Disruptive technology

[hgmichna]

I keep hearing about new disruptive technologies lately. These are technologies that suddenly and unexpectedly solve a problem that was hitherto solved in different, poorer ways.

But some businesses are dwelling on those poorer ways and make a living out of them. They are the ones that get disrupted when the new technology comes along.

So how about bitcoin? I think it will turn out to be a fairly heavily disrupting technology, once it becomes more established than it is today.

The list of businesses that may get disrupted could be long. The most obvious ones are the money changers and money forwarders. Next in line could be the banks. Then follow governments, particularly their taxation systems. And there are probably more to come.

Of course none of these gets disrupted and destroyed. Some will adapt and embrace bitcoin as an alternative piece of business. Let's wait for the first bank to accept and carry out bitcoin payments. Of course the banks must hate bitcoin, because it takes a significant portion of their business away. But if you cannot win a fight, you might as well make friends with the enemy and take whatever you can get.

Governments are a difficult matter, but as far as I can see, the impending changes are all for the better of us, the citizens. Governments like to destroy currencies to wash away their debts through inflation. Tell me when a government has honestly and completely repaid its debt. That is a rare occasion. Watch the euro going down if you need a real-life example. If you still have euros, change them into bitcoins before your euros melt like butter in the sun.

Now with bitcoins they will face a much harder task. When they default, everybody can see it. There is no trick by which they can walk away from their debts any more. I can hardly wait.

[1714056590]

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[1714056590]

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[cbeast]

Maybe Myspace will come back after they were disrupted by facebook if they adopt Bitcoin. Maybe a new social network will do the same. I think the disruptive part of bitcoin is not that it's liquid, but it's superliquid.

Bitcoin is like superconductor for money transfer. Sure, right now we don't have "room temperature" operations because we need a lot more infrastructure development, but it will come. That superconductive superliquidity will scale because technology will evolve around this new fundamental change in finance. The old dinosaurs of banks and countries will slowly go extinct.

[jackmaninov]

We're in knee of the curve in computing power doubling, hence Bitcoin, Siri, Watson winning at Jeopardy, etc. Expect lots more disruption in the years ahead.

[jackmaninov]

Oh yeah, I forgot the first few self-driving cars...

[JohnOliver]

I really don't see how Bitcoins will take business away from banks.

If I have a dollar, and I won't be needing it for while, I could keep it in my wallet. But that would waste away its opportunity value. If instead I put it in a savings account I could receive part of its opportunity value, the interest.

If I have a BTC, and I won't be needing it for while, I could keep it in my wallet.dat. But that would waste away its opportunity value. If instead I put it in a savings account I could receive part of its opportunity value, the interest.

Some bank fees will be gone, but most bank fees will simply be renamed (and possibly reduced). It will still cost money to transfer money (transaction costs), it will still cost money to get physical currency (minting costs of physical bitcoins), it will still cost money to send money instantaneously (mybitcoin and mtgox Instant codes).

[antihexe]

We're in knee of the curve in computing power doubling, hence Bitcoin, Siri, Watson winning at Jeopardy, etc. Expect lots more disruption in the years ahead.

Actually, that's the neat thing about exponential curves--you're always in the knee of the curve depending on your perspective!

[Shawshank]

I really don't see how Bitcoins will take business away from banks.

If I have a dollar, and I won't be needing it for while, I could keep it in my wallet. But that would waste away its opportunity value. If instead I put it in a savings account I could receive part of its opportunity value, the interest.

If I have a BTC, and I won't be needing it for while, I could keep it in my wallet.dat. But that would waste away its opportunity value. If instead I put it in a savings account I could receive part of its opportunity value, the interest.

Take a look at "Money illusion": http://en.wikipedia.org/wiki/Money_illusion

The main target of the Fed is economic growth, not inflation. The Fed will adopt inflationary measures to achieve growth, even if that means eroding the savings of American citizens. On the other hand, the main target of the European Central Bank is inflation, which must be below but near 2%.

