Is fractional reserve banking (i.e. lending based on a fractional reserve) incompatible with BTC?
Fractional reserve banking is inflationary money--Bitcoin is not. Bitcoin is not a bank. Bitcoin is incompatible with fractional reserve banking.
Topic: Fractional reserve banking - page 4. (Read 2438 times)
Is fractional reserve banking (i.e. lending based on a fractional reserve) incompatible with BTC?
Fractional reserve banking is inflationary money--Bitcoin is not. Bitcoin is not a bank. Bitcoin is incompatible with fractional reserve banking.
It's still possible, but to a much lesser extent.
An organization could offer a credit-line that's backed by Bitcoin. It could then extend that credit several-times over its actual reserves of Bitcoin. I would suspect that if anyone tried to do that though, it would be found out real fast and their reputation will suffer for it. I don't believe it will be possible to over-extend the credit to such degrees as we're seeing today with fiat, without the benefit of the printing press that fiat has.
An organization could offer a credit-line that's backed by Bitcoin. It could then extend that credit several-times over its actual reserves of Bitcoin. I would suspect that if anyone tried to do that though, it would be found out real fast and their reputation will suffer for it. I don't believe it will be possible to over-extend the credit to such degrees as we're seeing today with fiat, without the benefit of the printing press that fiat has.
Is fractional reserve banking (i.e. lending based on a fractional reserve) incompatible with BTC?
Jump to: