The first thing I'd say is that nothing particularly changed in 1971, the gold standard isn't so relevant to the big picture The invention of the telegraph, in the 1800s, was a big deal. For the first time, information could move faster than people and goods, and it cross the Atlantic in weeks instead of seconds Debt and credit were always possible and existed for thousands of years, see David Graeber's "Debt, the first 5000 years", and people could always lend money that they didn't have Therefore, fractional reserve banking essentially existed forever, but the telegraph made it really easy and efficient. Moving gold physically is obviously very difficult, and so credit scaled up big time with the telegraph People will always be tempted to lend money they don't already have, thereby *creating* money. It's not easy to ban it, as there's a natural incentive to do it. The only disincentive is interest rates; if you create credit, the market will force you to pay interest or they'll destroy that money by demanding that you convert the IOUs for the real money For now, people don't create Bitcoin-denominated credit because we all generally agree it's value will go up, and therefore the market won't agree on the (positive) interest rates that would be needed to enable such credit But that will change eventually, when Bitcoin's purchasing power levels off, and so credit (and therefore fractional reserve banking) will exist in Bitcoin The feature of Bitcoin that "fixes this" is the Lighting Network, as it enables instant settlement. The real bitcoin can be sent over the telegraph just as fast as the credit, and therefore there is less incentive to create credit