# Bitcoin as legal tender **URL:** \ **Category:** Great Debates\ **Created:** [June 6, 2021, 12:40pm UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705 "2021-06-06T12:40:11Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [September 26, 2021, 1:11am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/83 "2021-09-26T01:11:19Z")
It gets better: tether (a stable coin) looks like it’s about to crash. Crypto might be in for a wild ride. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [October 16, 2021, 4:41pm UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/84 "2021-10-16T16:41:00Z")
This could prolly start its own thread but I’ll include it here as a factor in whether or not using Bitcoin as legal tender is a good idea: > **[Bitcoin-mining power plant raises ire of environmentalists](https://apnews.com/article/cryptocurrency-science-technology-business-environment-516dbd319394a6a30f83d94947abad20)** > > An obstacle to large-scale bitcoin mining is finding enough cheap energy to run the huge, power-gobbling computer arrays that create and transact cryptocurrency. One mining operation in central New York came up with a novel solution that has alarmed... ---
**Author:** ![Lantern2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lantern2/32/3010_2.png) [@Lantern2](https://boards.straightdope.com/u/Lantern2)\ **Post date:** [October 17, 2021, 2:57pm UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/85 "2021-10-17T14:57:12Z")
Bitcoin has now recovered its mid-year losses and it’s close to it’s all-time highs. While I remain skeptical that cryptocurrencies will ever have large-scale, legitimate uses I am beginning to suspect they will be around for a long time. For one thing they will have non-legitimate uses like tax evasion and organized crime and are no more likely to disappear than those are. They may even have some positive effects in that they light a fire under governments to start their own digital currencies which could increase efficiency in all sorts of ways without the problems of crypto. And there will probably be interesting innovations in cryptoworld especially in smart contracts and programmable payments. which could be adapted by mainstream finance. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [October 30, 2021, 7:59am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/86 "2021-10-30T07:59:31Z")
How to launder a half-billion dollars: > It is now being resold for a billion dollars: > **[CryptoPunks: Details for Punk #9998](https://cryptopunks.app/cryptopunks/details/9998)** > > CryptoPunks are 10,000 collectible characters on the Ethereum blockchain. These are the details for Punk #9998 ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [October 30, 2021, 8:08am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/87 "2021-10-30T08:08:38Z")
Guys, when I would watch Lou Dobbs on _CNN Headline News_ back in December 1995 exhort yet another new website that would allow people to view crappy pictures of their pets, if I knew I would be talking in 25 years about how international criminals are using the internet to generate fake money which could buy fake crappy .gif’s which could legally be converted into real dollars… at a _half-billion per shot_… it would have been like: [![Imgur](https://live.staticflickr.com/65535/51641070053_cc66d16589_z.jpg "5sdaow") ](https://www.flickr.com/photos/68782016@N08/51641070053/) ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [November 2, 2021, 1:55pm UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/88 "2021-11-02T13:55:02Z")
> [@JohnT](#): > > How to launder a half-billion dollars: After the sale there was another offer of over a billion dollars. There is no chance, zero, that this isn’t money laundering. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [November 22, 2021, 3:02pm UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/89 "2021-11-22T15:02:09Z")
Now it’s **Bitcoin City**! > **[El Salvador to build cryptocurrency-fueled "Bitcoin City"](https://apnews.com/article/cryptocurrency-technology-bitcoin-el-salvador-e002b6d361a38c3aac6e8f14837bb8ec)** > > LA LIBERTAD, El Salvador (AP) — In a rock concert-like atmosphere, El Salvador President Nayib Bukele announced that his government will build an oceanside “Bitcoin City” at the base of a volcano. Bukele used a gathering of Bitcoin enthusiasts... 🤪 ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 25, 2021, 2:18am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/90 "2021-11-25T02:18:16Z")
For Bitcoin specifically, as it is limited in how many coins can be minted. How can you handle loans with interest? Currently banks just create money and loan it. If all the Bitcoins are mined and in circulation. There cannot be anymore created. But loans continue to increase the money supply. It seems that if a limited crypto currency is to be used as an actual monetary basis, it will require some changes in the functioning of loaning money. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [November 25, 2021, 2:22am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/91 "2021-11-25T02:22:14Z")
> [@Kedikat](#): > > There cannot be anymore created. But loans continue to increase the money supply. Banks can “create” money through fractional reserve lending. You can do that with bitcoins just as you can with dollars. ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 25, 2021, 5:11am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/92 "2021-11-25T05:11:35Z")
Bitcoins are not created that way. Such created Bitcoins would not integrate with the blockchain system of Bitcoin. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [November 25, 2021, 1:03pm UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/93 "2021-11-25T13:03:50Z")
I don’t think you grasp what fractional reserve banking is. There is zero reason this wouldn’t work. People could deposit bitcoin with the bank, and the bank could transfer that bitcoin to borrowers. That’s all there is to it. There is no need to duplicate a bitcoin or create it out of thin air. As a consequence you’d have a separate ledger of bitcoin owed, of course, outside the blockchain, but hell, that’s also how it works with dollars, whereby you have a ledger of dollars owed outside the actual existence of money. ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 26, 2021, 2:01am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/94 "2021-11-26T02:01:53Z")
