What happens if I deposit 9.99 BTC... a lot of times... ?
That's called being a smartass.
You could also notice that bit-bank does not try to trick and deceive you, like most banks.
However, since this seems to not be a very good idea, I'll work this out to still be profitable, and make you more likely to lend.
I originally made this bank because I kept seeing threads on people loaning bitcoins, and it got annoying.
If you want the bank to work, you have to do something along these lines:
- Pay depositors 10% annual interest on their bitcoins
- Make loans for for borrowers at 20% annual interest on their bitcoins
- You take home the difference between the loan interest and the depositor interest, less any expenses for losses on loans not repaid.
The biggest issue, as several people have pointed out already, is that a bitcoin bank would have no recourse to go after someone who doesn't pay their loan back. So there is an extraordinarily high risk that a borrower will not repay anything, and you would have to eat all of that cost. An interest rate must be found that allows you to eat that cost on x% of loans, and still turn a profit.
You could always operate it like one of those "payday loan" shops, where you charge 20% interest every 2 weeks.