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A comment on Coinbase warns that bankruptcy could wipe out user funds. Parent comment

Re:Coinbase warns that bankruptcy could wipe out user funds by JBSay on Wednesday May 11, 2022 @03:56PM (#31344932)
Money is not created through fractional reserve banking. Money is loaned into existence by commercial banks. Similarly Coinbase can sell you coins which don't exist. Like a bank it doesn't have to make good on this IOU until you withdraw your funds.
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Re:Coinbase warns that bankruptcy could wipe out user funds by einpoklum on Saturday May 14, 2022 @03:16AM (#31375770)
It is fractional reserve banking which allows banks to loan money into existence, as long as their reserve is at least a certain fraction of their total loans. The alternative is full reserve banking, where banks aren't allowed to do that - or no-reserve banking I suppose...
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Re:Coinbase warns that bankruptcy could wipe out user funds by tekknik on Thursday May 12, 2022 @10:15AM (#31354541)
Which with the volatility of Bitcoin puts them in a situation where they can underprice an asset if they loan it out. Bitcoin loaning is rather rare because of this.
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