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Irony: Bitcoin Relies on the Banks It Was Designed to Dethrone

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 2 mins read
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With an economic collapse upon us, it has revived discussion around the concepts that prompted the creation of Bitcoin.

And although the asset could have its finest hour in the face of the coming hyperinflation, ironically, the first-ever cryptocurrency’s existence currently depends on the banks that it was designed to replace. Will this ever change, or is Bitcoin doomed to be forever tied to fiat gateways in some way?

Bitcoin Built to Dethrone Banks, But For Now, Heavily Relies On Them

Bitcoin is the first-ever cryptocurrency, created by the mysterious Satoshi Nakamoto.

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It was released during the last economic recession, and its Genesis Block contains references to the controversial bank bailouts taking place during that period of time.

Bitcoin was created to be a peer-to-peer form of digital cash – a decentralized cryptocurrency network operating without the need for a central authority.

Related Reading | Economist: Government Overspending Amidst Crisis is Bullish for Bitcoin 

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And while that works in theory and concept, in execution, central authorities are very much needed.

A central authority or third party may not have any direct control over the Bitcoin protocol, however, in the futuristic digital asset’s current state, many direct connections to central authorities remain, and much of Bitcoin’s success and mere existence hinges on its line to central authorities like banks.

But why is it so important that these ties between banks and Bitcoin remain open and flowing?

But the Cryptocurrency May Forever Be Shackled to Fiat Gateways

Unless a user is transacting in private, through black market deals, classifieds, OTC, or even LocalBitcoins, most people are stuck getting their cryptocurrencies like Bitcoin from some type of cryptocurrency exchange.

These cryptocurrency exchanges or other fiat gateways like the Cash App are the only means to acquire Bitcoin for most, and any of these products or services must be directly tied to a banking account with all personal information added for tracking by the IRS and other third parties.

Clearly, the original intent behind Bitcoin was not for it to forever rely on fiat gateways for its network to build in value. But for now, it’s a necessary evil that continues to put Bitcoin at severe risk. However, there’s no other alternative.

Related Reading | Will Bitcoin Dethrone The Dollar As Global Reserve Currency? 

Because buying the leading cryptocurrency by market cap usually requires a bank somewhere along the line as an intermediary – among the biggest issues Bitcoin seeks to solve – at a whim, these banks could suddenly decide to not allow customers to purchase such assets. Then what?

Bitcoin still exists and it is indeed unstoppable in terms of the network operating. Even if all fiat gateways suddenly disappeared overnight, the network would still exist in some form.

But until it is in wide use, it will remain shackled to the fiat gateways it sought to dethrone so that users can buy and sell the asset back into fiat, as ironic as that may be.

Tags: banksbitcoinbtcusdcryptoSatoshi Nakamoto
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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