...... and your life is a lie and most of the population are destined to be the working poor, and other matters.
First forum moderator , this is relevant to cryptocurrency, and specifically to alternative cryptocurrency, for the following reason , it was brought up in the Caps thread with relation to Proof of stake .
I was amused, scared and entertained at how little is known of this simple process.
If investors and owners or creators of cryptocurrency do not understand the basics of modern money mechanics .
How are we as humans , meant to progress? , do we just " take for granted" that someone else will understand and make sure everything is functioning ?
What a sad existance , why this relates to alternatives is because a fork of the evolution of cryptocurrency is moving away from the blockchain system as we traditionally understand it .
With this in mind and the ignorance that abounds , what stops us docile creatures from making the same sheep like mistakes ?
So with no further delay......
From our friends at wikipedia
http://en.m.wikipedia.org/wiki/Fractional_reserve_bankingFractional-reserve banking is the practice whereby a bank retains only a portion of its customers' deposits as readily available reserves from which to satisfy demands for payment.
Reserves are held at the bank as currency or held as deposits in the bank's accounts at the central bank. The remainder of customer-deposited funds is used to fund investments or loans that the bank makes to other customers.[1]
Most of these loaned funds are later redeposited into banks, allowing further lending. Because bank deposits are usually considered money in their own right, fractional-reserve banking permits the money supply to grow to a multiple of the underlying reserves of base money originally created by the central bank.[2][3]To mitigate the risks of bank runs (when a large proportion of depositors seek withdrawal of their demand deposits at the same time) or, when problems are extreme and widespread, systemic crises, the governments of most countries regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks.[2][3]
In most countries, the central bank (or other monetary authority) regulates bank credit creation, imposing reserve requirements and other capital adequacy ratios. This limits the amount of money creation that occurs in the commercial banking system, and helps ensure that banks have enough funds to meet the demand for withdrawals.
[3]Fractional-reserve banking is the current form of banking in all countries worldwide.[4]
Now I expect most have not let the gravity of the situation sink in , im happy with that , all we need is a general understanding at least from the Peer level.
