Bank runs aren't just about losing trust. They're baked into how the system actually works.
Here's the thing with traditional banking: your deposits? They're not sitting in a vault. Banks promise you can withdraw them, but that same money gets lent out multiple times over. The whole setup depends on one assumption—not everyone withdraws at once.
It's not a flaw. It's the design.
When confidence shakes and people start pulling funds simultaneously, the system breaks not because something failed, but because it was never built to handle that scenario. The architecture itself assumes steady-state behavior.
This is why fractional reserve banking works until it doesn't.
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Bank runs aren't just about losing trust. They're baked into how the system actually works.
Here's the thing with traditional banking: your deposits? They're not sitting in a vault. Banks promise you can withdraw them, but that same money gets lent out multiple times over. The whole setup depends on one assumption—not everyone withdraws at once.
It's not a flaw. It's the design.
When confidence shakes and people start pulling funds simultaneously, the system breaks not because something failed, but because it was never built to handle that scenario. The architecture itself assumes steady-state behavior.
This is why fractional reserve banking works until it doesn't.