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0 pointsfauigerzigerk5y ago0 comments

I don't think that would necessarily work with bitcoin. Fractional reserve banking works because bank deposits are fungible legal tender, regardless of what they are backed with at any particular moment.

With bitcoin, the only "authority" that confirms who owns what is the blockchain. Nobody would have to accept that you have made a bitcoin payment just because you transferred some bitcoin based credit that is not actually bitcoin.

Of course bitcoin derived credit/securities/IOUs can work. But it's not the same as bitcoin unless there are laws that ban making that distinction in some context.

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MilaM5y ago

> Fractional reserve banking works because bank deposits are fungible legal tender

Actually bank deposits at commercial banks are not legal tender. Only banknotes, coins and deposits at the central bank are. In most (all?) countries, individuals are not able to open accounts with the central bank. Interestingly this is not a rule set in stone. Some central banks like the Swedish Riksbank [1] are investigating the possibility to issue virtual currency to individuals which would be a legal tender and an alternative to bank deposits.

[1] https://www.riksbank.se/en-gb/payments--cash/e-krona/

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0 pointsfauigerzigerk5y ago0 comments

Of course bitcoin derived credit/securities/IOUs can work. But it's not the same as bitcoin unless there are laws that ban making that distinction in some context.

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MilaM5y ago

> Fractional reserve banking works because bank deposits are fungible legal tender

[1] https://www.riksbank.se/en-gb/payments--cash/e-krona/

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