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Wrong on all counts. Bitcoins can be lent out, just like anything else can be lent out. All you need to make a loan is a loan agreement, and any asset can be l
by lottin 5y ago
Wrong on all counts. Bitcoins can be lent out, just like anything else can be lent out. All you need to make a loan is a loan agreement, and any asset can be lent out with a loan agreement, including bitcoins. There's nothing magical about bitcoins that prevents them from being lent out.
- fleddr 5y agoYou're stilling missing a very basic concept. You cannot loan out BTC that you do not have. If you have 50 BTC, you cannot loan out more than 50 BTC in actual BTC as loaning out BTC involves MOVING the BTC to me, which means you no longer own it. Yes, you can loan out BTC. The point is that you can't loan out BTC that you do not have.
- lottin 5y agoAn exchange has 1000 BTC in deposits and holds 100% of the deposits as reserves. The exchange makes a loan for 500 BTC. The 500 BTC come from the reserves. Now somebody has 500 BTC. The depositors still have 1000 BTC, except that the deposits are now backed by 500 BTC, instead of 1000 BTC (hence the name "fractional reserve"). The supply of bitcoins has gone up by 500 BTC.
- fleddr 5y agoThe supply DID NOT go up. You can do as much shadow book keeping as you like, but you didn't create a single new BTC. Nobody but miners can increase the BTC supply.
- lottin 5y agoThe supply did go up. It's simple arithmetic. This stuff has been going on for hundreds of years now. It's well known and understood.
- fleddr 5y agoI can write on a piece of paper that I have 50 BTC, but that doesn't create new coins. Miners create new coins, which land in wallets. Simple. You can't do this with gold either, despite "paper gold". It represents more gold than gold above ground, yet still within supply. Only fiat money allows you to create new money out of debt.
- lottin 5y agoJust count how many coins everybody has before and after the loan and the only possible conclusion is that the supply has gone up. If you still maintain that that the supply has not gone up, you have a lot of explaining to do. This can't just be dismissed with a handwave.
- fleddr 5y agoThe explanation is pretty simple actually: you created unbacked paper Bitcoin. Not a single new real Bitcoin was produced. The initial depositors no longer have the BTC they deposited, you loaned it out to somebody else. Yet you count their deposits as if they still own it, which they don't. It's a paper lie that does nothing to BTC supply. You can write anything on a piece of paper, it doesn't affect Bitcoin supply. Miners mint new coins, nobody else.
- lottin 5y agoBank deposits are legally enforceable claims on money, which means they're... money, regardless of whether they are fully backed or partially backed by reserves. It doesn't make any difference. And the same applies to bitcoin deposits on exchanges, which are nothing more than legally enforceable claims on bitcoins. In other words bitcoins. Why are you struggling so much with this? I mean... it's pretty basic stuff.
- fleddr 5y agoYou're the one struggling. You just agreed with what I said earlier: you did a swap from real Bitcoin (actual BTC that was mined and sits in a wallet) into a "promise" of said Bitcoin. That doesn't increase the BTC supply. It's just shadow book keeping outside the blockchain. You made new "money", not new BTC.