Fractional reserve banking is not as you describe. The word fractional is key. A bank does not have to have all the currency it loans out in actual deposits. Only a fraction of it. For instance. If the law allows, a bank can loan out $10 dollars for every $1 dollar it actually has in deposits. ( fractional reserve banking allows just such things ) So if a bank was only using a finite currency such as Bitcoin, it could not loan out more Bitcoin than it has in deposits. It cannot create new Bitcoin, or duplicate transactions of Bitcoin. The bitcoin blockchain system does not allow for a Bitcoin to be in a persons savings account, and also be out and about with other people spending it. As I mentioned, there may evolve some scheme aside from the Bitcoin blockchain to allow such shenanigans. But that would pretty much defeat the basic good intentions of a finite currency and blockchain as it is. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [November 26, 2021, 2:05am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/95 "2021-11-26T02:05:34Z")
> [@Kedikat](#): > > For instance. If the law allows, a bank can loan out $10 dollars for every $1 dollar it actually has in deposits It’s almost exactly the opposite. A bank might be able to lend 90% of its deposits, but it cannot lend over 100%. That’s a physical impossibility. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [November 26, 2021, 2:06am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/96 "2021-11-26T02:06:38Z")
> [@Kedikat](#): > > Fractional reserve banking is not as you describe. The word fractional is key. A bank does not have to have all the currency it loans out in actual deposits. Only a fraction of it. Yes, I know how it works. That’s my point. Fractional reserve banking does not require anything be created out of thin air. You can have fractional reserve banking with a finite currency, that’s the entire point of fractional reserve banking. > [@Kedikat](#): > > So if a bank was only using a finite currency such as Bitcoin, it could not loan out more Bitcoin than it has in deposits. Sure it could. You transfer 1000 BTC to the bank, it lends out 900 BTC. Someone deposits 900 BTC, the bank loans out 810. The bank is now in current possession of 190 BTC, owes 1900, is owed 1710, and didn’t create a single bitcoin. That is fractional reserve banking. ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 26, 2021, 2:08am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/97 "2021-11-26T02:08:59Z")
Oh right. Got it reversed. But it still means that the bank can lend out money that is not in free circulation. Which Bitcoin will not track properly. Thanks for pointing it out. ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 26, 2021, 2:11am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/98 "2021-11-26T02:11:51Z")
This illustrates both my reverse number mistake, but also how much extra bitcoin could be injected into the Bitcoin total. Which it is not set up to handle. > **[Fractional Reserve Banking: What It Is and How It Works](https://www.investopedia.com/terms/f/fractionalreservebanking.asp)** > > Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand or available for withdrawal. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [November 26, 2021, 2:16am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/99 "2021-11-26T02:16:20Z")
You are thinking of the bank acting as something like a crypto vault. Rick jay is imagining it to be part of a banking system where it plays something like gold used to play 100+ years ago. ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 26, 2021, 2:23am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/100 "2021-11-26T02:23:16Z")
The problem is with lending it out. Bitcoin does not allow double spending. Having 1 Bitcoin in a bank account means you have to have a blockchain transaction that places it there. Probably a bank administered wallet. If the bank loans that bitcoin to someone, then it goes from the banks wallet to their wallet. Or remains in the banks wallet and what they do with it is transacted with the banks wallet. But if you then withdraw your bitcoin from your account, the bank loses that Bitcoin from its wallet. So it now disappears from the person who took the loan of it. It gets even more steps removed and complicated as purchases go on. But it is actually always your Bitcoin. And it is the only one that belongs to you in the blockchain scheme of things, until you actually make a purchase or give it away. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [November 26, 2021, 2:29am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/101 "2021-11-26T02:29:52Z")
> [@Kedikat](#): > > The problem is with lending it out. > Bitcoin does not allow double spending. So what? This has to do with the fundamental concept of ‘money’. A lot of crypto enthusiasts don’t like this concept, so they would rather bitcoin (or whatever crypto they use) to act like a virtual gold standard. This is an actual problem with cryptos - the way they are ‘intended’ to be used isn’t really money, even if the designers and proponents think it is. But the average person doesn’t care. They don’t really care that when they go to the bank they can’t actually get gold or whatever. A lot of times, they don’t really even care if they can get green bits of paper. What they care about is the ability to safely store and spend money. Whether that’s in dollars or quatloos or ether, they often don’t need or care that they can’t immediately take physical (or virtual) receipt of them - they care that there is a bank or government that says they have it or can get it easily. If that causes confidence issues with bitcoin, that points to a fundamental issue with its suitability as a currency (which I personally don’t see as a good idea for a few different reasons)over any of a variety of extant fiat currencies. ---
**Author:** ![Kedikat](https://avatars.discourse-cdn.com/v4/letter/k/ed655f/32.png) [@Kedikat](https://boards.straightdope.com/u/Kedikat)\ **Post date:** [November 26, 2021, 2:32am UTC](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705/102 "2021-11-26T02:32:53Z")
Hmmmm. Skimming that fractional reserve banking article I posted a link to. Am i really that far wrong? Not at all in some more purely financial instrument reserve requirements. [Previous page](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705.md?page=4) [Next page](https://boards.straightdope.com/t/bitcoin-as-legal-tender/943705.md?page=6)