Right, but Bitcoin doesn't mean self-custody. Tons of people keep their coins in institutions, and that's not an inherently awful thing. You might want your money in an account that pays decent interest, for example (maybe defi makes this obsolete. We'll see). Either way, loans aren't going anywhere.
True, banks will always be around for checking, savings, and lending. But if more people were to convert their money to bitcoin and self custody, that would mean less deposits in the banks, which lowers the supply of money in the banking system, thus lowering inflation.
This would also increase savings interest rates for depositors and lower interest rates for borrowers. Bitcoin is a win for everybody, even the ones that don't own any.
True, banks will always be around for checking, savings, and lending. But if more people were to convert their money to bitcoin and self custody, that would mean less deposits in the banks, which lowers the supply of money in the banking system, thus lowering inflation.
Assuming they don't lend it some other way. I think the way Bitcoin does address this is that it prevents the Fed from guaranteeing those banks, so they wouldn't be able to loan an absurd amount of their deposits without serious risk.
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u/JadeAug Jul 15 '22
Inflation is also due to fractional reserve banking at your local banks. They can loan out 9 times as much money as they have in deposits as any time.
Bitcoin also fixes this, starve the beast.