Bitcoin Forum

Do you suspect Bitcoin Service providers are using Fractional Reserve banking?

service providers.. like bitpay and other retail/consumer direct swaps.. no..

service providers.. like exchanges with bitcoins altcoins and fiat.. yes..

exchanges "orderbooks" are not directly linked to funds stored on private keys. which allows them to make 'ghost' orders. and when things go bad that they have made a loss on the ghost orders because theres not enough coin or fiat to fill the withdrawals. they cry out the standard "we have been hacked" mantra. and then go into bankruptsy

My guess is that somebody somewhere surely is or will.
 

I expect Bitcoin FRB to be the norm in the future because most people will store their bitcoins in online accounts rather than in their own wallets. That is one of the reasons I don't believe that the value will reach the levels that many people hope for.

It would be difficult and risky. There's a lot of ups and downs and many lots of people selling or buying all at the same time. Some exchange may try to do it, but I doubt it could do it for long.

https://en.wikipedia.org/wiki/Fractional-reserve_banking (https://en.wikipedia.org/wiki/Fractional-reserve_banking)

I think this is something that they may be considering or may have already established- this require a complex process/system to manage. After all, service provider such as XAPO and Coinbase are acting pretty much like banks.

MtGox springs to mind as a good example of a Fractional Reserve banking exchange crying out the standard "we've been hacked" mantra. I think some exchanges are legit, but others are using Fractional Reserve systems.

Bitpay's a service provider, it covered up its hack for over a year and might have used Fractional Reserve banking afterwards.

Some sort of Fractional Reserve banking is definitely in place. This is a good way to make money since most of these Service Providers are actually giving "free" services.

they are the son of BITS which was also 'hacked'  so they did it twice and they owe me stolen coin (.39btc) lost after the first hack  when they were BITS  may they suffer pineal cancer and die a slow painful death from it.

 BTW  that is not cancer of the penis that I want them to die from.

Of course they do, fractional reserve system is the most succesful scam on the planet. Do you think bitcoin services are so honest that they dont participate in it?

But when the ponzi scheme deflates ,there wont be a bitcoin central bank to do QE to save them, so bitcoin wont suffer the hyperinflation fate like fiat money does, don't worry ;)

Only those holding their money with the scammers will lose it, those that hold their own money wont be affected.

Markets can remain irrational longer than you can remain solvent -- anonymous