Topic: Banks Against Bitcoin! (Read 308 times)

I am new to bitcoin, some Banks claim that Bitcoin and other virtual currencies are not currency or legal. means of payment, how the hell actually has happened?

Banks will one day become a thing of the past, while the crypto world is the thing of the future. People will eventually learn that they don't need banks as much as they think because crypto puts people in charge of their own money. The banks know it and hate it.

Banks do not approve bitcoins, but that does not mean they are against it. Plus, I don't think banks can control bitcoin.

Well, if you compare them from where you can make a contribution - then Bitcoin is more profitable! And on the part of reliability and safety of money approximately the same)

Sure banks don't like BTC at all, unless they are investing in it on the one hand and bad mouthing it with the other. I am sure banks are investing in and pushing up the BTC prices. Remember BTC was created as a way around the current banking system. Ripple is trying to be like a bank, whilst not being one. Exciting times.

Some conspiracy theorists say that bitcoin can replace banks and banks are afraid of competition. However, rather a real reason for more mundane is the risks associated with banking regulation.

It is because Bitcoin was decentralized and the government of each country was centralized so no wonder why they are against with it.
They had no authority over bitcoin alaso to all bitcoin holders and users.

it's not only about the profit.
it also because they can't control it.
that's why many banks nowadays are looking into blockchain technology and tried to apply it in their environment

Im the long run blockchain ( not bitcoin) will winn. If we are speaking about short run - banks

Bitcoin is the banks’ biggest competitor today. More and more people are shifting their mindset towards using  cryptocurrency. They could store a huge amount of money in their digital wallets without being traced. Another thing, they could get taxed! Transactions and exchanges are also very fast. These cryptocurrency features are making banks less relevant as more people are joining in. This will give them the urge to cope up with the ongoing revolutions of the digital world or else they will be wiped out.

I remember back in 2014 reading a lot of stories on Bitcoin Talk about users getting their accounts terminated simply for buying Bitcoin. That kind of talk has seem to calm down. Bitcoin is a competitor because you can store your money in it.

Now, on the contrary, many banks began to release a cryptocurrency,so I think they understand the trend that the future of electronic money and not for the papers,and so actively pouring into the market as they want is also part of the market under itself

On your question, there is such a very informative article entitled  "Why Crypto Looks A Lot Like Wall Street". Take your time and read.
This article contains information about Issuers, intermediaries, institutions, integrity. Therefore, here you can find answers to questions. My opinion is that the article is very well written and covers all aspects of the state of the cryptocurrency

Why Crypto Looks A Lot Like Wall Street

I first seriously heard about cryptocurrency while I was working on Wall Street.

This was in 2013. I was trading Argentine credit. One of my local brokers in Buenos Aires wanted to know if I had knew anything about bitcoin. Argentina, at the time, had been locked out of capital markets for over a decade. The peso, ostensibly pegged to the US dollar, traded at a discount on the ground, leaving locals hungry for other stores of value. Capital controls meant that getting money offshore often involved suitcases and ferries to Uruguay. The country was on the brink of another default.

The promise of bitcoin, in this context, was a store of value that would not be captive to the ineptitude or harm of a single, central authority.

As I dug further into bitcoin, more promises of an alternative, improved financial system presented themselves. The European debt crisis, and specifically the asset seizures in Cyprus, highlighted the significance of a digital store of value that could be owned directly – that could not be compromised by an external actor.

Here was an asset that did not demand an intermediary. Sitting on a trading desk at the time, the removal of rent-seeking middlemen from the system was particularly compelling. This technology could allow counterparties to interact directly, without having to disclose the details of their transactions or identities to third parties.

This was also an asset that was programmable. As a derivatives trader, I spent a lot of time thinking about counterparty exposure, collateral and capital requirements. Could smart contracts provide an automatically enforceable means of accounting for this sort of systemic risk?

It had not taken me long to grow disillusioned with the old financial system. Insider trading went on at scale. Reckless risk-taking was often rewarded. Market manipulation, under the guise of many different names, remained rampant.

Cryptocurrency promised an alternative to this system.

For many, 2017 will be the year that they first seriously heard about bitcoin. As I consider the state of cryptocurrency today, however, I don’t see many fulfilled promises.

Instead, we have constructed around crypto a warped version of the legacy financial system, with all the familiar players: issuers, broker dealers, exchanges and custodians. Along with these players come the legacy problems of centralized control, intermediation, systemic risk, market malpractice and – importantly – short-term greed.