Central banks systematically increase the supply of their currencies like euro and dollar. In dire situations, especially in current times, with high debt levels, central banks may be tempted to expand the money supply well over reasonable limits. Inflation is strongly correlated to money supply.

So, most of the time, a savings account in dollars or euros in a bank can not even compensate for inflation. The savers lose real value, i.e. savers lose purchasing power. On the other hand, Bitcoin supply will not expand in the long term (21 million BTC, maximum), so you can keep your purchasing power without the banking system.

The more central banks abuse Quantitative Easing, the more Bitcoin will be valuable in relation to those fiat currencies.

[finway]

You totally got it.

Money exchanger,
Money transferer,
Banker,
Government
 

[hgmichna]

On the other hand, the main target of the European Central Bank is inflation, which must be below but near 2%.

It used to be like that, but already three of the hawks at the helm of the ECB have thrown in the towel, because they rejected political pressure to abuse the ECB to pay for other people's profligacy. Last I heard, euro inflation stood at 2.5%, clearly outside the prescribed 1% to 2% band.

Apart from this, I believe all you wrote is precisely correct.

Bitcoin will have a disruptive effect on these political tricks, provided it does not die first of other causes, which looks less likely every day.

[714]

It seems to be a great time for mediocre ideas in technology. Facebook is the premier example, it's not merely mediocre as ideas go, it's quite pernicious with respect to privacy and security, and wholly dishonest to the people who use it thinking of themselves as customers when they are in fact the product being sold.

Bitcoin is an interesting exercise in game theory. In particular the dependency on the process of mining is wasteful of energy and creates nothing of intrinsic value, it only serves to establish certain constraints within the framework of the game. In this aspect more than any other it seems the result of having only a hammer ( cryptography ) and thus treating everything like a nail.

The current interest in bitcoin itself illustrates the blinding effect of a limiting paradigm, one need only review this forum to see there is not a great deal of thinking outside the box going on here. This is further confirmation that we live in a great time for mediocre ideas.

Things could be worse though, one would hope that there aren't a lot of people mining TulipCoins in a desperate attempt to get out from under losses on Second Life properties 

[Shawshank]

Bitcoin is an interesting exercise in game theory. In particular the dependency on the process of mining is wasteful of energy and creates nothing of intrinsic value, it only serves to establish certain constraints within the framework of the game. In this aspect more than any other it seems the result of having only a hammer ( cryptography ) and thus treating everything like a nail.

The current interest in bitcoin itself illustrates the blinding effect of a limiting paradigm, one need only review this forum to see there is not a great deal of thinking outside the box going on here. This is further confirmation that we live in a great time for mediocre ideas.

I disagree whole-heartedly with your outlook on Bitcoin. From my point of view, Bitcoin has a tremendous potential and all nothing short of revolutionary. I am not going to extend myself explaining all of them, but I will focus on your point about "wasteful energy" to create Bitcoins.

Bitcoin works exactly in the same way as any other scarce commodity. When gold rises in value, miners dig hundreds of meters deeper in the earth to get more gold. When petrol rises in demand, and in value, oil companies will extract it much more expensively from Athabasca tar sands or they will drill in Antarctica. Similarly, when Bitcoin rises in value, the GHashes/second of the network will also go up.

So definitely, it is not wasted energy. It is energy converted to a stable monetary system, that no government can devalue or confiscate, a currency can be transported anywhere in the world much cheaper and much faster than any bank transfer. And well, cash is expensive! Security vans taking the money everywhere around the country, security guards (public and private), counting and replacing old and worn-out notes, fraud and counterfeiting control, hidden tax of seigniorage... 

[714]

Bitcoin is an interesting exercise in game theory. In particular the dependency on the process of mining is wasteful of energy and creates nothing of intrinsic value, it only serves to establish certain constraints within the framework of the game. In this aspect more than any other it seems the result of having only a hammer ( cryptography ) and thus treating everything like a nail.

