Quote from: relative on June 28, 2011, 06:27:28 PM

Quote from: dennis_sweden on June 28, 2011, 05:47:17 PM

"Let us say that: a bank accepts deposits and receive 1000 Btc from various depositors. They give loans, but owing to the fact that they do not have Btc or rather the codes that Btc are made up from, they can never lend more than 1000 Btc. If the bank lends 1000 Btc no depositor can withdraw any Btc; which means that 1000 Btc equals 1000 Btc and not 2000 Btc.

I'm sorry, I don't know how else to explain it. you're getting it wrong. I think you're confusing "central bank money/21 million coins" with money. bank deposits are money (by any reasonable) definition, the bank doesn't need to have all the "bitcoin codes" in order to have deposits on its books. they simply owe someone 1000 BTC.

I can sign a contract today I owe you 1000 BTC without having ANY coins. if I was a bank and those deposits were in a checking account under your name, that would be considered part of the money supply.

You introduced the "central bank money/21 million coins" theme, not me, and I am not confused by the concepts. Yes, of course a Btc bank could in theory operate on a fractional reserve basis, but they would be bankrupt within days of writing checks, unless they injected new capital and bought Btc to meet liabilites, making it a very unprofitable business.

Say you sign a contract with me today owing me 1000 Btc, and at the date of maturity, Btc have appreciated in value 25%, the monetary debt value is higher. Of course, if the value decreased the monetary debt value would be lower. No business proprietor would accept a check from a Btc bank which operates on a fractional reserve scheme, rendering it impossible to operate such a bank in practice.