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Isn't a bank run only an issue if the bank is using a fractional reserve? Cryptocurrency exchanges aren't banks; they're not supposed to keep a fractional reser
by Ajedi32 9y ago
Isn't a bank run only an issue if the bank is using a fractional reserve? Cryptocurrency exchanges aren't banks; they're not supposed to keep a fractional reserve. If everyone suddenly demands all their coins at once, the exchange should have no trouble complying with that.
The only problem is that there's no way to know for sure whether an exchange is running on a fractional reserve or not.
- 3pt14159 9y agoThe issue is that they do run fractional reserves, even if they aren't supposed to. Much like banks of the 1600s.
- darawk 9y agoThey claim that they don't. If they do, that is a serious problem. Some of the exchanges have, but there is no evidence i'm aware of that points to any of the current major exchanges running a fractional reserve.
- 3pt14159 9y agoThe issue is that once there is evidence there is a bank run. Mt Gox wasn't supposed to, but they did. And there are others out there that I hear rumours about having 5 or 10% of their reserves stolen from hot wallets. Sure it's fine if there is never a run, but it's worth pointing out that this is a real threat vector.
- darawk 9y agoYa, no argument from me there. It's definitely a threat. I just don't think it should be stated as fact that they do run fractional reserves without evidence of that.