There is not only the MB money supply (total number of paper dollars that exist), there is also the M1 money supply (MB + number of Traveler's Checks, and other highly liquid bank inventions), and M2 (which includes deposits).
The true size of the monetary base can artificially grow and shrink in ways completely uncontrollable by the central-authority. This is true with both the USD and Bitcoins.
The ultimate reminder is... the US implementation of fractional reserve banking forces banks to do no worse than 10%. In unregulated markets, the "banks" (ie: MT. Gox) will tend to lie and cheat, and will have ratios at far far worse rates.
Yes, but the BTC infrastructure itself provides a cryptographically strong method of proving reserves. If a large nation decided to implement its own hybrid fiat/cryptocurrency, it would basically be an unstoppable juggernaut, assuming no one ever broke the crypto protocols in a widely exploitable way. (And even then, the fiat currency might survive.)
Agree'd. Although, to reach this conclusion, you have to first shed the commonly idiotic notions of anti-government anti-social stupidity, and recognize the utility of a public-private partnership.
Anyway, I think from a "infrastructure" point of view, BTC is not good enough yet. I'm finding proof-of-stake systems (peercoin / NXTcoin) far more technically useful than BTC... in particular, the fact that they're "greener" and don't waste electricity like the current mining rigs do.
The ideal system probably would be a decentralized proof-of-stake cryptocoin with regulated exchanges.
http://en.wikipedia.org/wiki/Money_supply
There is not only the MB money supply (total number of paper dollars that exist), there is also the M1 money supply (MB + number of Traveler's Checks, and other highly liquid bank inventions), and M2 (which includes deposits).
The true size of the monetary base can artificially grow and shrink in ways completely uncontrollable by the central-authority. This is true with both the USD and Bitcoins.
The ultimate reminder is... the US implementation of fractional reserve banking forces banks to do no worse than 10%. In unregulated markets, the "banks" (ie: MT. Gox) will tend to lie and cheat, and will have ratios at far far worse rates.