Fractional Reserve Banking allows banks to lend out a portion of the deposits they receive, instead of keeping them all in reserve. For example, if a bank receives $100 deposit, it can then lend out $90 to a borrower while keeping only $10 as reserve. This newly created money is deposited back into the banking system and lends again, further increasing the money supply. While this practice promotes economic growth by providing more funds for investment and consumption, it also creates inflationary pressures that erode purchasing power over time. Bitcoin offers an alternative by having a fixed supply which limits its inflationary pressures.#finance #economics