Credit creation on a Bitcoin standard

[HedgeFx]

Hello, I have bitcoin since 2017 and follow all the various discussions about the future of bitcoin and how it may become the monetary standard one day.

One thing I can't really see an answer to is how credit creation would work on a Bitcoin standard (or gold standard for that matter) as the system would be fully reserved and not fractionally reserved as the current standard is...

Wouldn't this mean there would be a limited amount of credit available to lend out then? Which could then hinder economic/growth expansion? Would be great to get an explanation on this, thank you

An answer to your question could be that together with bitcoin many other cryptocurrencies can be created and which can be useful for the purpose of creating a multiplier for credit: the multiplier will not be the reserve but the trust in the system and in the individual projects.

[Kgdktac]

it's worth noting that under a fully reserved system, banks would still be able to create credit, but only up to the amount of reserves they hold. This means that credit creation would be limited by the amount of bitcoins held in reserve, but it wouldn't necessarily mean a complete halt to credit creation or economic growth.

It's also possible that under a Bitcoin standard, alternative lending mechanisms could emerge that don't rely on fractional reserve banking, such as peer-to-peer lending or asset-backed lending. These alternative mechanisms could help fill the gap left by reduced credit creation from traditional banks.

Overall, the impact of a Bitcoin standard on credit creation and economic growth is complex and would likely depend on a variety of factors. While a fully reserved system would limit credit creation, it's possible that alternative mechanisms could emerge to fill the gap, and a fixed money supply could help prevent inflation and promote more stable economic growth.

[BVeyron]

Hello, I have bitcoin since 2017 and follow all the various discussions about the future of bitcoin and how it may become the monetary standard one day.

One thing I can't really see an answer to is how credit creation would work on a Bitcoin standard (or gold standard for that matter) as the system would be fully reserved and not fractionally reserved as the current standard is...

Wouldn't this mean there would be a limited amount of credit available to lend out then? Which could then hinder economic/growth expansion? Would be great to get an explanation on this, thank you

I suppose it's possible to create credits out of not yet mined BTC. But the core problem of crypto credits is legislative uncertainty. BTC can't be used for any financial transactions which operate with non-existing assets.

[Husires]

It is difficult for the Bitcoin standard to be a standard in the current circumstances. We are talking about an asset that needs to have a market capacity of at least 10 trillion dollars or more than 600 thousand dollars for each currency, which is something that if it happens, it may need more than 50 years, so in the short term we can Seeing Bitcoin as a tool for international trade, as it can be used alongside a basket of transactions to conduct trading between countries that may not want to use gold or the dollar and will be an alternative to currencies such as the yuan, which will not be suitable as an alternative to the dollar, but Bitcoin will not be a new standard at the present time.

[Games.Bitcoin]

Hello, I have bitcoin since 2017 and follow all the various discussions about the future of bitcoin and how it may become the monetary standard one day.

Credit is created in the Bitcoin standard by working differently than traditional fiat-based systems. Whereas the decentralized currency and the limited supply of Bitcoins as per the Bitcoin standard will be a notable change in credit creation. Without a central bank controlling the money supply, credit expansion will primarily rely on the creation of peer-to-peer platforms and the DeFi protocol. Smart contracts and block chain technology make the Bitcoin standard credit to make the process transparent and even reduce the need for intermediaries to automate the lending process.

[Ico.best]

The credit system will be the same as when there was a cold standard. You can only lend what you have and most likely nothing more. The only thing possible is to lend with paper bitcoins, but you may only be able to sell them at a deep discount! Actually paper bitcoin already exists, just Google it.

[Blitzboy]

It is difficult for the Bitcoin standard to be a standard in the current circumstances. We are talking about an asset that needs to have a market capacity of at least 10 trillion dollars or more than 600 thousand dollars for each currency, which is something that if it happens, it may need more than 50 years, so in the short term we can Seeing Bitcoin as a tool for international trade, as it can be used alongside a basket of transactions to conduct trading between countries that may not want to use gold or the dollar and will be an alternative to currencies such as the yuan, which will not be suitable as an alternative to the dollar, but Bitcoin will not be a new standard at the present time.

Bitcoin for global commerce? Intriguing and potent. USD, EUR, and RMB have been juggernauts on the global scene. So why not Bitcoin? A decentralized, boundary-free, and secure digital currency? But, isnt it limiting to see Bitcoin merely as a tool? As a forward-thinker, I push you to envision more! Sure, Bitcoin' market capacity isn't there yet, but "yet" is the keyword!

Revolutionary tech doesnt follow a linear adoption path but an explosive one. Remember the web in the 90s? Cell phones in the early 2000s? Cant we predict Bitcoin hitting the 10 trillion dollar milestone sooner? Your viewpoint rests on the old economic wisdom. Isnt it high time to discard the past and seize blockchain technology and cryptocurrencies?