South Korean banks have backtracked from their decisions to stop servicing cryptocurrency accounts as crypto investors protested and the government re-discussed its policy. The country’s 6 major banks have been told that they must follow through with the original plan and install the system that would end the anonymous trading of cryptocurrencies.
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The South Korean authorities will start inspecting major banks for their compliance with cryptocurrency regulations on Monday. This move follows the regulators’ recent announcement prohibiting the use of virtual bank accounts for anonymous trading.
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Bitcoiners in Australia claim banks are on purpose freezing their bank accounts, disallowing exchange transfers, and at least one exchange is over-reacting to the freeze. They’re so unnerved they’ve done what any good crypto enthusiast does: air it all on social media and in comment threads.
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"A bank is a financial institution that accepts deposits from the public and creates credit." (WP).
The "creates credit" aspect is the central concept of a bank. A bank creates credit. Lending money is the core business model of banks. So something which doesn't lend money isn't a bank. The core concept of LN is that money in a channel needs to be funded first. A LN node doesn't lends money, so it isn't a bank.
Lending money is also the real problem, risk etc with banks:
If a bank lends out money to the wrong people, the bank can become bankrupt and all their customers deposits can't be payed back anymore which can create lots of trouble if banks hold lots of money. A LN channel only has the money which is funded first so it can't go bankrupt. People will always get their money back. There is no possibility of a bank run or economic collapse as with banks.
Also a bank can create "money from nothing" because of fractional reserve banking: The bank can lend money it doesn't have, needing only a fraction in reserves. That's what's known as "fiat money" and this has its own risks. With LN this isn't possible because channels needs to be funded with 100% of the money they contain, so also no risk here.
So LN doesn't creates "banks" again. LN nodes are no banks because the core aspect, "creating credit" is missing. People who repeat FUD like "LN just reinvents the banking system" simply have no clue how banks work and where the real risks are – or they use this analogy to push their agenda. So be aware.
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In a video published on Tuesday, Israeli Prime Minister (PM) Benjamin Netanyahu claimed that the operation of traditional banks will eventually become obsolete and could be replaced by Bitcoin. He based his claim on the trustless nature of Blockchain technology and on Bitcoin's continuous, notable …
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