so both is true. we need static base money and elasticity in credit. i read somewhere that different policies and governance in different states killed the free banking era. maybe the most important t...
Absolutely, there's a long way to go, but at the same time, it is not that far out again. A lot of things have been built; only adoption is slowing down, but it'd catch up.
When you research free banking and why it "failed", you'll find out that most of the acclaimed reasons why it was stopped were largely things that the government could've managed if they wished to.
One of the reasons, and what may be considered as the major reason, was "war financing". The government needed to exert full control over money to be able to finance wars. They wouldn't be able to do that if different banks kept issuing different currencies that often had different values.
Bitcoin, from design, is made for free banking, and unlike when gold and silver (whose reserve claims were not easily verified) were used as reserve assets, bitcoin, on the other hand, is readily verified through several cryptographic proof of reserve systems.
Today, we already have financial solutions that make Bitcoin the base layer on which currencies can be issued.
Fiat channel is one of those, and many other versions of the same solution exist.
FIAT CHANNEL:
Fiat channels enable the creation of synthetic stable value fiat assets on the Lightning Network, with Bitcoin serving as the underlying asset being transferred.
The Fiat channel protocol was coined from the original Hosted Channels protocol. In this case, when a client receives Sats over the channel, the Fiat value as at when received is locked in as a stable balance, while the Sats valur keep floating with the Bitcoin price movement.
To ensure that the client can always spend the sats worth of their locked-in stable amount (at any given Bitcoin market price), the Host (who's the lightning node runner) must hedge the fiat exposure of the client, and must balance this hedging each time a withdrawal or deposit is made.
So at all times, what the client sends out when making payment is Sats, but the face value is denominated in Fiat.
So the Host must have Sats on his node to route the client's payment, and must hedge the client's fiat exposure, balancing these positions at all times.
This is a typical free banking setup where several Hosts can run lightning nodes with Fiat channel plugins and hedging mechanisms to offer this service to any willing client.
We are currently researching how to enforce cryptographically verifiable proof of reserve and hedging capital/margin.
This is a work in progress, but so far it has been implemented on Valet, and users can already open Fiat channels to our SATM nodes.
Valet: https://github.com/standardsats/valet/releases
Fiat Channel: https://github.com/standardsats/fiat-channels-rfc
SATM node QR: 👇
SET UP STEPS:
- Install Valet and create a wallet (copy 12 phrase keys)
- Click on Lightning
- Scan Node QR
- Scan the attached QR code
- Select "Request USD Fiat channel."
- A 500,000 Sats capacity Fiat channel will be opened automatically, and you can start receiving Sats on the go, and watch how it works.
NB: At any point, you can sweep your Fiat channel balance into your normal Lightning channel.
When you research free banking and why it "failed", you'll find out that most of the acclaimed reasons why it was stopped were largely things that the government could've managed if they wished to.
One of the reasons, and what may be considered as the major reason, was "war financing". The government needed to exert full control over money to be able to finance wars. They wouldn't be able to do that if different banks kept issuing different currencies that often had different values.
Bitcoin, from design, is made for free banking, and unlike when gold and silver (whose reserve claims were not easily verified) were used as reserve assets, bitcoin, on the other hand, is readily verified through several cryptographic proof of reserve systems.
Today, we already have financial solutions that make Bitcoin the base layer on which currencies can be issued.
Fiat channel is one of those, and many other versions of the same solution exist.
FIAT CHANNEL:
Fiat channels enable the creation of synthetic stable value fiat assets on the Lightning Network, with Bitcoin serving as the underlying asset being transferred.
The Fiat channel protocol was coined from the original Hosted Channels protocol. In this case, when a client receives Sats over the channel, the Fiat value as at when received is locked in as a stable balance, while the Sats valur keep floating with the Bitcoin price movement.
To ensure that the client can always spend the sats worth of their locked-in stable amount (at any given Bitcoin market price), the Host (who's the lightning node runner) must hedge the fiat exposure of the client, and must balance this hedging each time a withdrawal or deposit is made.
So at all times, what the client sends out when making payment is Sats, but the face value is denominated in Fiat.
So the Host must have Sats on his node to route the client's payment, and must hedge the client's fiat exposure, balancing these positions at all times.
This is a typical free banking setup where several Hosts can run lightning nodes with Fiat channel plugins and hedging mechanisms to offer this service to any willing client.
We are currently researching how to enforce cryptographically verifiable proof of reserve and hedging capital/margin.
This is a work in progress, but so far it has been implemented on Valet, and users can already open Fiat channels to our SATM nodes.
Valet: https://github.com/standardsats/valet/releases
Fiat Channel: https://github.com/standardsats/fiat-channels-rfc
SATM node QR: 👇
SET UP STEPS:
- Install Valet and create a wallet (copy 12 phrase keys)
- Click on Lightning
- Scan Node QR
- Scan the attached QR code
- Select "Request USD Fiat channel."
- A 500,000 Sats capacity Fiat channel will be opened automatically, and you can start receiving Sats on the go, and watch how it works.
NB: At any point, you can sweep your Fiat channel balance into your normal Lightning channel.
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