I keep hearing that Bitcoin is immune to inflation because You can't make more bit coins than some fixed constant of bitcoins through a process of mining. However, assuming enough people take it seriously, doesn't bitcoin have the same inflationary problems as fractional reserve banking? As soon as you put it in a bank because people hate storing their bitcoins in a "vaults" like gold, you introduce the same old fractional reserve banking system that the US federal reserve watches over... and because its an international currency that's not regulated, who sets the fractional reserve rate for bitcoin? isn't that a bubble waiting to happen? What happens if there's a run on a bitcoin bank?

  • Could you explain further why someone would store a Bitcoin in a bank and why would that matter? How would the Bitcoin's inflate because of that situation? Dec 21, 2017 at 22:15
  • I was just talking hypothetically if bitcoin is used broadly as a replace for normal money... then people start placing them in banks for convience, and banks start loaning money in bitcoins...I guess currently bitcoin requires you to exchange back to normal money to use it? I couldn’t for instance get a loan denominated in bitcoins?
    – Bill Moore
    Dec 21, 2017 at 22:32
  • Not that I would ever want to do that.. I would rather have a loan that devalues over time so that I can pay it off faster ...just extrapolating the bit coin hype about taking over as money...
    – Bill Moore
    Dec 21, 2017 at 22:36
  • Maybe a person would be willing to borrow bitcoin for short term inferring less risk from value changes... then it all goes back to fractional reserve banking again and inflation of money derived for bitcoin?
    – Bill Moore
    Dec 21, 2017 at 22:54


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.