Post
Topic
Board Bitcoin Discussion
Re: Do you suspect Bitcoin Service providers are using Fractional Reserve banking?
by
poncom
on 14/07/2016, 00:46:03 UTC
service providers.. like bitpay and other retail/consumer direct swaps.. no..

service providers.. like exchanges with bitcoins altcoins and fiat.. yes..

exchanges "orderbooks" are not directly linked to funds stored on private keys. which allows them to make 'ghost' orders. and when things go bad that they have made a loss on the ghost orders because theres not enough coin or fiat to fill the withdrawals. they cry out the standard "we have been hacked" mantra. and then go into bankruptsy

MtGox springs to mind as a good example of a Fractional Reserve banking exchange crying out the standard "we've been hacked" mantra. I think some exchanges are legit, but others are using Fractional Reserve systems.

Bitpay's a service provider, it covered up its hack for over a year and might have used Fractional Reserve banking afterwards.