The current interest in bitcoin itself illustrates the blinding effect of a limiting paradigm, one need only review this forum to see there is not a great deal of thinking outside the box going on here. This is further confirmation that we live in a great time for mediocre ideas.

So definitely, it is not wasted energy. It is energy converted to a stable monetary system, that no government can devalue or confiscate, a currency can be transported anywhere in the world much cheaper and much faster than any bank transfer. And well, cash is expensive! Security vans taking the money everywhere around the country, security guards (public and private), counting and replacing old and worn-out notes, fraud and counterfeiting control, hidden tax of seigniorage... 

A lovely sounding blurb, but you might want to do a little research about the real world. For example, I've done everything with ACH transfers for years now. The system is globally very efficient cost wise, and costs me *nothing* in direct fees. Other than having to break some quarterly estimated income tax payments into pieces of less than $100K, it's never surprised me or given me pause.

Do you get a lot of stage coach robberies where you are, or what? 

[westkybitcoins]

It seems to be a great time for mediocre ideas in technology. Facebook is the premier example, it's not merely mediocre as ideas go, it's quite pernicious with respect to privacy and security, and wholly dishonest to the people who use it thinking of themselves as customers when they are in fact the product being sold.

Bitcoin is an interesting exercise in game theory. In particular the dependency on the process of mining is wasteful of energy and creates nothing of intrinsic value, it only serves to establish certain constraints within the framework of the game. In this aspect more than any other it seems the result of having only a hammer ( cryptography ) and thus treating everything like a nail.

The current interest in bitcoin itself illustrates the blinding effect of a limiting paradigm, one need only review this forum to see there is not a great deal of thinking outside the box going on here. This is further confirmation that we live in a great time for mediocre ideas.

Things could be worse though, one would hope that there aren't a lot of people mining TulipCoins in a desperate attempt to get out from under losses on Second Life properties 

Mediocre?

You looked into bitcoin, worked with it, and the key word you're summing it up with is... mediocre?

a limiting paradigm

not a great deal of thinking outside the box going on here.

Wow.

I'm not even sure how to respond to this.

It does make me wonder why an obvious genius of your caliber is even on this forum though. I suppose brilliance must take breaks from basking in its own radiance; deigning to properly assess the world's first cryptocurrency seems like a noble enough distraction.

*smh*

[Shawshank]

Bitcoin is an interesting exercise in game theory. In particular the dependency on the process of mining is wasteful of energy and creates nothing of intrinsic value, it only serves to establish certain constraints within the framework of the game. In this aspect more than any other it seems the result of having only a hammer ( cryptography ) and thus treating everything like a nail.

The current interest in bitcoin itself illustrates the blinding effect of a limiting paradigm, one need only review this forum to see there is not a great deal of thinking outside the box going on here. This is further confirmation that we live in a great time for mediocre ideas.

So definitely, it is not wasted energy. It is energy converted to a stable monetary system, that no government can devalue or confiscate, a currency can be transported anywhere in the world much cheaper and much faster than any bank transfer. And well, cash is expensive! Security vans taking the money everywhere around the country, security guards (public and private), counting and replacing old and worn-out notes, fraud and counterfeiting control, hidden tax of seigniorage...  

A lovely sounding blurb, but you might want to do a little research about the real world. For example, I've done everything with ACH transfers for years now. The system is globally very efficient cost wise, and costs me *nothing* in direct fees. Other than having to break some quarterly estimated income tax payments into pieces of less than $100K, it's never surprised me or given me pause.

Do you get a lot of stage coach robberies where you are, or what?  

I am not American, not even an English native speaker. Never heard of ACH, so I had to check it out on Wikipedia. It looks like an American thing. We have something of the sort in my country, too. However, ACH and Bitcoin are as different as chalk and cheese. Really, they have very little, if anything, in common.

