Not that it's destined to go back to the lender, but that the blockchain can limit the amount that someone like coinbase can loan out, and/or make the amount that they are loaning out public and verifiable.
Then I can decide as a user if I want to hold my currency in a "bank" that loans out 70% of their assets, or one that loans out 10% of their assets.
> Then I can decide as a user if I want to hold my currency in a "bank" that loans out 70% of their assets, or one that loans out 10% of their assets.
But but both of them are by the definition a fractional reserve bank. And I am (honestly...) not trying to be pejorative here, but it is delusional to think that customers would be better regulators of a fractional reserve bank (or a straight out scam that is just dressed up like a fractional reserve bank...) than separate independent bank regulator.
(It may be time to call quits on this discussion as the HN pending comment algorithm seems to think that this is too dep:) Anyway, thanks, at least I think I have learned a lot (even if I haven't changed my mind on the future of BTC...))
That is quite weird concept for me. How can I, as a borrower, use borrowed money in any meaningful way if that money is destined to go back to the lender? Why would anyone accept that as payment? To me, either you have credit (as in trust with risk that someone does not pay back) in the system, or you do not. If you do, you can count on financial engineers to build fractional reserve banking. And maybe it is just lack of my imagination, but I have difficulties seeing a modern society without credit.