of their portions, the Foundation would own the stock from from the $50-70,000 setup expenses which come from the treasury. Part of the idea of the use of the MNs portion would be to create liquidity for Dash / fiat conversion for business owners that need to continue to use fiat for their supply purchases which still need to be done in fiat. Thus businesses will not need to worry about accepting and holding Dash in quantity. It is an extension of the MN responsibility, however easy fungibility (seamless) of Dash with fiat IMO will be essential for broad acceptance in the market place.

The agreement of only a few of the MNs, for example 22 putting 1/2 of their current value will be enough to capitalize the bank, or 44 putting 1/4, can make the project happen. How the funds would be applied or used within the banks activities can be made subject to the MNs agreement or voting so that control over their funds would be maintained. As an example if it is decided to set up a debit card payment system those MNs that think that is important could vote to do that. An advantage is that the holdings of the MNs can be leveraged to do those projects as well, as long as the profit from the projects will pay for the extra credit granted. The basic idea is to integrate decentralized digital cash into the current fiat system to create complete ease of use. A bank has a very big advantage to accomplish that. Perhaps it will be very helpful for the Evolution project; it is very much in line with the objective of Evolution..
Well you said the major advantage is the dash to fiat Conversion. You dont need a bank for that. We exchange dash to fiat for the spot price since we have a dash demand. So we are basicly doing that bit for free. I can see some advantages of a bank. But that would need to be planned upfront. The credit is none in my opinion. Neither is dash to fiat. You dont need a bank for that.
 

John Congdon

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Well you said the major advantage is the dash to fiat Conversion. You dont need a bank for that. We exchange dash to fiat for the spot price since we have a dash demand. So we are basicly doing that bit for free. I can see some advantages of a bank. But that would need to be planned upfront. The credit is none in my opinion. Neither is dash to fiat. You dont need a bank for that.
The advantage is for merchants that are tied into the banking system where currently more than 99.9% of business transactions other than physical cash take place.. Do the exchanges such as Poloniex allow Visa/MC/Discover receipts and withdrawals? Is conversion automatic when needed? Generally conversion is not free as there is a bid ask spread and/or the exchange is taking a fee. Exchanges are not free services. In the case of the proposal we would be facilitating an efficient decentralized exchange within the bank and for the convenience of merchants and Dash acceptance.
 
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TroyDASH

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The MNOs would remain the owners of their portions, the Foundation would own the stock from from the $50-70,000 setup expenses which come from the treasury. Part of the idea of the use of the MNs portion would be to create liquidity for Dash / fiat conversion for business owners that need to continue to use fiat for their supply purchases which still need to be done in fiat. Thus businesses will not need to worry about accepting and holding Dash in quantity. It is an extension of the MN responsibility, however easy fungibility (seamless) of Dash with fiat IMO will be essential for broad acceptance in the market place.

The agreement of only a few of the MNs, for example 22 putting 1/2 of their current value will be enough to capitalize the bank, or 44 putting 1/4, can make the project happen. How the funds would be applied or used within the banks activities can be made subject to the MNs agreement or voting so that control over their funds would be maintained. As an example if it is decided to set up a debit card payment system those MNs that think that is important could vote to do that. An advantage is that the holdings of the MNs can be leveraged to do those projects as well, as long as the profit from the projects will pay for the extra credit granted. The basic idea is to integrate decentralized digital cash into the current fiat system to create complete ease of use. A bank has a very big advantage to accomplish that. Perhaps it will be very helpful for the Evolution project; it is very much in line with the objective of Evolution..
So you are seeking to raise $1.5m from private investors then, it really has nothing to do with whether or not they are masternode owners or whether they have any dash at all (it is up to you to convert into whichever denomination you want for your holdings). What is the order that you would like to see things happen? It would not be wise for the treasury to pay for your setup fees if you haven't secured the equity yet.
 

akhavr

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The banks will be compliant with current US bank regulations and KYC. The purpose of the banks for Dash is to have a seamless interface with the vastly larger fiat system in order to serve its current and future business clients that at least for now must interface with that system.
1. Who will be held liable if things would go wrong, from regulatory and compliance perspective? For any business entity, the ownership structure is required to be completely transparent. For banks, I guess that looks more like financial colonoscopy. So, Dash Network won't be able to be a legal owner of the bank, nor the masternode owners.

2. What would be the governance of such bank?

3. What opportunities that would open in the fiat integration? For example, I could see such bank operating a ripple or stellar network node, in addition to the regular SWIFT payments. What else? (I don't see giving out credit through fractional reserve as a benefit, sorry)
 

Instacoins

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The advantage is for merchants that are tied into the banking system where currently more than 99.9% of business transactions other than physical cash take place.. Do the exchanges such as Poloniex allow Visa/MC/Discover receipts and withdrawals? Is conversion automatic when needed? Generally conversion is not free as there is a bid ask spread and/or the exchange is taking a fee. Exchanges are not free services. In the case of the proposal we would be facilitating an efficient decentralized exchange within the bank and for the convenience of merchants and Dash acceptance.
From dash to fiat we would do for free up to certain Limits. So that cant be the major incentive.
 

John Congdon

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Trust, DASH developers and community members, master-node owners, crypto-libertarians are high-educated people. They know about loan rate and bank's partial covering. But I suppose that we need a crypto to fiat converting system that free verily from bank and government control. Some time ago I learn an internal rules of international payment systems. All of them was founded by banks, and entirely follows KYC and other suck rules. IMHO, it will be a big mistake to play with system that destroy a base freedom principles.

