My Bank App is Better Than Bitcoin for Payments (And That’s Fine)

bank card

The cryptocurrencies are faster and cheaper narrative has fizzled out as banks have embraced digital payments in recent years, improving customer experience and usability. Sure, buying a beer with a QR-code may give you a warm and fuzzy feeling, but it isn’t the problem Bitcoin solves. It is much more than that.


Banks Go Digital

An all-too-common narrative a few years back was that Bitcoin (and other cryptocurrencies) would outcompete the likes of Visa and Mastercard with speed and cheaper transactions.

“Won’t somebody think of the merchants” was an often-repeated argument in 2014-215 because credit card companies typically charge around 3 percent service fee to process payments.

Fast forward a few years and merchants haven’t budged. Nor are they jumping on payment-focused coins either like Litecoin, Bitcoin Cash, Dash etc. So why didn’t they stick it to Visa and switch to ‘crypto’?

Digital fiat payments have actually become not only more ubiquitous but also much easier and cheaper. Though the latter is partially due to costs being offset by selling customer info to advertisers (which is a topic for another article).

Banks have indeed upped their game as far as user-friendliness goes with mobile apps, contactless payments, in-app integration, you name it. In fact, it’s never been easier to part ways with your money than it is today.

contactless payment nfc pay to swipe card

My Bank Card Beats Your Favorite Coin

My card, given to me by my bank, is tied to an app on my phone so I can check my balance and track all my balance and transaction history. I was impressed when BTC wallets did this six years ago. But banks have caught up fast and are beating cryptocurrencies in this arena.

The card/app work seamlessly together enabling contactless payments in the store, on public transport, and pretty much anywhere Visa/Mastercard are accepted, which is literally everywhere.

Sure, discussing Bitcoin is fun and all. But sometimes I just want a quick coffee without proselytizing Bitcoin to a barista who obviously doesn’t care about censorship-resistance and decentralized consensus protocols.

I should also mention that my bank has excellent customer support. It knows who I am and will block anyone else from using my account with the press of a button on my smartphone. My bank will refund me any money lost due to fraud – which is very reassuring unlike that uneasy feeling of possibly sending BTC to the wrong address by mistake.

What’s more, I can send money instantly to my friends for absolutely zero fees. And why wouldn’t it be zero? My bank is using a good old database after all – not your blockchain that takes minutes to confirm.

In other words, big blocks, small blocks, medium-sized blocks – none of this can compete when it comes to the speed and efficiency of a centralized database for payments.

My bank app even has a QR-code option for in-person payments if I’m feeling extra Bitcoin-ish.

The Problem That Bitcoin Solves

Bitcoin, however, wasn’t meant to compete with Visa or Paypal. Digital payments were already gaining traction when Bitcoin spawned from the 2008 financial crisis.

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.

– Satoshi Nakamoto, Bitcoin Whitepaper

Bitcoin was instead designed as an alternative to the central banking system that has historically abused the public’s trust. One hyperinflationary episode is all it takes and the money becomes worth less than the paper it’s printed on.

Bitcoin’s monetary policy, on the other hand, is completely transparent, its supply and inflation rate is known, and it’s the hardest form of money to ever exist. Yes, even more than gold because mathematical scarcity beats perceived scarcity. 

These attributes make it a money technology that has never existed before – and more importantly, removes the need to trust any intermediary.

In an article titled The Problem That Bitcoin solves, economist and The Bitcoin Standard author, Saifedean Ammous, explains:

[Paul Krugman] seems, mistakenly, to assume bitcoin is competing with consumer payment networks like Visa or PayPal….that is not what bitcoin is best suited for. Rather, bitcoin is an international settlement network, one that competes with the central bank settlement systems that are the foundation upon which networks like Visa or PayPal depend.

Therefore, the ‘payments for coffee on the blockchain’ narrative is dying because paying for stuff and accepting digital payments today isn’t a problem for people.

However, the public is also slowly realizing why Bitcoin isn’t going away. Particularly as publications like Time magazine release articles titled ‘Why Bitcoin Matters for Freedom’ and places like Venezuela are demonstrating how Bitcoin is literally saving lives.

That’s not to say that payments aren’t important. This and other use-cases will be built as ‘apps’ harnessing the trustless Bitcoin blockchain (e.g. Lightning Network). But they’re secondary to what’s really at stake here in an increasingly authoritarian and cashless fiat system: financial sovereignty.

Do you agree that Bitcoin’s primary role is to preserve financial sovereignty? Share your thoughts below!


Images courtesy of Shutterstock

The post My Bank App is Better Than Bitcoin for Payments (And That’s Fine) appeared first on Bitcoinist.com.

