I've been thinking about how Bitcoin could impact the world of reserve banks. Seen a lot of posts saying that Bitcoin will kill reserve banks as well as posts saying that reserve banks will carry it on their balance sheet for international settlement
Which one do you think it is? Or are there other ways this could play out? What are your estimated timelines?
Many governments already own Bitcoin and those who act on behalf of their citizens will want to hold more. Those that do will be like those with great natural resources today. Not a perfect situation but at least they have some assets for when times are tough.
Unfortunately most governments don't recognize that their sovereignty is under threat or had a false kind of sovereignty in the first place, so they don't act on behalf of their citizens, and Bitcoin becomes another tool in operating however they were going to before.
I expect we'll see another blockchain used for settlements first. Then, after that fails, and Bitcoin is more prominent, they'll start using it.
Generally, I don't expect Bitcoin to destroy reserve banks anytime soon. I'm not even sure why that would be the ultimate outcome. There will still be banks that specialize in storage security and risk assessment for loans and those banks will have an incentive to engage in fractional reserve practices. Unlike today, this will probably be more transparent, but there will be people who opt for higher interest rates from these banks.