What banks have long proven is that the value of fiat comes mainly from debt. As long as people, businesses, and governments have debt, they will need fiat to pay it off. It's a crazy circular racket but it works. That's why governments can't afford to mandate full reserves or abolish central banks, it would destabilize their national currencies.
Bitcoin should definitely NOT be issued with debt like central bank money. But like bank money, Bitcoin is intangible electronic money with no intrinsic value and not anchored to any tangible commodity to preserve and stabilize it's value. It needs debt to preserve it's value and this function is being provided by peer-to-peer lending services. Of course they charge interest, which is fine for them but isn't necessary for preserving the value of fiat.
What I'm thinking is to incorporate some kind of peer-to-peer lending system into the Bitcoin network so users can lend and borrow Bitcoin with each other for free or a simple % fee rather than compounding interest. Don't ask me how it would be implemented, I have no idea, but it would be quite useful to users and beneficial to Bitcoin, I think.
I concur with you. I am working on something exactly like this except it will not be in Bitcoin because I believe the monetary supply should be response to the market conditions.
