Well, ideally it should work like this:
1 BTC is lent by Alice to John
John re-lends it to Joe
Joe pays back john 1 BTC, who then settles his debt with Alice with that same 1 BTC.
It does not matter how many people lend the single Bitcoin in a chain, the total amount of debt is still just one Bitcoin. What people mean when they say "Lend Bitcoin" is creating IOU
