Currently, when you need to borrow money, your banker just edits your balance account and create money magically. You then pay back monthly.
Banks won't be able to do that with Bitcoin with its limited supply. You can't print bitcoins.
Yes, he edits number on your balance but that's not something magical because behind those numbers there is real money, they can't lend more than they can.
agree... when a bank issue a loan, they need sufficient money to fund the loan
as a borrower you will want to withdraw that loan in real fiat money... hence bank needs to supply that
I think your confusing the properties of magically creating money with that of fractional reserves.
~ Take that to its limit, and that $100 deposit will end up funding $1000 of new loans, creating $900 out of thin air as I previously described.
~ they don't move any money out their reserves to cover your loan. The $100 loan is brand new money created out of thin air.
imo, that's not creating new money but reusing money in circulation to create new credit line
and the problem is, in our social life we treat and use this credit line the same as money
This is impossible to do with bitcoin, since if you were to take out a loan the bank HAS to give you the relevant amount in bitcoin so you can transact it.
it's possible... think of exchange or custodial wallet
"the relevant amount in bitcoin" transacted only when borrower withdraw bitcoin to his own wallet
user sends real btc to deposit address in a custodial wallet and his account balance adjusted properly
a custodial wallet issues a loan to user account, and real btc transacted only when user withdraws
so the custodial wallet can act just like a bank (managing it like a real bank may run into some issues)
a bank will collapse when all depositors take their money at the same while bank doesn't have enough reserve balance
the same thing can happen to custodial wallet who tries to become like a bank or misuse users' funds