Quote from: Hawker on May 16, 2013, 03:35:34 PM

Quote from: townf on May 16, 2013, 02:59:13 PM

Quote from: Hawker on May 16, 2013, 01:49:17 PM

I see what you are saying but I don't see why it matters. Idiots are perfectly qualified to do business in the idiotic ways they have always done so. You will be perfectly free to not do business with them. In a free market, if the currency is Bitcoin, there will be fractional reserve banking. You of course will be able to keep your Bitcoin in a usb stick under your mattress but the vast majority of people will use banks that pay interest.

The idiots I'm talking about is the FR lenders themselves. If a community surrounding them are all using their notes, and the FR bank idiotically creates way too many notes and suffers a run and goes broke, all the note holders get screwed. You aren't "free to not do business with them" because the only way to achieve that is to never do any business with any of them ever, ie never use notes.

Note holders aren't ever "free" from this risk, even when they are perfectly free to choose whose notes they use. I agree that FR bankers will always be "free" to be idiots and go broke with note holders getting shafted.

However what about using cryptography and decentralized networks to somehow make a FR system bailout proof and idiot proof in order protect note users from this risk?

Again, assuming that everyone who uses the notes does so voluntarily, what's the problem?

I guess there isn't a problem if we don't mind going through the entire local-bank-panic-so-merge-with-another-bank-over-and-over-again-until-it-becomes-a-behemoth-cartel-composed-of-very-few-members-that-hijacks-the-government-and-turns-everybody-into-debt-slaves cycle all over again