The possibility of fractional reserve bitcoin banking clearly exists. It is up to us -- those that understand -- to spread the certainty that a bitcoin and a bitcoinIOU are two different things. And to never accept a bitcoinIOU in lieu of a bitcoin. Only if this knowledge becomes universal, can we stave off the threat of fractional reserve bitcoin banking.
ahh, thank you. That's what I've been trying to get at. I'm from USA, and from what I've seen people do in the past and present, I've determined that we can spread word all we want and care to. Do it until the day we die, and all the experts will warn against keeping Bitcoin online and accepting Bitcoin IOU's. And it will amount to nothing because Bank of America can give out free ipad's with a new minimum BTC deposit account, and people will want to avoid paying transaction fees by keeping their transactions off the blockchain when demand soars past hundreds and thousands of transactions per second.
For that reason, I believe that the 21 million coin cap is a technicality, and the supply of Bitcoins in use will go beyond that very soon (by comparison) thus making the currency less inflationary compared to fiat, but not truly deflationary indefinitely as per the protocol. The market will determine the supply.
Perhaps. However, our current system has grown up through generations understanding that, should a bank become insolvent, the FED (through the FDIC) will make all depositors whole. And in the case of a systemic issue, again, the FED (through massive 'printing' of new 'dollars') will make depositors 'whole'. Though this 'whole-ness' will be in terms of dollars only -- not wealth or purchasing power.
It will be interesting to see how BoA's bitcoin dealings might evolve in the case where there is no central bank to backstop such operations.
Ten years ago, pretty much nobody understood the fraud of central banking. Today, an increasing percentage does.
Let us cling to our principles and our hope, and endeavor to pull the blinders off the next group of the people.
All true, thanks for the insight! I'll do my part.