Source: Blockchain

Perfect Storm: Bitcoin Didn’t Exist in the Last Financial Crisis

perfect storm financial crisis bitcoin

Bitcoin has been quietly preparing for over a decade for the next market storm as a non-political alternative to the money printing pyramid.


Bitcoin Separates Money and State

Bitcoin was forged by the last great financial crisis of 2008 and designed to thrive in financial turmoil.

“Bitcoin adoption has always been driven by bank failures, bailouts, bail-ins, and political unrest,” said Max Keiser in an interview with Bitcoinist earlier this month.

It’s certainly no coincidence that Satoshi Nakamoto left a message in the first ever mined Bitcoin block —known as the genesis block. It famously contains the dated title of an FT article:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

The anonymous creator hints that Bitcoin is a non-political alternative to the existing financial system. The Bitcoin whitepaper could, in fact, be interpreted by some as a declaration of the separation of money and state. 

Bitcoin was an inevitability  a solution to downfalls of the trust-based monetary system — in which central banks and governments have historically abused that trust at the expense of the public.

For almost fifty years now, the de facto global currency has essentially been running on ‘full faith and credit’ only. The problem is that when this faith is tested by the markets (i.e. reality), credit-fuelled bubbles are exposed. When they go pop, liquidity dries up and cash once again becomes king.

Bitcoin: Trust Buster

So it’s no surprise that cash injections — euphemistically known as QE (Quantative Easing) — have become the preferred drug prescribed by central banks to fuel the longest bull market in history. 

At the same time, the demand for the US dollar hasn’t waned but actually risen. This phenomenon may have impacted the price of bitcoin 00 this year, according to Keiser.

“The problem Bitcoin has had recently is its competitor, the US Dollar, has been rising,” he explains.

When the dollar rolls over and starts dropping, Bitcoin will hit new ATH.

Meanwhile, critics say it’s too volatile to be a safe haven alternative. Its price has admittedly dropped by 85 percent from its all-time high in 2017. But proponents, like Max Keiser and many others, argue that short-term price fluctuations do not matter if the legacy fiat monetary system is inherently flawed.

They also note that savvy investors are realizing the long-term value proposition of holding the world’s most politically-neutral, hard form of money.

Simply put, trusting no one pays off for those who wait.

Bitcoin Transfers Value From the Sodler to the Hodler

Saifedean Ammous, economist and author of the Bitcoin Standard, states that Bitcoin’s attributes, particularly immutability and neutrality, make it attractive to investors with a long-time preference.

saifedean

Saifedean Ammous

He explained:

Bitcoin has already gone through 9 years of growth out in the wilds of the internet, mostly without a central planner in charge of it after its creator disappeared. It grew because it offered utility to enough users and developers to keep maintaining it.

It has weathered attacks and hacks and ‘community conflict’ and plenty of powerful interests and questionable characters trying to bend it to their will. After all of this, Bitcoin can indeed claim to be immutable. Once it became clear Bitcoin was successful at doing this, then anyone who was interested in an immutable digital hard money could use it.”

Coinbase President Asiff Hirji, whose San Francisco-based exchange launched a custodial platform for institutional investors earlier this year, also sees Bitcoin and cryptocurrencies rewarding the patient in the future.

According to Hirji, none of Coinbase’s investors speculated on BTC price when they valued the exchange at $8 billion earlier this year. They weren’t betting on what the price will be “today, tomorrow or even a year from now,” he said 

“If that’s your time horizon, as an institutional investor, you shouldn’t be touching this,” adds Hirji.

Fragile Fiat

From a security standpoint, centralized money systems are also honeypots. Centralized infrastructure is prone to hacks and shut down compared to a much more robust decentralized network like Bitcoin, which has been operating 24/7 with 99.8 percent uptime.

What’s more, third-parties aren’t just security holes. They are also structurally political. A duopoly such as Visa and Mastercard, for example, can (and do) restrict access for their own reasons, and even have the power to push other companies to toe the line.

bakkt earnings season Wall Street's Old Guard Has A Double Standard When It Comes To Bitcoin

The next global financial crisis is baked into the fiat cake. It’s a matter of not if, but when.

Will Bitcoin be ready? Only time will tell. But with warning signs already surfacing such as global social unrest and the markets tanking, the test may come sooner rather than later. 

Do you consider Bitcoin the perfect long-term investment? Share your thoughts below! 


Images courtesy of Bitcoinist archives, Shutterstock

The post Perfect Storm: Bitcoin Didn’t Exist in the Last Financial Crisis appeared first on Bitcoinist.com.

Source: Blockchain