I hadn't thought of that before. So bitcoin is like gold in this regard, when gold was used as currency.
It occurred to me that bank notes today are the ancestors of a receipt that promised you a certain quantity of gold. Cash is just a promise - an abstraction from the underlying thing of value.
Whilst bitcoins are limited, you can create as many promises as you like - you just need an extra layer on top of bitcoin. Does this solve the loaning problem?
You would still have bitcoin as the base, like the gold standard but with none of the physical limitations of actual gold and with people still being able to easily transact in bitcoins.
I'm not sure whether having two things that you can pay with - bitcoin / promise of bitcoin - would be implementable. Would it require another crypto layer on top of bitcoin, with some parallel blockchain?
I think it's possible that introducing reserve banking on top of Bitcoin could solve the lending problem for a while, just like it solved the lending problem on top of gold - for a while.
In the end, though, the same problems would crop up again after a while: bank runs, the attempt to deal with bank runs via a central bank, the tendency for downward spirals in countries with a trade deficit, and so on. Eventually, countries would have the same incentives to get out of a "Bitcoin standard" as they had with the gold standard.
It occurred to me that bank notes today are the ancestors of a receipt that promised you a certain quantity of gold. Cash is just a promise - an abstraction from the underlying thing of value.
Whilst bitcoins are limited, you can create as many promises as you like - you just need an extra layer on top of bitcoin. Does this solve the loaning problem?
You would still have bitcoin as the base, like the gold standard but with none of the physical limitations of actual gold and with people still being able to easily transact in bitcoins.
I'm not sure whether having two things that you can pay with - bitcoin / promise of bitcoin - would be implementable. Would it require another crypto layer on top of bitcoin, with some parallel blockchain?
Gold standard: http://en.wikipedia.org/wiki/Gold_standard
This is an interesting read about bank notes: http://www.bankofengland.co.uk/banknotes/pages/about/history...