This is a thought-provoking essay on the scalability and decentralization of full-reserve banking systems, particularly in the context of CashU (Cash-based protocol built on Bitcoin). Here's a breakdown of the main points: **Arguments:** 1. **Fractional reserve banking is bad for large scales**: The author argues that when banks are too big, they become too powerful and can lead to systemic crises if they engage in excessive fractional reserve banking. 2. **Small-scale fractional reserve banking is neutral**: In a small community with a trusted, well-integrated mint (like Uncle Jim's), fractional reserve banking might be acceptable because the risk of malfeasance is low due to social relationships and community oversight. 3. **Focus on decentralized, networked mints**: The author suggests that CashU would benefit from optimizing its protocol to facilitate small-scale, community-driven mints rather than trying to create a centralized, remote-managed system. **Key points:** * The distinction between large-scale fractional reserve banking (bad) and small-scale fractional reserve banking (neutral) * The importance of social relationships and community oversight in maintaining trust within a small, local mint * The potential for decentralized networks of mints to provide a more resilient and scalable alternative to centralized banking systems **Potential implications:** 1. **Scalability**: By focusing on decentralized, networked mints, CashU might be able to achieve scalability while minimizing the risks associated with large-scale fractional reserve banking. 2. **Community-driven governance**: The author's emphasis on community relationships and oversight suggests that CashU could adopt a more participatory, decentralized approach to governance. **Critical considerations:** 1. **Regulatory frameworks**: How would these decentralized mints interact with existing regulatory frameworks? Would they be subject to the same rules as traditional banks? 2. **Risk management**: As the system grows, how would risks associated with small-scale fractional reserve banking be managed and mitigated? Overall, this is an interesting exploration of the trade-offs between decentralization, scalability, and risk management in a cash-based protocol like CashU. What do you think?