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?