Quote from: Solosanz on Today at 08:42:44 AM

I don't think Bitcoin can be a good currency when it's about credit or lending system, because lending system mostly need of third party who act as an escrow to make sure the borrower already give a valid collateral to prevent the lender to get scammed.

Same thought here. Bitcoin is created to remove the third party on the transaction scene and this credit system needs third parties that directly oppose the core intention of Bitcoin. So I don't think that Credit creation can be implemented on a Bitcoin standard. This kind of plan needs variation and that variation surely will fail in terms of Bitcoin standards.

Quote from: Solosanz on Today at 08:42:44 AM

Since Bitcoin is decentralized, there's no way to retrieve the coins whenever the borrower didn't want to repay the loan.

Precisely and I think the majority of lenders will not lend money to strangers. That alone shows that this kind of method will badly fail.

Quote from: bitmover on Today at 04:44:55 PM

Hal Finney predicted a credit system and fractional banking using bitcoin, long ago.

Quote from: Hal on December 30, 2010, 01:38:40 AM

Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.

Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.

George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.

I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.

This is a possibility, and the banking system may find a away to adapt itself and how it works using bitcoin.

But this move does not conform with Bitcoin standards, IMO.