I’m not sure about this. The fractional reserve we have today is based on a system where the underlying monetary base can be created out of thin air. A Bitcoin

I’m not sure about this. The fractional reserve we have today is based on a system where the underlying monetary base can be created out of thin air. A Bitcoin based fractional reserve would be based on something which fundamentally can’t be created at the whim of any single government at the base monetary level. So yes, you could still over promise Bitcoin but the difference is you cannot be bailed out on a whim. This is an important distinction that would lead to (IMO) healthy outcomes like banks genuinely going bankrupt if they can’t get a ‘real’ bail out of hard Bitcoin instead of bail out socialised by future tax payers’ money and inflation.