[PKop]

No it doesn't. The purpose of Bitcoin is sound money.. A finite currency immune to governments' and central banks' desire to devalue currency for debt financing.

Bitcoin is more scarce and therefore better store of value than any fiat currency could ever be.

Do you not understand second layer solutions do not put your Bitcoin at risk? You commit to a payment channel which defaults to closing the channel according to original amounts when opened.. if the other party doesn't follow through. Again, your funds are not at risk so it's not like a bank, and there's no fractional reserve nor devaluing, so the SOV use case is preserved.

Not at all like current fiat money system.

[wildmusings]

You can certainly have fractional reserve banking in a Bitcoin financial system, just as we did under the gold standard. Banks would give you an incentive to deposit BTC with them (could be interest rates or lower transactions fees) and then lend out some percent of those deposits. Voila, FRB and money supply growth.

[t3soro]

The bank would have no capital to lend at fractional reserve. It could not lend out 90% deposit value without getting run on, because there is no deposit insurance. There is no M1 money supply growth coming from the central bank. You would be buying a bond but also necessarily acknowledging the possibility of default, unlike today in the funny money world of perpetual debt money.

[wildmusings]

Fractional reserve banking predates deposit insurance by hundreds of years. All of what you say was also true about gold, which was of relatively static supply.