Is there any change to bitcoin (or bitcoin style crypto) that would make fractional reserve banking or something else, impossible or harder to exist?
What I can think of is the volatility and the asset it is valued against. If Bitcoin is operated as an asset which is calculated simply on its value, then a fractional reserve system could work, as money loaned in Bitcoin would be payable in Bitcoin.
So if Mr A deposits 1.5
BTC, and the bank keeps 0.3
BTC, while lending out the remainder to Mr B, who is expected to repay the 1.2
BTC as well as the interest on it. Volatility would not be a factor as the value is of itself.
As some example, would Demurrage make it harder to happen?
As a scenario, how do you imagine demurrage can affect its usability?
I don't think that we can use the same thing with Bitcoins. Fractional reserve banking might be hard if we are just considering bitcoins, since at the end of the day we have to understand the fact that, bitcoins as a whole are volatile and lending through 3rd parties can cause initial owners to have probelms since they might have to sell instantly because of market fluctuations. How do they decide to do that then ?
Stock market, exchanges nothing predicted any pandemic, but we are living one and everything went very down which does mean that, even if the exchanges hold billions of dollars it would be nearly impossible to achieve stability due to the volatile nature.
Fractional reserve banking might only work for fiat. With Bitcoins it might be a disaster in making.
Just my thoughts~