ACH is an electronic network for financial transactions in the US, regulated by the Federal Reserve. Keep in mind, that being a network for transfers is just a negligible part of the power Bitcoin.

These are just a few points where Bitcoin fit (nothing to do with ACH).

1) Bitcoin is global.
2) Bitcoin can be considered a decentralized currency.
3) Bitcoin has commodity like properties. As it happens to all commodities, its supply is limited, so I consider it "sound money" (unlike fiat currencies like dollar or euros).
4) In cases of war, hard political distress, "corralitos", etc. your money will be safe, unreachable by governments (much better properties than gold or silver in this particular point).
5) International transfers, including remittances by inmigrants, much cheaper than traditional banks or Western Union.

And the list goes on and on...

[714]

These are just a few points where Bitcoin fit (nothing to do with ACH).

1) Bitcoin can be considered a decentralized currency.
2) Bitcoin has commodity like properties. As it happens to all commodities, its supply is limited, so I consider it "sound money" (unlike fiat currencies like dollar or euros).
3) In cases of war, hard political distress, "corralitos", etc. your money will be safe, unreachable by governments (much better properties than gold or silver in this particular point).
4) International transfers, including remittances by inmigrants, much cheaper than traditional banks or Western Union.
 
And the list goes on and on...

1. Yes, for exchange, as long as the centralized idea that it *is* one is maintained by consenting parties. One need only witness what happened in 2008 when credit default swaps became the phony insurance they always had been.
2. Commodities generally have intrinsic value, for example, wheat. What can I do with a bitcoin other than exchange it?
3. Your money can be made unsafe by being made worthless, something a government can easily achieve without touching it. Hell, I can give it negative value, if I find you in collusion in the bitcoin network or hoarding bitcoins I'll shoot one of your children in the face. Don't be naïve about that. For that matter just call it counterfeiting, that's been a capital offense here and there throughout human history.
4. Banks and currency exchanges definitely feed mercilessly on captive customers. Alternatives are good. There was a time when the real (low) cost of funds transfer within the U.S. was less accessible to end users, competitive pressures have reduced this at least for some customers. Bitcoin does add something to the competitive landscape.

[Shawshank]

These are just a few points where Bitcoin fit (nothing to do with ACH).

1) Bitcoin can be considered a decentralized currency.
2) Bitcoin has commodity like properties. As it happens to all commodities, its supply is limited, so I consider it "sound money" (unlike fiat currencies like dollar or euros).
3) In cases of war, hard political distress, "corralitos", etc. your money will be safe, unreachable by governments (much better properties than gold or silver in this particular point).
4) International transfers, including remittances by inmigrants, much cheaper than traditional banks or Western Union.
 
And the list goes on and on...

1. Yes, for exchange, as long as the centralized idea that it *is* one is maintained by consenting parties. One need only witness what happened in 2008 when credit default swaps became the phony insurance they always had been.
2. Commodities generally have intrinsic value, for example, wheat. What can I do with a bitcoin other than exchange it?
3. Your money can be made unsafe by being made worthless, something a government can easily achieve without touching it. Hell, I can give it negative value, if I find you in collusion in the bitcoin network or hoarding bitcoins I'll shoot one of your children in the face. Don't be naïve about that. For that matter just call it counterfeiting, that's been a capital offense here and there throughout human history.
4. Banks and currency exchanges definitely feed mercilessly on captive customers. Alternatives are good. There was a time when the real (low) cost of funds transfer within the U.S. was less accessible to end users, competitive pressures have reduced this at least for some customers. Bitcoin does add something to the competitive landscape.

As I said. First, Bitcoin is global.

