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As I pointed out no where was stated that it’s not technically possible but that it’s not practiced or supported by current mainstream cryptos. If anything som

As I pointed out no where was stated that it’s not technically possible but that it’s not practiced or supported by current mainstream cryptos. If anything some of the larger blockchains “naturally” move towards a “central bank” like model. Say you have a blockchain that requires you to sync 100’s of terabytes if not petabytes of information to setup a new node and 100’s of gigabytes a day to keep it upto date. It’s not going to be feasible for individuals to talk to it directly. Now you already have exchanges that keep ledgers other than the blockchain and that already do most of their transactions off the blockchain these are your banks. In this model the blockchain essentially offers only value store for the exchanges and keeps only the exchanges honest this is essentially your central reserve. The blockchain offers also a consensus protocol where either the miners if it’s PoW or the exchanges if it’s PoS hold the important seats, that’s your board of directors. So yes I don’t think that current crypto is incapable of mimicking the model of banking we currently use some already do it unintentionally to some extent. But currently there isn’t a single crypto that offers a built in fractional reserve and credit system as part of its blockchain its off possible to implement it.

brian_cloutier 8y ago
That's not really true though. For one: > supported by current mainstream cryptos There's nothing that needs to be supported. Bitcoin already "supports" it, in the same way that cash does. All you have to do is find a counterparty and draw up a contract. > it’s not practiced That part's mostly true because with this kind of volatility who would risk owing you a bunch of bitcoin, but loans involving Bitcoin are starting to appear: https://saltlending.com/ https://saltlending.com/ I wouldn't necessarily trust https://www.bitbond.com/ https://www.bitbond.com/ with _my_ bitcoin, but theoretically I could, and this is starting to look a lot like fractional reserve.
- dogma1138 8y ago
  Ofc it has to support it you can’t loan more bitcoins than you have unless you use some other tools like say options by even that isn’t straight forward unless you have a clear secondary settlement process. If you want to do fractional reserve in say crypto you need to have a blockchain where the “bank” can print crypto like they do with current currency until then it’s off the books accountign or a ponzy scheme like MtGox.
  - brian_cloutier 8y ago
    > If you want to do fractional reserve in say crypto you need to have a blockchain where the “bank” can print crypto like they do with current currency until then it’s off the books accountign or a ponzy scheme like MtGox. Okay, I think maybe what we're arguing about is definitions. I'm trying to say, "off the books accounting" is perfectly legitimate fractional reserve. It is not possible to create more on-chain Bitcoin, but something which looks exactly like fractional reserve is possible today and would end up creating "off-chain" Bitcoins, increasing the Bitcoin money supply without increasing the number of on-chain Bitcoin beyond 21 million. Maybe you don't think that such a system should be called Fractional Reserve, I guess that's where we disagree. > you can’t loan more bitcoins than you have Fractional reserve isn't about loaning more than you have. In fact, kind of the the entire point is that you must loan less than you have: you loan out at most some fraction of your deposits and reserve the rest.
    - dogma1138 8y ago
      That’s not a fractional reserve since that one needs to be in the same unit of account if you are using two units of account that’s not a fractional reserve that is an exchange rate. If you loan less than your total then again it’s not fractional lending it’s simply lending.
      - brian_cloutier 8y ago
        Okay, I'm not sure I should answer because it's starting to seem like you're trolling. Giving you the benefit of the doubt: > if you are using two units of account that’s not a fractional reserve The system I described only has one unit of account, Bitcoin. It doesn't matter whether they're on-chain or "virtual", they're both Bitcoin, and are worth the exact same amount. > If you loan less than your total then again it’s not fractional lending it’s simply lending. You have misunderstood fractional reserve banking. Banks are not allowed to give out more money than they have received in deposits. Here's Wikipedia: > Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Say the reserve ratio is 10%. Then, given $100, the bank is allowed to give out $90 and must keep $10 on hand.

brian_cloutier 8y ago

That's not really true though. For one: > supported by current mainstream cryptos There's nothing that needs to be supported. Bitcoin already "supports" it, in the same way that cash does. All you have to do is find a counterparty and draw up a contract. > it’s not practiced That part's mostly true because with this kind of volatility who would risk owing you a bunch of bitcoin, but loans involving Bitcoin are starting to appear: https://saltlending.com/ https://saltlending.com/ I wouldn't necessarily trust https://www.bitbond.com/ https://www.bitbond.com/ with _my_ bitcoin, but theoretically I could, and this is starting to look a lot like fractional reserve.

dogma1138 8y ago
Ofc it has to support it you can’t loan more bitcoins than you have unless you use some other tools like say options by even that isn’t straight forward unless you have a clear secondary settlement process. If you want to do fractional reserve in say crypto you need to have a blockchain where the “bank” can print crypto like they do with current currency until then it’s off the books accountign or a ponzy scheme like MtGox.
- brian_cloutier 8y ago
  > If you want to do fractional reserve in say crypto you need to have a blockchain where the “bank” can print crypto like they do with current currency until then it’s off the books accountign or a ponzy scheme like MtGox. Okay, I think maybe what we're arguing about is definitions. I'm trying to say, "off the books accounting" is perfectly legitimate fractional reserve. It is not possible to create more on-chain Bitcoin, but something which looks exactly like fractional reserve is possible today and would end up creating "off-chain" Bitcoins, increasing the Bitcoin money supply without increasing the number of on-chain Bitcoin beyond 21 million. Maybe you don't think that such a system should be called Fractional Reserve, I guess that's where we disagree. > you can’t loan more bitcoins than you have Fractional reserve isn't about loaning more than you have. In fact, kind of the the entire point is that you must loan less than you have: you loan out at most some fraction of your deposits and reserve the rest.
  - dogma1138 8y ago
    That’s not a fractional reserve since that one needs to be in the same unit of account if you are using two units of account that’s not a fractional reserve that is an exchange rate. If you loan less than your total then again it’s not fractional lending it’s simply lending.
    - brian_cloutier 8y ago
      Okay, I'm not sure I should answer because it's starting to seem like you're trolling. Giving you the benefit of the doubt: > if you are using two units of account that’s not a fractional reserve The system I described only has one unit of account, Bitcoin. It doesn't matter whether they're on-chain or "virtual", they're both Bitcoin, and are worth the exact same amount. > If you loan less than your total then again it’s not fractional lending it’s simply lending. You have misunderstood fractional reserve banking. Banks are not allowed to give out more money than they have received in deposits. Here's Wikipedia: > Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Say the reserve ratio is 10%. Then, given $100, the bank is allowed to give out $90 and must keep $10 on hand.