We may think that we are down the crypto rabbit hole, but really we are through the Wall Street looking glass.

Issuers

Cryptocurrency tends to be marketed as "trustless." A truer way of thinking about it is that can replace the necessity of trusting a single, central authority with the ability to trust a network of decentralized actors.

Many of the tokens that have emerged in the last year, however, have been issued by small teams of entrepreneurs, who must be trusted to get the project off the ground. Thanks to the cryptocurrency community’s emphasis on open source development, later-stage work often proceeds in a more decentralized manner.

Nonetheless, investors and consumers need to reconcile the dissonance between the sales pitch of decentralization and the reality of how these projects are often run in their early days.

The paradox of centralized cryptocurrency creation is perhaps nowhere so clearly on display as in Venezuela. The Venezuelan president, Nicolas Maduro, announced a few weeks ago his intent to issue a cryptocurrency, presumably in order to evade sanctions. This is unlikely to work, but it also misses the point. A promise of bitcoin is to act as a store of value that would not be captive to a central authority.

A new Venezuelan cryptocurrency, if issued by Maduro, is just as likely to be mismanaged as the bolivar.

Other assets also make this point. Tether is an example of a centrally-mismanaged token. It claims to be a fully-collateralized, dollar-backed asset. The fact that it is not redeemable, coupled with the opaque and problematic accounting practices of its issuers, however, makes it as questionable as any of Wall Street's financial creations, if not more so.

Decentralization is a transformative concept in finance and technology. But if the source of value for these products still relies on a central issuer, then how different are they from the financial products that Wall Street has been devising for decades?

Intermediaries

Cryptocurrency is also talked about as a disintermediating technology. The peer-to-peer nature of blockchain-based assets is perhaps their most interesting feature.

The reality of how these assets are generally being transacted and custodied, however, is highly intermediated.

The professionalization of the issuance process is one example of cryptocurrency markets replicating the legacy system. The services provided by investment banks in equity capital markets are now getting packaged and sold to teams of entrepreneurs looking to do token sales.

These services include running diligence on investors, book-building, addressing compliance concerns and handling the legal process. On the one hand, this marks an important initiative in maturing the market. On the other, it is recreating Wall Street's system around this new asset class.

The platforms that facilitate the buying and selling of cryptocurrencies and tokens also fit this category. The development of over-the-counter trading desks in cryptocurrency feels particularly ironic for me, given I first really understood bitcoin’s value proposition while sitting on a trading desk myself. These desks and exchanges undoubtedly play critical roles in providing liquidity to the market, but in many ways they are replicating what we knew from the old system.

For this reason, decentralized exchange is one of the most compelling areas of research in the space. Rather than rebuild the legacy exchanges, decentralized exchange seeks to enable a new way of transacting that is truer to the value proposition of the technology.

Wallets, like exchanges, have been significant in driving adoption of, speculation on, and use of cryptocurrency. Interaction with private keys remains a real user experience challenge. While many do choose to self-custody their cryptocurrencies, and the very option to do so is one of the important features of this asset class, we have yet to see a product enable secure and reasonable private key custody without reliance on third parties.

In place of this, the industry has again created mirror images of the legacy system: professional custody services using everything from safe deposit boxes to Swiss bank vaults.

These mirror images of Wall Street have a distorted quality. Not only do they imprecisely (or immaturely) resemble the old financial infrastructure on which they are based, but they also bend and corrupt the original intent of the product. Cryptocurrency has created more intermediaries than it has displaced.

The intent was to give people direct control of their funds, free from seizure from banks and governments. Instead, people are handing over that control to a new class of actors--who are frequently even less accountable than their old school counterparts.

Institutions

The question of institutional accountability speaks directly to another promise of cryptocurrency. With its capacity for programmability, crypto can enforce financial contracts. This could solve issues of collateral management and guarantee compliance with capital requirements. The 2008 financial crisis was exacerbated, in part, by a lack of clarity about exposures among counterparties. Auditability and enforceability inherent to crypto should help mitigate, or at least reveal, this kind of systemic risk.

However, the third parties that have been created around cryptocurrency equally exposed to each other as banks, exchanges, and custodians were in 2008.

Commingling of funds within wallets and exchanges, opaque accounting, cross-exchange exposure and unclear margin requirements are a few of the sources of institutional risk in the market. The relative lack of standards in cryptocurrency means that these risks are poorly studied and understood. Disclosures on the subject have yet to be widely demanded by customers and are far from commonplace.