1) I don't understand your point here. By "decentralized" I mean, Bitcoin is based on Peer to Peer technology (P2P), so it hasn't got a single point of failure. This fact makes it, in theory, more difficult to the attack of hackers, and definitely much more difficult to bans by government decree.
2) You can exchange Bitcoin for fiat money at exchangers, you can buy hundreds of products online (food, IT services,  books, etc), and as I quoted in my previous post, you can transfer wealth around the world very fast and virtually free, protects you from Quantitave Easing of fiat money, gives you the freedom to leave your country in case of war even if bank accounts are blocked by a "corralito", and so on. So, yes, Bitcoin definitely has intrinsic value, in some aspects is even better than gold or silver.
3) Governments will have a difficult time destroying Bitcoin by decree, since it has world-wide scope. However, as far as I know, Bitcoin developers are striving to make Bitcoin legal and regulated.
4) Agree, Bitcoin offers fast and low fee transfers.

[714]

These are just a few points where Bitcoin fit (nothing to do with ACH).

1) Bitcoin can be considered a decentralized currency.
2) Bitcoin has commodity like properties. As it happens to all commodities, its supply is limited, so I consider it "sound money" (unlike fiat currencies like dollar or euros).
3) In cases of war, hard political distress, "corralitos", etc. your money will be safe, unreachable by governments (much better properties than gold or silver in this particular point).
4) International transfers, including remittances by inmigrants, much cheaper than traditional banks or Western Union.
 
And the list goes on and on...

1. Yes, for exchange, as long as the centralized idea that it *is* one is maintained by consenting parties. One need only witness what happened in 2008 when credit default swaps became the phony insurance they always had been.
2. Commodities generally have intrinsic value, for example, wheat. What can I do with a bitcoin other than exchange it?
3. Your money can be made unsafe by being made worthless, something a government can easily achieve without touching it. Hell, I can give it negative value, if I find you in collusion in the bitcoin network or hoarding bitcoins I'll shoot one of your children in the face. Don't be naïve about that. For that matter just call it counterfeiting, that's been a capital offense here and there throughout human history.
4. Banks and currency exchanges definitely feed mercilessly on captive customers. Alternatives are good. There was a time when the real (low) cost of funds transfer within the U.S. was less accessible to end users, competitive pressures have reduced this at least for some customers. Bitcoin does add something to the competitive landscape.

As I said. First, Bitcoin is global.

1) I don't understand your point here. By "decentralized" I mean, Bitcoin is based on Peer to Peer technology (P2P), so it hasn't got a single point of failure. This fact makes it, in theory, more difficult to the attack of hackers, and definitely much more difficult to bans by government decree.
2) You can exchange Bitcoin for fiat money at exchangers, you can buy hundreds of products online (food, IT services,  books, etc), and as I quoted in my previous post, you can transfer wealth around the world very fast and virtually free, protects you from Quantitave Easing of fiat money, gives you the freedom to leave your country in case of war even if bank accounts are blocked by a "corralito", and so on. So, yes, Bitcoin definitely has intrinsic value, in some aspects is even better than gold or silver.
3) Governments will have a difficult time destroying Bitcoin by decree, since it has world-wide scope. However, as far as I know, Bitcoin developers are striving to make Bitcoin legal and regulated.
4) Agree, Bitcoin offers fast and low fee transfers.

1. I'll make it easy, it's *pretend*, sort of like Santa Claus or jeebus. Credit default swaps were believed to be valuable until someone finally acknowledged what would happen when a significant portion of them were exercised. Then a pyramid of this always phony loss insurance collapsed and the CDS wasn't so valuable any more. There's nothing magical about P2P, even if bitcoin is using Tor or i2p or point-to-point encrypted tunnels, I can neutralize those nodes, my friends up the road at the US NSA track Tor node traffic all day long. All I need then is one physical location of a party involved or not and I get to shoot somebody's child in the face. It's a slam dunk, and totally worth it.
2. You agree then that the only functional thing one can do with a bitcoin itself is use it for exchange. It's not a commodity. You can't even drive a screw with a bitcoin.
3. All that is required to disable bitcoin is enough sanction to make bitcoin untenable for most people. Shooting children in the face will be more than sufficient to achieve this outcome, hopefully, the more the better 

[paraipan]

....................

