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152 sats \ 1 reply \ @k00b 19 Oct 2023 \ parent \ on: _Broken Money_ book club, part 2 bitcoin
I'm nitpicking but I think she made an error with the analogy. An individual bank's bank run is like a game of musical chairs but a fractional reserve banking system - which she describes very clearly - is more like a house of cards.
A fractional reserve banking system is like a game of musical chairs; it functions for a while but if something ever stops the music, it call fall apart quickly.
It's more like a house of card-like games of musical chairs lol
Given that btc is a good of pure abstraction, does it make sense to consider things like the price implosion from $69k to $15k to be a 'bank run' in the belief in btc as a credible money?
This is interesting. When bitcoin's price decreases, is the market pricing entries in bitcoin's ledger like a failing bank's ledger? When the cards begin to fall in a fractional reserve system, the price of legitimate ledger entries (gold say) tend to appreciate.
When people panic withdraw from bitcoin's ledger, what do they perceive are bitcoin's liabilities?
An alternative take: maybe we're only seeing the price of sub-ledger bitcoin (as held on exchanges) decrease during bitcoin's "bank runs." It's hard to wrap my arms around that, but I could see that being true.
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100 sats \ 0 replies \ @elvismercury OP 19 Oct 2023
An alternative take: maybe we're only seeing the price of sub-ledger bitcoin (as held on exchanges) decrease during bitcoin's "bank runs." It's hard to wrap my arms around that, but I could see that being true.
Interesting idea -- separates the pricing mechanism btwn on-exchange and off-exchange btc, like they're two distinct type of conceptual entities. Not sure what implications that has, but I'm going to noodle on it.
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