Banks Versus Bitcoin: Advantages Of Decentralized Financial Systems

Authored by Joseph Young via,

Decentralized cryptocurrencies like Bitcoin and Ethereum have strong advantages over centralized financial systems, primarily because of their ability to function and operate without a single point of failure, which hackers and bad actors can target.

image courtesy of CoinTelegraph

Transaction processing

On Feb. 19, Jameson Lopp, the lead engineer at multi-signature Blockchain security firm BitGo, noted that during a holiday in the US, local banks closed down, failing to provide financial services to individuals and businesses that could be in urgent need of financial settlement services to process payments.

Meanwhile, Bitcoin, as a peer-to-peer (P2P) settlement system, was able to process over $1 bln worth of transactions, and more than $7 bln worth of Bitcoin was traded on a single day. Regardless of holidays and weekends, users of Bitcoin and other cryptocurrencies like Ether can freely transact on a peer-to-peer basis, through the utilization of wallets.

Non-custodial cryptocurrency wallets enable users to remain in full control over their funds, by only allowing users to gain access to their private keys and no other centralized entity or platform. As such, Bitcoin wallets like Blockchain, Trezor and Ledger cannot refund transactions or recover user accounts once the private key is lost, encouraging users to be more financially aware and responsible.

As emphasized by Bitcoin analyst and RT’s Keiser Report host Max Keiser on several occasions, financial freedom and independence provided by Bitcoin and other cryptocurrencies in the market are largely beneficial and crucial for individuals and businesses operating in regions wherein government entities control banks and financial institutions.

Importance of financial freedom

Last year, Saudi Arabian billionaire Prince al-Waleed Bin Talal was arrested by the government of Mohammed Bin Salman, who is expected to take control over Saudi Arabia and become its ruler, as the most powerful figure in the Middle East. The government of Salman initiated an anti-corruption purge, arresting 11 Saudi princes and 200 businessmen.

At the time, The Wall Street Journal reported that the government of Saudi Arabia had asked $6 bln for the freedom of Bin Talal, who has garnered a net worth of over $25 bln from his investments in Twitter ($300 mln), CitiGroup ($550 mln), AOL, Apple, MCI, Motorola, Fox Broadcasting and many more.

On the Keiser Report, Keiser criticized the previous remarks of Bin Talal, who had called Bitcoin “Enron in the making.”

"It just doesn't make sense. This thing is not regulated, it's not under control, it's not under the supervision of any central bank. I just don't believe in this Bitcoin thing. I think it's just going to implode one day. I think this is Enron in the making,” said Bin Talal on CNBC’s Squawk Box.

Criticizing Bin Talal, Keiser stated:

He said Bitcoin was no good because there is no central government and no central bank. And then a week later, the central bank and the central government rips out all of his net worth. If he had them in Bitcoin, he wouldn’t have that problem. He is like a poster child for why you should buy Bitcoin. Anyone who is thinking about should I buy Bitcoin, look at [Talal] sleeping on a mattress of a rich hotel under house arrest. Furthermore, he is overrated as a money manager.

In November 2017, the Saudi government cracked down on private bank accounts and froze the accounts of prices and businessmen. Keiser noted that could have been avoided if the wealth of these individuals were stored in a decentralized store of value, like Bitcoin.

Potential of cryptocurrency in offshore banking

The offshore banking industry, which is dominated by influential financial institutions like JPMorgan, is structured around large banks that are able to clear big sums of money in an efficient and secure manner. But, the transfer of millions to billions of dollars require significant manual labor including transaction verification, Anti-Money Laundering (AML) checks and payment clearing.

Cryptocurrency-focused hedge fund Blocktower executive Ari Paul stated that cryptocurrencies have the ability to address the offshore banking industry that supersedes that of major banks:

“Cryptocurrency is trying to be the offshore banking system, I think. At least some of the cryptocurrencies. Most of the financial luminaries, I think genuinely, don’t understand what it’s trying to be. Jamie Dimon is an exception. By all accounts, I know people who spoke to him about cryptocurrency four years ago before I was really in the space. He understands it. I think he sees it as a competitor against JPMorgan,” said Paul during an interview with Business Insider.

Regarding transaction settlement, offshore banking, and financial freedom, centralized systems of banks fall significantly behind major cryptocurrencies, which can offer all three services with low costs and a robust infrastructure.

Conclusively, cryptocurrencies like Bitcoin and Ethereum have significant advantages over banks in a number of areas, including security, borderless transaction settlement, efficient payment clearance, and lack of dependence on centralized service providers or entities.  Although the offshore banking industry is valued at $32 tln and the valuation of the cryptocurrency market remains below half a trillion, the above-mentioned advantages could allow cryptocurrencies to compete against banks across many sectors.


fx gatorengineer Mon, 03/12/2018 - 22:19 Permalink

Latest when the last bitcoins have been mined, the banks will take over. In reality they may already have.

