The financial system, of any nature, ends up serving the purposes of hierarchical power, but the financial system is not the CAUSE of that power, nor of that wealth. It is just one of the means.
Geez, you really do have time. ^ This is wrong in so many levels. Long story short. USA has how much gold? Like $500 - $600 billion, but the M2 money in circulation are like $12 - $13 trillion.
So what ? Money has nothing to do with gold. Even M0 money is not related to gold. M0 money is just as fictional as bitcoin is: just a number of tokens, with that difference that the central bank can mine as many of these tokens as she likes (not entirely, there have to be given a kind of debt IOU). There is NO "basis value" in the fiat system, not more than there is in bitcoin. And that's a good thing. Money is imaginary.
- Bite me! There are not more than 21 million.
Of course. Fractional banking was invented with gold already. There's no difficulty doing fractional banking on top of bitcoin, not more than on top of gold, or on top of M0 imaginary central bank tokens.
So *there's no point* in using bitcoin as "base money" because you can build a very similar fiat system on top of it as ours.
You could do like in the 1930ies: forbid people to do "exchange token withdrawals". You can still transmit "bitcoin" from exchange to exchange, but it is forbidden to withdraw them. In the 1930ies, the US forbade people to exchange their dollars for real gold, although dollars were supposed to be backed by gold at that time.
In fact, you could just require much higher "withdrawal fees" (say, 50% of the value) than "exchange transmission fees" (only 0.5% of the value, when on chain bitcoin transactions will be, because of block size limitations, already 10% of the transaction value of an average user transaction). Then, most people will use MOSTLY exchange IOU "bitcoins", and exchanges can do fractional bitcoin banking with a ratio of 20 - 1.
Exchanges can do this, because they do only a few settlements per day as they have direct lightning-like micropayment channels between them.