ADD: Do you know about AdvanceCash corp.? What sort of main advantages do you propose?
The "system" follows known rules that are clearly stated and published that have been passed through legislation. While it can be time consuming and a pain in the ass there are people who are educated to specifically do those things. That's just the way the system is. Decentralization and the blockchain is bringing something far better, however until it is significantly more integrated into everyday procedures we need to deal with the crap too. That is what economic pioneers need to do in this case and it is doable.

From what I could tell about Advanced Cash Corp it is a payday loan style of company which generally charge outlandish fees for giving loans. I also noticed that it has a number of complaints against it. That has nothing to do with this proposal. The main advantage of the proposal is speeding up acceptance of Dash and crypto in general in the overall marketplace, as well as allowing Dash a means of expanding its physical presence in the world.
 

John Congdon

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1. Who will be held liable if things would go wrong, from regulatory and compliance perspective? For any business entity, the ownership structure is required to be completely transparent. For banks, I guess that looks more like financial colonoscopy. So, Dash Network won't be able to be a legal owner of the bank, nor the masternode owners.

2. What would be the governance of such bank?

3. What opportunities that would open in the fiat integration? For example, I could see such bank operating a ripple or stellar network node, in addition to the regular SWIFT payments. What else? (I don't see giving out credit through fractional reserve as a benefit, sorry)
1. Banks usually are set up under a holding company and the investors own the holding company. As a corporation the banks will have officers and a board of directors and that is where the responsibility lies for meeting regs, mainly with the officers. An LLC structure would also be possible but pretty much same thing, manager and officers would have responsibility.The officers will serve as employees of the bank in maintaining normal bank functions. The operating style of the banks will be as offshore investment banks which means that they will not be doing any retail banking in Puerto Rico. Any retail services that the banks will be offering will be done over the internet, such as account setup, debit card processing and decentralized currency exchange. I don't see any problem with the Foundation or MNs being stockholders in the bank or the holding company, whichever seems to be appropriate in this case. The reporting of major shareholders is required however the threshold is 10% ownership. I don't see any one individual at this point or in the future having 10% or more ownership.

2. Governance is according to what is specified in by-laws so that can be adapted to the needs of this particular situation. We have flexibility here. We will want to run all of that by legal council too.

3. The main opportunities are to service business clients or people who are accustomed to using Visa/MC etc. payment systems and being able to integrate that with the decentralized digital systems. To me SWIFT is seeming a bit outdated though it could serve some correspondent needs. I could see the possibility of Dash taking on some of the role of Ripple. Access through the banks could certainly assist.In the meantime setting up nodes for Ripple and Stellar would be good.

I can understand negative feelings about fractional reserve (FRB) as I harbored those for a long time. However I realized a couple years ago that that system has been a very progressive influence in society and expansion of opportunity. The problem has been with who has been in control of FRB along with the high cost and who has benefited; it was initially used to give power to the rich or money powers and secondly to politicians at the expense of the general population.

In one very positive aspect FRB is a mutual credit system. The gateway to that has been previously through the rich but we can completely change that and that is the purpose of the two banks. I will suggest that you read the accompanying whitepaper if you have not done so.
 
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solarguy

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Using the fractional reserve system of the legacy banking industry seems antithetical to what crypto in general, and Dash in particular are trying to achieve. It's using leverage and debt to spend more money up front than we would otherwise be able to do. We literally have more money in the Treasury than we know what to do with right now, and it looks like the Dev team and the Masternodes are struggling heroically to grow and expand in a sensible and efficient manner. Suddenly having another 12 million debt backed dollars to throw at the world would only exacerbate that problem.

Plus, the ability to do this in a way that prevents the possibility of abuse seem problematic in the extreme.

I would have to vote no with my two MN's.
 

John Congdon

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So you are seeking to raise $1.5m from private investors then, it really has nothing to do with whether or not they are masternode owners or whether they have any dash at all (it is up to you to convert into whichever denomination you want for your holdings). What is the order that you would like to see things happen? It would not be wise for the treasury to pay for your setup fees if you haven't secured the equity yet.
As I mentioned in the proposal all can be done on a trustless contract basis. That is part of what blockchain is about. I can raise from other private investors, yes, but it will probably not be their interest to assist the Dash community. However it would be of interest for the MNs to further participation in the Dash community I would think as it is a direct benefit to them.

As far as a sequential order I would need to see sufficient interest and a conditional commitment from the Dash community to do the project and then get a confirmed estimate as to what legal assistance and handling the application process will cost. From there we will need a confirmed commitment and start the application process which will involve paying for the setup. As I have noted several times what is invested by the Dash community will be to assist the Dash community. If you will read the whitepaper that has been submitted with the proposal you will find that the banks have a large economic vision of creating a far more egalitarian economy in the world. Basically that is to create sustainability and move out of a fossil fuel and military dominated industrial economy to a decentralized peace generating economy. Also to move to a decentralized political base. That is why I am very interested in helping to further a type of payment system that Dash represents.

I addition I would like to make some suggestions regarding how a currency actually functions some of which have been noted in the proposal. That is a separate but nonetheless an important area to discuss. If one really wants to create a currency that is functional and can be accepted as a currency it is quite different from creating an alternative payment system. IMO creating a decentralized functional currency would have some wonderful contributions to the general economy and world at large. The crypto world is still at some distance from accomplishing that though heading in a good direction.