You can give out credit backed by BTC but it's impossible to give out more actual BTC than you hold, much like gold, unlike fiat.
cash, on the other hand, doesn't suffer from this predicament, since it's legally must be accepted. so Bitcoin lending via credits can't work, if at all.
My only point was that this wouldn't equate to more btc in circulation, just more credit.
Just adding that the system above, rightly or wrongly was not sufficient for the expanding credit requirements of the world.
> so it definitely can work. Depends upon what your definition of work :)
> My only point was that this wouldn't equate to more btc in circulation, just more credit.
Exactly. And be subject to the problems with bank runs because of the inelastic nature of gold.