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

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.

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 

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.