Although Von Mises saw money as a category of human action or as a medium of indirect Exchange, Austrians imply that cryptocurrency cannot be money, because it was never accepted as something useful of its own account. No matter what anyone says, cryptocurrencies might be used as money because of their portability, durability, divisibility, security and their intrinsic characters such as liquidity (ready acceptance), saleability (wide acceptance), and stability of value.
Despite all this, Bitcoin is making up 86% of the entire cryptocurrency market, it has suffered from frequent and severe jumps and crashes since its inception in 2010. In addition to an upward trend as the crypto ecosystem grows, the demand for Bitcoins is also highly volatile. Unfortunately, A highly of Bitcoin transactions are made for speculative purposes. Some believe that Bitcoin cannot be a unit of account because it has not a credible price anchor – which does not necessarily imply a fixed exchange rate – speculation will tend to be a stabilizing force, pushing the actual value back toward that target. (People who use bitcoin for commercial activities want to immediately convert their bitcoins to the dollar just after the transaction in order to minimize the risk to the merchant of holding a balance of bitcoins.) In history, we know that Gold solved this problem in spite of its rigidly capped nominal supply.
Until the advent of sustained economic growth starting with the industrial revolution was accompanied by a banking revolution, the limitation of Gold supply was not a problem. After the explosion of economic growth, scarcity of the gold and silver did not create a serious problem thanks to banking revolution. Fractional reserve banking was able to overcome gold’s nominal supply problem. Overcoming such obstacles for Bitcoin and other cryptocurrencies is critical for their future.
Bitcoin’s success so far was brilliant but not enough. If people prefer this currency transition, such as from physical coins to electronic money, Bitcoin should solve the essential problem, trust. In my opinion, fractional reserve basis on cryptocurrency may solve this trust problem. It is certainly that customers always trust banks much more than cryptocurrencies because of maintaining redeemability, and their transparency. Also another ground is that they are subject to regulatory requirements and supervision by the competent authorities. I know this is not a basic process. Because fractional reserve banking depends on the inside Money (the money which is created from bank liabilities such as checkable deposits), a cryptocurrency system should define the base money adding new compatible protocols on the existing structure. As we know, open transaction can ease the secure cross-blockchain exchange of different cryptocurrencies, and so this can ensure a framework for the relatively transparent use of multiple inside monies and base monies.
The circulation of liabilities redeemable in base money provides that day to day demand for base money is stable. Therefore the stabilization of the value of cryptocurrencies may be possible allowing fluctuations to be borne by changes in the supply of liabilities rather than the price level or the volume of transactions. Providing trust can solve this problem in an anonymous, trustless and automatic (a computer algorithm) environment.
I have a proposal to solve this problem. My proposal is inspired by a recent research of World Bank’s CGAP about electronic money institutions. I believe that true intermediation on a scale sufficient to stabilize the value of the cryptocurrency will have to fight not only in the marketplace for general acceptance separately from the base money, but also in the political realm for the privilege of operating unmolested.
Kerse and Staschen (2018) have examined a range of safeguarding measures for customer funds of nonbank electronic money issuers (EMIs) around the world. Regulatory requirements of fund safeguarding may add up to protect against the risk of loss and unavailability of customer funds for regulators. However, these “fund safeguarding” measures could also be applied to safeguarding of cryptocurrencies via the method of fractional reserve t.
One of the favorable methods of regulating the safeguarding of customer funds is to hold funds in official bank accounts. While this can create a source of funds for the economy where it is intermediated by banks, it increases the customers’ trust towards EMIs. Also, investing funds in low risky liquid assets (e.g., government bonds) could be an alternative way for protection against the risk of loss of customer funds.
Placing funds in a mechanism similar to safety deposit box for cryptocurrencies enable them indirect protection against hard volatility, trust and incentive for legitimacy. A certain part of the balance of cryptocurrency investors could be held in these common accounts. Although these money cannot be used for stabilizing of the value of cryptocurrencies such as a monetary policy tool of a central bank, this assures investors who have drawbacks to the crypto world. This is a kind of insurance which is designed the time when cryptocurrency protocols and contract structures are created. If cryptocurrencies acted as the base currency, its built-in security, a span of distance for transactions, and rapid settlement times, the integration capacity to today’s global banking system would be possible. It can be claimed that a centralized authority/structure in the crypto-economy may slow down its mobility and freedom. Nonetheless, if it is not, central bank digital cryptocurrencies will become prevalent thanks to their solution about this phenomenon.
To sum up, one of the useful methods which is proposed by CGAP experts can be integrated existing cryptocurrency structure. So, von Mises’ dream of an objective currency free from political manipulations can be realized.
 Of course, the proposal on fractional reserve blockchain is not new. But, implementing safeguarding methods can be unprecedented.
 Mehmet Kerse. & Stefan Staschen (2018), Safeguarding Rules for Customer Funds Held by EMIs, CGAP Background Documents. https://www.cgap.org/research/publication/safeguarding-rules-customer-funds-held-emis
 Safety deposit box (or boxes) should certainly be established by independent organizations.