U.S. Banks Can Now Hold Bitcoin, and It’s Not a Good News As You May Think at First Sight
The banks cannot be part of the solution.
|Sylvain Saurel||Jul 25|
The good news has been piling up for Bitcoin for several weeks now. First of all, we have noticed that more and more institutional investors are buying Bitcoin through Grayscale investments.
Then, it was around PayPal to announce that it was working on a solution to give access to buying / selling Bitcoin directly from its platform. As a reminder, PayPal has 325 million users around the world.
Things seem to accelerate now with the Office of the Comptroller of the Currency (OCC) which has just announced that it now allows U.S. banks to hold Bitcoin for their customers.
A logical decision
This authorization from the U.S. banking regulator is in line with history in more ways than one. The demand for Bitcoin from U.S. citizens has been growing significantly in recent months. The great monetary inflation that we are currently experiencing is not unrelated to this.
More and more Americans are now looking for new ways to protect their wealth. Bitcoin appears to them as a new solution to be tested.
On the other hand, the banks’ hostility towards Bitcoin is gradually disappearing, giving way to an appetite for this asset with impressive returns.
The time when JPMorgan CEO Jamie Dimon called Bitcoin a fraud seems very distant. However, these statements hardly date back to the end of 2017. This shows you just how much attitudes to Bitcoin may have changed over the last three years.
Today, JPMorgan offers its banking services to major companies in the world of cryptocurrencies such as Coinbase and Gemini.
The narrative used by the banking world to denigrate Bitcoin is reaching its limits. More and more research confirms that Bitcoin is not only used for money laundering or illegal activities. Besides, it has already been found that using Bitcoin for illicit purposes is harder than using the U.S. dollar.
The recent massive hack on Twitter shows how difficult it is for hackers to launder the Bitcoins they have just stolen. Bitcoin Blockchain analytics companies analyze in real-time all transactions made from the address used by the hackers.
Bitcoin is a public ledger, which offers unparalleled transparency compared to the banking system where total opacity reigns. This has enabled many banks to facilitate money laundering over the past decades.
Little by little, the reality of Bitcoin’s revolutionary side is overcoming myths and clichés.
Many see a bullish signal for Bitcoin, but it is more complicated than that
Many see in the announcement made by the U.S. banking regulator an extremely bullish signal for Bitcoin in the coming months and years. I’m not going to argue otherwise.
Making the purchase of Bitcoin available to more people is bound to be something that can raise Bitcoin price dramatically.
Nothing says that the customers of U.S. banks will jump on Bitcoin as soon as such a service is offered. Nevertheless, many may be tempted to try and buy Bitcoin to see.
I may disappoint some, but I feel that even so, the fact that U.S. banks cab hold Bitcoin for their customers is not a good thing for the Bitcoin revolution.
Indeed, banks are at the root of the problem with the current monetary and financial system as Satoshi Nakamoto has explained in the past :
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”
— Satoshi Nakamoto
Banks are part of the problem, they can’t be part of the solution
Satoshi Nakamoto created Bitcoin following the 2008 banking crisis. He makes it clear that the current system requires full confidence in central banks and private banks.
However, central banks and private banks have always betrayed the trust of people. The greed and corruption of the banking world have led to a whole host of excesses, such as waves of credit bubbles or censorship of clients’ assets and the transactions they wanted to carry out.
Banks cannot be part of the solution that Bitcoin embodies to the flaws of the current system.
By offering to buy Bitcoin for its customers, U.S. banks will own the private keys of the Bitcoins they buy.
U.S. banks will still have total control over their customers’ assets. Bitcoin was created to give you freedom over what you own.
If a bank has control over the private keys of your Bitcoins, it can confiscate them from you as it sees fit.
Buying Bitcoin through a bank is nonsense
Buying Bitcoin through a bank is therefore in total contradiction to the spirit of Bitcoin, which is to empower you to take control of your destiny regarding money.
The risk of censorship will always be the same as with the current monetary and financial system.
Another essential mission of Bitcoin is to enable the financial inclusion of millions of people who have always been excluded from the current banking system.
Bitcoin aims to bank the unbanked. Bitcoin is already doing this for thousands of people in Africa in particular. In the future, this is where the adoption of Bitcoin will explode in my view.
People excluded from the current banking system will also be excluded from a system where Bitcoin is purchased by banks. In reality, there are many more risks and constraints on customers buying Bitcoin through their banks.
By buying Bitcoin, you become your own bank with all the advantages and responsibilities that this entails. By letting your bank have control, you can at any time become unbanked of the Bitcoin system, so to speak.
Those who are pleased with the important news that U.S. banks are allowed to buy and hold Bitcoin for their customers have a purely financial view of Bitcoin in my opinion.
Bitcoin price is indeed expected to increase as a result of the purchase of Bitcoin by U.S. banks for their customers. Unfortunately, this increase in Bitcoin price will be at the expense of the true values of the Bitcoin revolution.
I believe that a big educational work needs to be done by Bitcoiners to explain to the general public that the purchase of Bitcoin should be done directly with no intermediary.
This is the only way to opt-out of the current monetary and financial system to take full control of what you own.
This implies that you will then be in charge of the security of your Bitcoins. With a little bit of training, it’s not that complicated. It’s the small price to pay to be truly free, but it’s worth it.
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