This paper discusses the lack of bitcoin credit markets as one of the major obstacles to becoming a medium of exchange. In one sense, I agree with this, but the authors don't seem to understand that you can have functioning credit markets without fractional reserve banking.

Bitcoin credit markets would function exactly like credit markets were supposed to work on the gold standard (bitcoin just prevents the rampant cheating that occurred). A lender (mortgage provider or credit card company, for instance) would have to hold the bitcoin first and would then allow customers to spend it on condition of repaying them with interest. It's not that hard to understand, as it's how most normal people think the current finance system works.