[thedudeabides5]

Actually this isn’t the only way.

If financial intermediaries like Coinbase start extending credit or engaging in fractional reserve banking, then yes, you can “create more Bitcoin.”

Just like how in the gold standard, you could still create more gold backed dollars by making a mortgage loan...

Kind of funny how all these new monetary wizards miss out on this simple fact.

[cbdumas]

All these replies telling you this isn't possible are amazing. Perhaps they are forgetting that when you hold coins at Coinbase that's no different from a bank giving you a bank note saying you "own" x amount of gold in their vault.

EDIT: I was obviously not the first to say this but it is really interesting to watch the crypo space re-invent all of modern finance, one piece at a time.

[PKop]

Except a bank run on this sort of endeavor would bankrupt Coinbase in a few hours. The "threat" of taking delivery of actual BTC will strongly push against entities that want to fractionally reserve BTC.

"not your keys not your Bitcoin" has been a mantra from the beginning. You can track BTC withdrawals from exchanges. Ability to possess your own BTC quickly and easily is a primary feature of Bitcoin that separates it from gold and fractionally reserved fiat.

Fractionally reserved Gold happens because gold is heavy, hard to transport, store, and secure. This leads to centralized storage and then fractional reserve. You do see how the lack of physical properties, especially in contrast to gold, make the comparison much different in regards to willingness and ability to withdraw BTC and self store?

Again, a physical gold bank run, vs a BTC bank run are so massively different due to fundamental properties that this is a comically absurd threat comparison.

[fauigerzigerk]

I don't think that would necessarily work with bitcoin. Fractional reserve banking works because bank deposits are fungible legal tender, regardless of what they are backed with at any particular moment.

With bitcoin, the only "authority" that confirms who owns what is the blockchain. Nobody would have to accept that you have made a bitcoin payment just because you transferred some bitcoin based credit that is not actually bitcoin.

Of course bitcoin derived credit/securities/IOUs can work. But it's not the same as bitcoin unless there are laws that ban making that distinction in some context.

[MilaM]

> Fractional reserve banking works because bank deposits are fungible legal tender

Actually bank deposits at commercial banks are not legal tender. Only banknotes, coins and deposits at the central bank are. In most (all?) countries, individuals are not able to open accounts with the central bank. Interestingly this is not a rule set in stone. Some central banks like the Swedish Riksbank [1] are investigating the possibility to issue virtual currency to individuals which would be a legal tender and an alternative to bank deposits.

[1] https://www.riksbank.se/en-gb/payments--cash/e-krona/

[G3rn0ti]

That’s nonsense. Only miners can create new Bitcoin. What Coinbase could do is to issue a financial derivative backed by Bitcoin e.g. a “Coinbase Penny” representing a 1/1000th of Bitcoins. And then could go on issue more of those pennies than actually backed by Bitcoins. But it wouldn’t be cryptocurrency if it wouldn’t run on a blockchain. Of course, the “Coinbase Penny” could collapse if we people stopped trusting Coinbase. Bitcoin wouldn’t notice like the gold price does not care whether a single US dollar is still backed by 24.057 grams of silver like it originally did.

[arcticbull]

It would work just fine unless there's a run on it. So long as HODLers HODL, nobody would ever notice. That's the premise of the whole proof of keys business. (https://www.proofofkeys.com/)

[Aunche]

This is a really dangerous way to create more Bitcoin. If the credit markets freeze, then the entire system collapses.