1. I'll make it easy, it's *pretend*, sort of like Santa Claus or jeebus. Credit default swaps were believed to be valuable until someone finally acknowledged what would happen when a significant portion of them were exercised. Then a pyramid of this always phony loss insurance collapsed and the CDS wasn't so valuable any more. There's nothing magical about P2P, even if bitcoin is using Tor or i2p or point-to-point encrypted tunnels, I can neutralize those nodes, my friends up the road at the US NSA track Tor node traffic all day long. All I need then is one physical location of a party involved or not and I get to shoot somebody's child in the face. It's a slam dunk, and totally worth it.
2. You agree then that the only functional thing one can do with a bitcoin itself is use it for exchange. It's not a commodity. You can't even drive a screw with a bitcoin.
3. All that is required to disable bitcoin is enough sanction to make bitcoin untenable for most people. Shooting children in the face will be more than sufficient to achieve this outcome, hopefully, the more the better 

whoa, so much hate... hope they train you take those bullets back sometimes

[714]

....................

1. I'll make it easy, it's *pretend*, sort of like Santa Claus or jeebus. Credit default swaps were believed to be valuable until someone finally acknowledged what would happen when a significant portion of them were exercised. Then a pyramid of this always phony loss insurance collapsed and the CDS wasn't so valuable any more. There's nothing magical about P2P, even if bitcoin is using Tor or i2p or point-to-point encrypted tunnels, I can neutralize those nodes, my friends up the road at the US NSA track Tor node traffic all day long. All I need then is one physical location of a party involved or not and I get to shoot somebody's child in the face. It's a slam dunk, and totally worth it.
2. You agree then that the only functional thing one can do with a bitcoin itself is use it for exchange. It's not a commodity. You can't even drive a screw with a bitcoin.
3. All that is required to disable bitcoin is enough sanction to make bitcoin untenable for most people. Shooting children in the face will be more than sufficient to achieve this outcome, hopefully, the more the better 

whoa, so much hate... hope they train you take those bullets back sometimes

Evidently yanking your chain is like taking a day off to shoot children in the face, too easy, thanks for playing 

[hgmichna]

As to governments trying to torpedo bitcoin, my hope here is that they are too stupid and too slow to notice in time what hits them. Once bitcoin grows large enough for them to notice, too many votes are at stake.

[JohnOliver]

I really don't see how Bitcoins will take business away from banks.

If I have a dollar, and I won't be needing it for while, I could keep it in my wallet. But that would waste away its opportunity value. If instead I put it in a savings account I could receive part of its opportunity value, the interest.

If I have a BTC, and I won't be needing it for while, I could keep it in my wallet.dat. But that would waste away its opportunity value. If instead I put it in a savings account I could receive part of its opportunity value, the interest.

Take a look at "Money illusion": http://en.wikipedia.org/wiki/Money_illusion

The main target of the Fed is economic growth, not inflation. The Fed will adopt inflationary measures to achieve growth, even if that means eroding the savings of American citizens. On the other hand, the main target of the European Central Bank is inflation, which must be below but near 2%.

Central banks systematically increase the supply of their currencies like euro and dollar. In dire situations, especially in current times, with high debt levels, central banks may be tempted to expand the money supply well over reasonable limits. Inflation is strongly correlated to money supply.

So, most of the time, a savings account in dollars or euros in a bank can not even compensate for inflation. The savers lose real value, i.e. savers lose purchasing power. On the other hand, Bitcoin supply will not expand in the long term (21 million BTC, maximum), so you can keep your purchasing power without the banking system.

The more central banks abuse Quantitative Easing, the more Bitcoin will be valuable in relation to those fiat currencies.

I completely agree that putting USD in a savings account is retarded, however I said "dollar", not "USD". Not every fiat currency is tumbling into worthless.

