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As the chat shows, the price of RAM will be much lower if fractional reserve. But I don't understand how this happens? Any thoughts?

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This is just a theoretical thought experiment. RAM is not recommended for investing as it is highly speculative. The probability of this fractional reserve of RAM formula being used is very low. RAM is a very young market and is in growing pains currently.

RAM is intended to be used by dApps and the speculators are just helping finding the price.

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