The current financial system has layered over the original concept of money so many things its unrecognizable to its natural form. Go back to where money originated, and you'll realize its an evolutionary necessity for social cooperation, a mediator of morality between selfish actors. Think about the natural formation of seashell necklaces, to the cigarette packs as money traded by prisoners, the rocks traded by penguins, the gold coins by the roman empire, to the nutrients traded by trees in mycelial networks. The control and manipulation of a currency is the perversion of the transfer of work between agents in an economic system. It corrodes the network and does not allow the system to function properly, and when that system fails to function, so do the moral obligations and contracts that the money represents. What happened in 2008 was a result of a system that can't fulfill its promise to uphold the necessary thermodynamic laws that should be maintained by an economic system.
The problem with real estate is its not divisible, its not consistent, and its not exactly fungible, but investors found ways to turn it into a tradeable asset class during the mortgage crisis. With bitcoin what are these creative investors going to do? Create bitcoin derivatives? You can already trade it near instantly at any fraction or denomination you wish.
The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
I hope you realize you're not bringing a new argument to the table. This is exactly what exchanges already do, which is why there's a saying: If you dont hold the private keys you don't own the coin.
Engineers will eventually build a system that obsoletes the need for someone else to hold custody of your money, its the entire DeFi space that's under development right now. At that point there's very little a fractional reserve system can offer. Who's going to want to trade with you when the currency you got when you took out a loan isn't a bitcoin but "a bitcoin guaranteed by bank of america". There is an obvious difference because users cannot pull out the sum and hold the private keys to it. And if the bank does lend you real bitcoins to which you can own the private keys to. Simply put, that cannot be by definition fractionally reserved, because its the real deal.
> The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
Not even going to respond to this one. I'll let you guess the basic fallacy you're breaking here.
Tell me what would a fractionally reserved loan offer me that the actual amount that I could possess would not?
If I don't own the actual amount, then how do I send it to other people's wallets?
And if the actual amount can never technically get into other people's wallets, why would anyone even accept them over the real thing?
And if it does enter other people's wallets, mathematically how does the system fractionally reserve?
And if people start accepting the loans themselves, would the loans be priced equally the same, or would it be traded at a different value?
And if the loans and actual thing work in different valuations, then aren't they different currencies?
So then what does one being fractionally reserved have anything to do with the original which is not?
There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
You can even claim litecoin, dogecoin, ethereum, tether, buttcoin, and all the other coins are its alternative forms, and they exist just fine.
And exactly as you have said, fractional reserve btc banking will exist just fine as well, just like every last one of them.
The question is: will it have anything at all to do with the original thing?
Slack in the motion of finances. It prevents the entire system from seizing up when there are problems.
Yes, people who want to bank themselves won't have access to any of these systems. But I personally think that people are fools for thinking that even if BTC takes over the planet that everybody will operate their wallets themselves, especially if lighting is what is needed to scale.
> There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
I have no idea how this is related to the discussion at hand.
That's not my problem. Why would I, a greedy actor, ever care about the system at large? Just give me my BTC. Why would I ever take frBTC (fractionally reserved BTC) over BTC?
> I have no idea how this is related to the discussion at hand.
What I'm saying is the frBTC (fractionally reserved BTC) is just another altcoin, no different than puppyCoin, BitcoinSV, or buttCoin. The thing you talk of about a fractionally reserved BTC already exists, has been happening, and will continue to happen for as long as people can fork code. The trick is convincing anyone at all that they are the same thing.
Whatever happens, you can know that things are generally as they should be, that the human suffering that does happen is ultimately unavoidable, better than the alternative. You must never feel the stings of witnessing grand injustice, of all the death in everything, or at least those stings are buffered. You can wake up and say: "maybe we still have to tweak our implementation here and there, but the laws of our world are consistent, as well as (paradoxically) complete."
Really, I envy you! I envy you like in some ways I envy the spiritual, faithful people of the world, who similarly know there is a cosmic justice, karma, that the dealings of people are within a bounded system that will, god willing, normalize, like warmer air on cold.