user7292: I understand that this is not appropriate question but it obsesses me for a long time (other forums do not give certain answer) and I think that finantial cryptography experts should understand this very well. I am interested to know what prevents bank to issue more money than it has on its deposits. Say, customers transferred 1000k dollars to bank. What prevents it to lend 100M as loans/withdrawals? I think that every bitcoin user is such banker and answer must be answered.

user5406: Banks do lend out more money than they have. This concept is referred to as Fractional Reserve Banking. Government regulation is supposed to impose a minimum of reserves they need to keep, limiting the amount of money they may create.
The difference between Bitcoin users and banks is that banks can lend out more money than they have, because they can just increase the account balance of their customer, while adding a liability of the customer to their own bookkeeping.
Meanwhile, if a Bitcoin user lends bitcoins, for the borrower to be able to use them, he has to transfer actual bitcoins to the borrower. Unlike the banks' ability to increase different account balances at the same time, the Bitcoin lender cannot send the same bitcoins to different borrowers at the same time.
If however, the Bitcoin borrowers are satisfied by receiving a statement of liability from the lender, the lender could pursue Fractional Reserve Banking as well.

7292: <p>I understand that this is not appropriate question but it obsesses me for a long time (other forums do not give certain answer) and I think that finantial cryptography experts should understand this very well. I am interested to know what prevents bank to issue more money than it has on its deposits. Say, customers transferred 1000k dollars to bank. What prevents it to lend 100M as loans/withdrawals? I think that every bitcoin user is such banker and answer must be answered.</p>
 5406: <p>Banks <em>do</em> lend out more money than they have. This concept is referred to as <a href="http://en.wikipedia.org/wiki/Fractional_reserve_banking" rel="nofollow">Fractional Reserve Banking</a>. Government regulation is supposed to impose a minimum of reserves they need to keep, limiting the amount of money they may create.</p>

<p>The difference between Bitcoin users and banks is that banks can lend out more money than they have, because they can just increase the account balance of their customer, while adding a liability of the customer to their own bookkeeping.</p>

<p>Meanwhile, if a Bitcoin user lends bitcoins, for the borrower to be able to use them, he has to transfer actual bitcoins to the borrower. Unlike the banks' ability to increase different account balances at the same time, the Bitcoin lender cannot send the same bitcoins to different borrowers at the same time.
If however, the Bitcoin borrowers are satisfied by receiving a statement of liability from the lender, the lender could pursue Fractional Reserve Banking as well.</p>
