IIRC, real banks trade imaginary dollars all the time by operating as a fractional reserve. The average person probably doesn't know nor care, but FDIC insurance prevents the bank run from causing people without a lot of assets from losing it all.
Of course, I could be completely wrong. Any experts care to chime in?
EDIT:
From the explanation linked below it looks like banks keep a fraction on hand and the rest is due to the bank in the form of lines of credit. Which I suppose explains why the FDIC still needs to exist - it's not like the bank can just tell everyone they loaned money to pay it back right away if everyone withdraws their money at once.
Also, it seems we are continuously conflating 'regulated currency' with 'regulated banks'.
The banks have most of their as assets as liabilities, and only keep a certain percentage liquid (cash).
Also, the FDIC (and eventually the NCUA) was created out of a need to stabilize the dollar, post Great Depression. It's considered an organization that helps regulate liquidity of the currency, which is essential to being a currency.
Bitcoins on the other hand do not have any such regulation, and exhibit recessionary behavior not unlike gold, which was decoupled from the U.S. dollar about the same time the FDIC was created.
Because bitcoins lack liquidity regulation and have an impending production cap, they will almost never make it as a currency. That's not to say some other cryptocurrency won't solve the problem later.
Of course, I could be completely wrong. Any experts care to chime in?
EDIT:
From the explanation linked below it looks like banks keep a fraction on hand and the rest is due to the bank in the form of lines of credit. Which I suppose explains why the FDIC still needs to exist - it's not like the bank can just tell everyone they loaned money to pay it back right away if everyone withdraws their money at once.
Also, it seems we are continuously conflating 'regulated currency' with 'regulated banks'.