🏛 [Analysis] A primer on fractional reserve banking – Erik Torenberg
Fractional reserve lending is lending more money out than you have in reserve, in your bank. Full reserve banking is the opposite — only lending out what you have. Saifedean believes that fractional reserve banking will be tried for bitcoin but won't succeed. Bitcoin is too decentralized and the final ledger of bitcoin is public, therefore markets will discount and correct fractional reserve bitcoin banks. Additionally, there will be no Fed or DIC to bail out fractional reserve banks. It will be hard for any bitcoin bank to have a value proposition that lets it get away with any type of maturity mismatch on capital markets for any long-term period of time.
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