A fractional reserve bitcoin bank is quite impossible, because no one would be able to insure deposits given the tremendous upward potential.
An uninsured fractional reserve bank is just another risky investment vehicle, and doesn't provide the benefits you are aiming for.
A full reserve bank is possible, but has no way to make a profit or pay interest from this banking business.
That leaves various forms of accidental bitcoin account/wallet providers, who make a profit by being exchanges, advertising or gambling. Exactly what we already have.
"Do we need bitcoin banking" is a difficult question, but "do we have fractional reserve banking?" is ridiculously simple:
Uninsured fractional reserve banking did, does & will continue to exist in bitcoin.
Think back to Pirateat40 Savings & Loan. Think of the various "insured" passthroughs (Patrick/Starfish). Fast-forward to all of the Ukyo stuff.
Fractional reserve lending is profitable, that's how it came into being & that's why it exists.
Enlightened self-interest, free market & the invisible hand worked in consort to establish it as the central pillar of the modern financial system.
Enjoy
My point is that the insurance schemes of the past did not work. People should have learned it never will with bitcoin, at least not while still growing exponentially. Some of your examples are ludicrous, no one has ever checked or just seen the collateral pirateat40 or Patrick was supposed to have. That's not insurance, that's just plain lies to get people on a ponzi.
The passthroughs were billed as being secure, and people invested in them as such. To be honest, i haven't bothered to check the financials of my bank before depositing money either, though most folks on this forum insist that fiat is a ponzi also.
In the so called modern financial world central banks have the ability to insure arbitrary losses by just printing new money. This is the reason people still trust banks with their (small) deposits despite the constant news.
This is not possible with bitcoin. Hence a deposit in a fractional reserve bitcoin bank must be seen as high risk investment, in particular more risky than just holding bitcoin. That's not what most people wish for when asking for banking services. And that's why I dispute calling them banks at all, and claim traditional banks are not viable with bitcoins yet. This may change when the market saturation is much higher.
I agree that it's riskier to invest money than to hold it, and technically the coin deposited in uninsured bitcoin banks is more accurately described as an
investment rather than a
deposit, but the distinction is pretty vague. Insured banks are a relatively new development, and a central authority/entity/lender of last resort is not necessary for fractional reserve banking. Bitcoin bankers could follow in the footsteps of conventional bankers, forming conglomerates/peer contracts/guild regulations to create a p2p insurance scheme.
The creepy thing is the very same schemes invented by mainstream bankers, the very ones which necessitated regulation, are being rediscovered/reanimated by bitcoin's new banker elite. Both curious & disheartening to watch.
