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But Bitcoin specifically excludes credit. I put $100 in the bank. The bank lends $50 to an entrepreneur. Now there is $150. That’s the magic of credit. And it’s
by JackFr 6y ago
But Bitcoin specifically excludes credit. I put $100 in the bank. The bank lends $50 to an entrepreneur. Now there is $150. That’s the magic of credit. And it’s impossible with Bitcoin.
- tonfa 6y ago> And it’s impossible with Bitcoin. I'm sure bitcoin purist will hate it, but afaik there's a lot of btc being held at exchanges (e.g. coinbase). Technically instead of holding BTC there, you could be holding cBTC (value in a coinbase btc deposit account) and coinbase could issue cBTC loans similar to banks. (The issue is that there's no backstop like in the real world, where central bank can step in as lender of last resort to avoid bank runs)
- JackFr 6y agoSo cBTC simply isn’t Bitcoin. It a double spend by design. So the whole fixed supply goes out the window when depositories start extending credit.
- quickthrowman 6y agoWhy is it impossible with Bitcoin? This is already taking place. How do you think the interest bearing crypto accounts work? Rehypothecation, lending the same coin possibly multiple times. https://blockfi.com/an-introduction-to-rehypothecation-with-cryptocurrency https://blockfi.com/an-introduction-to-rehypothecation-with-...
- JackFr 6y agoI’m not sure I get it. Only one person can own a Bitcoin at a time. So some people of reinvented fractional reserve banking. But now with the problem that it’s unregulated, unbackstopped by a lender of last resort and ultimately through rehypothecation you’ve virtually eliminated any advantage gained by using blockchain technology.