hers is how a bitcoin ETF could use fractional banking
step 1 take orders for 10k of coin
step 2 buy coin
step3 50% of coin is sent to holders who have asked for it
step 4 50% of coin is stored by holders at exchange (some people never learn)
step 5 the exchange sells 50% of the coin held at the exchange to new buyers they do this in the belief that there will not be a demand to redeem that many at once .
note the exchange still has a record of the coin owned and who by but not enough to cover every one'
step 6 wash rinse and repeat
