Future Of Lending: Bitcoin Full Reserve – Bitcoin Magazine

​​This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin International.

The debate rages on about what the proper roles of bitcoin, “crypto” and lending should be. What kind of credit should we have, if any? What is fiduciary media and do we need it? Or should it all be fully reserved?

In this article I will spell out some thoughts on this long-running debate and how it applies in a Bitcoin context.

The Short Version

For the impatient, the short answer is: We don’t need fractional-reserved fiduciary media for credit and commerce to exist in society. You can have commodity credit in a full-reserve banking system, it merely stops circulation credit and the creation of fiduciary media. The defense of “free” fractional-reserve banking amounts to a kind of special pleading, inflationist stance. This does not preclude the fact that there will be many who try to commit fractional-reserve banking fraud, but “the market” does not necessarily have to serve this demand, nor is it beneficial to society.

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