Sound Bitcoin Banking Versus Unsound Bitcoin Banking

Ugly Old Goat
7 min readSep 13, 2022

Bitcoin banking today is caught on the horns of a dilemma between the creation of inflationary money through DeFi without the creation of corresponding new wealth (unsound banking) and the Rothbardian fiat 100% in-kind fractional reservists. (Yes, 100% is a fraction!)

The first can be described as unsound banking the latter can at best be described as a bitcoin warehousing operation, no different from a gold warehousing operation except that the base money is bitcoin, rather than gold.

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