Maybe you are correct in that it is a misuse of the term "based on", however much of the the money supply, as opposed to the money base is created via debt. As only a fraction of the the value of the loans are held in reserve, much of of the money supply exists purely by loans exceeding the reserve. In this sense, parts of the money supply is "based on debt".
Valid point, Dennis. However, when I get a bank loan to buy a house, we know the bank creates the money at that point and credits my account with it. But when I pay the owner of the house from whom I buying, he then gets the dollars. When he has them, his dollars are not "based on debt." Nobody has a claim to his dollars except him. Properly defined, I'd say the dollars are "based on" market supply and demand for funny green paper. You could say the loan itself is "based on debt," or even that the housing industry is "based on debt," or that the US Gov is "based on debt." All those things are true, but I think dollars are not based on anything but supply/demand.
But we can all agree Bitcoins are not based on debt, in any sense of the term.