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> A trillion dollars goes into bitcoin, the price just goes up and there's no dilution.

Isn't someone just going to create a Bitcoin-denominated derivative or fractional reserve bank, assuming that hasn't already happened?



Not just a derivative, bitcoin itself can be inflated via partially-backed bitcoin deposits at exchanges. In other words, the moment exchanges decide to lower their reserve ratio from 1 to less than 1, the supply of bitcoins in circulation will increase as a result. And, as you point out, we don't know that this hasn't already happened.


However at least with bitcoin you can easily self-custody, and be sure you're holding a real bitcoin and not a fractional one in an exchange


Shove some cash under a mattress or store it in a vault and you can be sure you are holding real dollars not fractional ones. Just holding a real dollar says nothing about the value of the dollar you are holding. Same as just holding a real bitcoin says nothing about the value of the bitcoin you are holding. Outside forces affect the actual value of what you hold fractional or not. The ability to self-custody affords you nothing. The value in either case can plummet completely outside of your control.




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