But I digress, you completely missed the point of my post. It's partly my fault since I used fiat as an example, and obviously this crowd doesn't like fiat that much. I'll rephrase my point in more general terms:

"things of value" have a opportunity value associated with it. If my car is sitting in my garage while I go on a vacation, I'm wasting my car's opportunity value while I'm gone. If I shutdown my computer while I'm sleeping, I'm wasting my computer's opportunity value while I slept. If I have 1BTC sitting in my wallet, I'm wasting the opportunity value of that BTC as long as it's in my wallet.

The only way to recover that lost opportunity value would be to lend my valuables out whenever I'm not using it. If I lend that 1BTC out from the time I received it to the time that I needed to spend it, someone else could have used that BTC for something productive. This way both the lender and the borrower profits.

[Shawshank]

I completely agree that putting USD in a savings account is retarded, however I said "dollar", not "USD". Not every fiat currency is tumbling into worthless.

Well, if a period of high inflation is to come to such a heavy-weight country as the US, be sure it will spread to a certain extent to Europe too, and viceversa. In that case, the unbalances generated in the export/import sector and in salaries due to high inflation, will have to be balanced by more inflation in neighboring countries, which in a extreme case may lead to an inflationary spiral. The limited supply of Bitcoin tries to avoid this situation.

But I digress, you completely missed the point of my post. It's partly my fault since I used fiat as an example, and obviously this crowd doesn't like fiat that much. I'll rephrase my point in more general terms:

"things of value" have a opportunity value associated with it. If my car is sitting in my garage while I go on a vacation, I'm wasting my car's opportunity value while I'm gone. If I shutdown my computer while I'm sleeping, I'm wasting my computer's opportunity value while I slept. If I have 1BTC sitting in my wallet, I'm wasting the opportunity value of that BTC as long as it's in my wallet.

The only way to recover that lost opportunity value would be to lend my valuables out whenever I'm not using it. If I lend that 1BTC out from the time I received it to the time that I needed to spend it, someone else could have used that BTC for something productive. This way both the lender and the borrower profits.

You are not forced to keep your BTC in your wallet you can always lend it to someone for a profit. You can do this person to person, or via MSB, banks, etc. In fact, fractional reserve banking is still possible with BTCs. The only difference is, because it is so easy to store vast wealth in a single file, you can avoid banks altogether, avoid fractional reserve and still keep the value of your savings through time, no matter how much fiat currencies depreciate.

[hgmichna]

You are not forced to keep your BTC in your wallet you can always lend it to someone for a profit. You can do this person to person, or via MSB, banks, etc. In fact, fractional reserve banking is still possible with BTCs. The only difference is, because it is so easy to store vast wealth in a single file, you can avoid banks altogether, avoid fractional reserve and still keep the value of your savings through time, no matter how much fiat currencies depreciate.

That is precisely true. However, there is an important detail to be aware of. With ordinary currencies you are almost always dealing with fractional reserve banking (often with only around 5% bank backup capital), because cash is so difficult to handle.

With bitcoins this is remarkably different. They have most or all qualities of cash, but in addition they also have some qualities that otherwise only fiat money has, namely that you can transmit them worldwide within minutes.

This means that you can easily avoid the risks associated with other currencies by using pure, direct bitcoins. The only remaining attraction of doubly virtual bitcoins, i.e. borrowed bitcoins or fiat money based on bitcoin, is that you can ask interest when you lend and that you can borrow by paying interest.

People who do that should be keenly aware that they are giving up the security of cash and incur the risk of somebody's bankruptcy and other ways to lose their money. Only a real bitcoin has all the qualities of bitcoins. And, as things stand, if their borrower defaults, nobody will bail them out like the Europeans try to do with their governments and banks.

So  I will not care if people do fractional reserve banking with bitcoins. But I will always be aware of the difference between a borrowed (doubly virtual, unsafe) bitcoin and a real one.