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25 sats \ 1 reply \ @cointastical OP 6 Nov 2022 \ parent \ on: Getting Started | Fedimint bitcoin
Imagine running a fractional reserve and the bitcoin price spikes. That community bank would have a huge deficiency (in fiat terms). But this community bank could probably meet withdrawals because with the price rallying, there's probably more people depositing (jumping in) than withdrawing.
But thenwhen there's a bitcoin bear market there's going to be a lot of users cashing out / withdrawing ... it's only then that this community bank's insolvency is discovered (because attempts to withdraw cannot be serviced).
So ya, ... not your keys, not your coins, applies here as well.
I should give credit where credit is due (no pun intended), fedimint does solve the custody problem for small communities wanting to centralize their custody with a group of 'trusted individuals' and it federates the centralized model into atomic communities.
What I would like to see is the tokens themselves having a similar cryptographic relationship between the owner and the mint as do sats on the lightning network between channel peers such that the mint can be punished for misbehaving and likewise the wallet holder for double spending. This simply is not what Fedi offers, however I believe it could evolve into this level of custody. I would also like to know if there are other E-cash token solutions exploring this possibility.
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