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There's a major difference. With Fiat, you're basically forced to use a bank, because that's the safest way to hold your cash. Every bank, however, is participa
by fragsworth 13y ago
There's a major difference. With Fiat, you're basically forced to use a bank, because that's the safest way to hold your cash. Every bank, however, is participating in fractional reserve lending, so you're also forced to take part - and the government is forced to insure everyone from potential losses.
Fractional reserve banking can happen with Bitcoin, but as a user, you do not have to participate. You can hold your coins in your own wallet and not have to worry about what your bank is doing with it. This means you can never lose your coins from a run on the bank.
Now, if you want to, you can loan your coins out with interest. Or you can give them to a bank and collect an interest rate. But when you do this, you're taking a risk, and you should assume any losses from this risk on your own, and nobody needs to be insured for it. If you don't want to lose your coins, keep them in your own wallet.
- dnautics 13y agoWell, you don't have to participate in bitcoin as a whole, but if do participate in bitcoin, even if you don't participate in any fractional reserve schemes on top of bitcoin, you will still be affected by the monetary expansion caused by them.
- deleted 13y ago[deleted]
- crystaln 13y agoI think you're off on both points. You do not have to use a bank account for USD - you can use safety deposit boxes or other secure locations. This is analogous to how you would store large amounts of bitcoin privately. I think the incentive to use a bank for BTC will ultimately be greater than for USD, since the risk of theft is less predictable or manageable by the average consumer. Holding a large bitcoin balance is terrifying - any keylogger or other compromise could result in complete loss. With physical USD, at least you know intuitively how to protect it.