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You are assuming deposits and loans both are done in terms of bitcoins. In theory, we can design a banking system that accepts deposits in bitcoins and gives o
by iambvk 13y ago
You are assuming deposits and loans both are done in terms of bitcoins.
In theory, we can design a banking system that accepts deposits in bitcoins and gives out loans in the fiat currency.
- AnIrishDuck 13y agoRight, but you no longer have a "pure bitcoin" banking system. You have a dual currency system that is predicated on the trust of (1) the US government and (2) the bitcoin community. Also, such a system mutes a key feature of current "money multiplier" based systems, which is recursion. Under the current system, when you deposit $100 in a bank, that bank can then lend $10 to nine other people. Who can then each take that $10 and deposit it nine other banks, which can each lend $1 to nine other people... Without this effect, the money multiplier would probably need to be tweaked pretty drastically.