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.
Luis saves the 1 BTC. Now John and Joe Are screwed, they created 2 BTCs worth of debt, and its in luis savings. John and Joe lose their shirts.
