[raw23]

This also happens with fiat currency in the form of lost or destroyed cash. The final supply of bitcoins is limited but bitcoins can still be created using fractional reserve banking no different then our current banking system.

[randomaccount45]

Your claim about fractional reserve banking creating more Bitcoins is wrong. The banking system doesn't create central bank money it creates a claim to it.

Fractional reserve banking oesn't create coins or notes, it creates credit (or bank money). These credit (IOUs) are liabilities of the bank that are denominated in central bank money (central bank liabilities). When a bank makes a loan this does not in any way affect the central banks balance sheet -there are no changes in the liability side of its balance sheet.

When the loan is withdrawn, this still won't cause a change in the liabilities of the central bank. Other than what bank owns what liability at the central bank. (But even this isn't necessary. It depends on what type of payment the customer made with the loan and what payment system it was cleared through: if it went through a gross settlement system or a multilateral net system,etc.).

The supply of central bank money is dependent on how central banks implement monetary policy. Everywhere in the world (and what has probably always been the case) central banks will supply as much of central bank money as is demanded from the banking system.

Fractional reserve banking will when the bank credit is denominated in Bitcoin doesn't create more Bitcoin, it just creates more claims in Bitcoin. The supply of Bitcoin is independent from this.