The nascent infrastructure growing up around cryptocurrency reflects the institutions of Wall Street. It’s little wonder that the same risks persist.

Integrity

The parallels between the old and the new are not limited to issuers, infrastructure and institutions. The parallels also permeate the integrity of the players in the system.

Market manipulation, insider trading, shilling, spoofing, pumping-and-dumping and conflicts of interest abound in cryptocurrency markets. This comes as no surprise to anyone who has sat on a Wall Street trading desk, especially considering the relative immaturity of crypto markets.

When I was a trader, I found myself acutely aware that Wall Street might be the hub of it all, but somewhere – on the other end of all the Bloomberg screens, and broker-dealers, and custodians, and clearing houses, and asset managers and mutual funds – were individuals and their retirement money or their college savings.

The same is becoming true of cryptocurrency as retail consumers buy in.

Initiatives and standards are starting to emerge within the industry. Like so much else in crypto markets, these initiatives largely reflect lessons learned by Wall Street. Disclosures by journalists, pundits, and fund managers are starting to become commonplace. Messari, an open source EDGAR-like database, is offering transparency to investors on newly-issued tokens. The Brooklyn Project, launched by Consensys, focuses on consumer protection and setting standards for tokens, encouraging self-regulation by issuers.

Even Coinbase's probe into employee insider trading demonstrates that it is taking its role in the market – and setting standards for it – seriously.

As Wall Street learned for itself, accountability is an important market practice. These are important developments not just for consumer protection, but also for the growth and longevity of the market as a whole.

Long-term greedy

If the hype in 2016 was all about replacing Wall Street's infrastructure with blockchain technology, then 2017 was all about replicating Wall Street’s infrastructure around crypto.

This has led us astray of many of the original promises of cryptocurrency: promises about the roles of issuers, of intermediaries, and of institutions. The level of integrity in the market, unfortunately, also reflects that of the old system, exacerbated by general market immaturity and a lack of agreed-upon standards.

"Long term greedy" is a notion that crypto would do well to borrow from Wall Street. The idea is that certain behaviors, while they may benefit you less in the short term, will pay off in the long run.

These behaviors include having a steady hand in volatile markets, something cryptocurrency investors are well familiar with. More importantly, though, these behaviors also entail respecting other market participants.

I think 2018 will see cryptocurrency markets continue to grow up and self-regulate. 2018 will teach us that being long term greedy is about more than holding – it’s also about maintaining integrity.

Finally, 2018 may return us to some of the original intent of cryptocurrency as the market awakens to remember that the real value lies not through the looking glass, but in the original promises of decentralization and disintermediation.

Banks and government are scared of the harm bitcoins and crypto can cause to their profit and policies if not checked that is why they don't want to give it a support.

Banks are against Bitcoin because it their biggest competitor ans also it is not beyond their power to control many people are investing in bitcoin because they knew its more safe than in the bank. Bank can be robs, can steal and destroy, and take all your hard earned money and besides in Bitcoin you're no longer need to carry a bulk of money or gold in your hand,, you transact through digital connection.

You can't blame the banks solely for those incidents. First of all, the legal definition of Bitcoin is very vague in most of the nations. And in South Asia, certain nations (such as Nepal and Bangladesh) have banned Bitcoins, and some others such as India have issued warnings against their usage.

There are several banks in several countries around the world did band the fund from bitcoin exchanges , including my country in South Asia , that's sad !

This is big threat for them that's why and because digital currency is beyond their control and also there is a probability that it will take their place and their work will no longer exist, where will they be at that time?..that's why they're making a noise out of it and totally against it...people are now preferable choose bitcoin over bank for many reason and that sometimes hard to accept but reality is, that will happen...that they will lose their system...its either they go against it or are they going to embrace it to survive.

I think the reason why many banks are against bitcoin or cryptocurrency in general is because it is not backed by gold asset and is not generally controlled by the government and does not follow the concept of inflation. Having a platform and ground of its won, plus commanding that much value despite it's new-worldly concept, I think that make it difficult for banks and governments alike to actually control it. It is not similar to fiat or traditional currency that can be controlled by the bank it terms of the amount and quantity in circulation in a specific market.

Bankers try to appear to be against bitcoin, but since this year they have become the biggest whales in bitcoin. They sell at high, like when it had reached 20k, then buy all back for lower creating instant free money this way. Since bitcoin is limited and not infinite, they talk negatively about it so average joes will never touch it or go near it, keeping their savings in the bank instead of in crypto, a double win for the bankers.