Understanding Fractional Reserve Banking

This chapter examines the intricacies of fractional reserve banking and its misconceptions, emphasizing how deposits are often utilized by banks rather than merely safeguarded. It contrasts traditional banking practices with the advantages of Bitcoin, highlighting the need for transparency and proof of reserves to build trust. The discussion addresses the challenges and legal implications of implementing a secure banking system in the context of cryptocurrencies, advocating for innovative models that prioritize full reserves.