[wongarsu]

Sure fractional reserve banking can be done with bitcoin. It's not a problem of the currency but of the environment and ecosystem.

A regular bank is well-trusted and insured. A bank run is unlikely because of the trust and even in that case the insurance or a lender can keep the bank solvent. A bitcoin bank is at best moderately trusted and is almost always uninsured. Minor events can lead to panic which leads to a bank run, which leads to insolvency because there is neither insurance nor a good lending infrastructure available to most bitcoin banks.

Concerning lending: there is a small but growing bitcoin lending community, but it's closer to Kickstarter or the VC model. Credits are not given out by banks but by a number of small investors. It's not very efficient yet, but it kind of works.

[roblev]

Yes I agree, and personally I would trust a bitcoin bank even less given the repeated security problems that bitcoin businesses to date.