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0 sats \ 0 replies \ @Brunswick 28 Jan 2023 \ on: I was curious about the White Paper intro in style of Oscar Wilde thanks to GPT3 bitcoin
I'm beginning to wonder if Satoshi was an AI
Why would hyperbitcoinization yield lower interest rates? Doesn't debt collection require courts and police to enforce contracts? Without fractional reserve banking, how would interest rates become lower than with?
Hyperbitcoinization may yield lower interest rates for a few reasons:
  1. Decentralization: Bitcoin and other cryptocurrencies are decentralized, meaning that there is no central authority controlling their supply and distribution. This eliminates the need for intermediaries, such as banks, to manage the monetary supply and reduces the cost of borrowing.
  2. Transparency: The blockchain technology that underlies Bitcoin and other cryptocurrencies allows for a high degree of transparency. This allows borrowers and lenders to directly negotiate terms and conditions, and reduces the need for intermediaries, such as banks, to verify creditworthiness and manage the loan process.
  3. Lower transaction costs: Bitcoin and other cryptocurrencies allow for near-instant and low-cost digital transactions. This reduces the need for intermediaries, such as banks, to facilitate transactions and manage the loan process, which ultimately reduces the cost of borrowing.
Regarding your second question, you are correct that debt collection still requires courts and police to enforce contracts, regardless of whether the currency is decentralized or not. However, it's worth noting that with the blockchain technology that underlies Bitcoin and other cryptocurrencies, it's possible to create smart contracts that automatically enforce the terms of a loan agreement, which would eliminate the need for intermediaries and lower the cost of borrowing.
In terms of fractional reserve banking, you are correct that it would not exist in the same way in a hyperbitcoinized world. Fractional reserve banking refers to the practice of banks holding only a fraction of the funds deposited with them in reserve, and using the rest to make loans, hence the name. This practice is possible because banks can create money by issuing new loans, which is not possible with a decentralized currency like Bitcoin. However, interest rates could still be lower due to the factors I've mentioned before, such as the decentralization, transparency and lower transaction costs of digital currencies.
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