BTC will end up stabilising the very system it was designed to challenge.

It has become the poster child of brainless speculation with 98% of the gamblers having neither a clue about nor any interest in the original purpose.


In reply to by gatorengineer

lookslikecraptome Ramesees Tue, 03/13/2018 - 03:50 Permalink

u have no clue how the medici work. I know how BTC works and have some. I will guarantee you the banks, wall street and Nikkei types are already all over it. I love anarchism and they should have let aig fall flat on its ass. 


The fact that they did not let it fail should tell you crypto evangelists a piece about what is happening now. 

Crypto is like throwing a flea on a rhinoceros . No effect at all, to be crushed by a big flat foot or obliterated by a big pointy horn. Cheers

In reply to by Ramesees

lookslikecraptome hedgeless_horseman Tue, 03/13/2018 - 03:18 Permalink

seriously dude. I hope it works for you. I have made comments that the banks will own cryptos and i think they already do. At least u r walking ur talk. cheers. I have been critical of the crypto evangelists, for their naivete. I do not like the banks and the financial systems. Just  take chunks out of it now and then. Medici die damn fucking hard, if at all.  

In reply to by hedgeless_horseman

lookslikecraptome HRClinton Tue, 03/13/2018 - 03:33 Permalink

this centralized v. decentralized is semantic horseshit. any exchange by its definition is centralized. an exchange is a "Place where exchanges are made" in person or across nodes or whatever the fuck ever. we could go on 4 ever with semantic crap. P2P changes jack shit as evidence by pirate bay, bit torrents and Tor. Homey, they kicked down the door of Tor 5 years ago. 


In reply to by HRClinton

NVTRIC Mon, 03/12/2018 - 20:13 Permalink

If you can't hold it in your hand or defend it with a rifle, you don't own it.  


While the internet is truly robust and powerful, knowledgeable folks could take it down in short order, literally halting global commerce.  There are more bad guys than knowledgeable security and white hat folks.


Long bullets, beans and BBQ sauce, not bitcoin, son.  However skill-sets will be in much higher demand as the secret is out for food  preppers... Mormons have been storing a year of food under their house for 50+ years...


You know, in cause of rapture or some shit.  Hell, if pulling your commandments out of a hat is what is required to make people think about life safety and protection in an unexpected crisis, so be it.  



kavabanga Mon, 03/12/2018 - 20:14 Permalink

Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! Looking at the four hour chart, you can see that BTC has formed a bear flag consolidation, after failing to breakout above theinverse head and shoulders pattern on 3/5. Looking at the action inside of the bear flag , you can see that BTC has produced several failed attempts to successfully rally out of the flag. Resistance has been found at the 50 EMA (in orange) and the current candle is a borderline bearish engulfing candle, that has pushed BTC back into the body of the flag. The only thing holding BTC up at this point, is the 20 EMA (in blue.) As I'm writing this, the 20 EMA is actually being pierced. So, if we get some candle closes below the 20 EMA here, the next stop should be the pink trendline , as it converges with the 78.6% retrace. Below there, we should see a bear flag breakdown. If this bear flag does break down, we are very likely to see test of the low on 2/6, meaning BTC will likely fall to 6,000, or lower. 

If you focus on the broad picture of the chart, you can see that BTC has just failed at my infamous green trendline . The last candle rallied up to it, touched it, and now we've plummeted lower, printing abearish engulfing candle in the process. Technically, we appear to have just popped out of the bear flag , to confirm that trendline as resistance. That is very bearish price action, and if this current candle closes below the 20 EMA (in blue) we are very likely to see sustained downside action. I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic. Au revoir. 

This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media. Good luck trading everyone! 

Cabreado Mon, 03/12/2018 - 20:35 Permalink

If you think you can maintain a civil society with a crypto-currency, you are likely at least 20 years ahead of schedule.

In the meantime, have fun...

TradingTroll Mon, 03/12/2018 - 20:43 Permalink

Oh the bullshit is rich in this article.


“Meanwhile, Bitcoin, as a peer-to-peer (P2P) settlement system, was able to process over $1 bln worth of transactions, and more than $7 bln worth of Bitcoin was traded on a single day. Regardless of holidays and weekends, users of Bitcoin...”


That says the settlement system settled in US$.


What actually happened was the trade occurred in say BTC but the writer chose to display how strong BTC in a P2P network is by denominating in fiat!

 We will back it out at at $10,000 for argument’s sake to try to figure out what transactions occurred.

It seems around 700,000 BTC traded.


This is the same problem the gold and silver bugs have. They weaken themselves by denominating their endgame insurance in fiat. That’s no endgame insurance if you are referencing to US$. In the endgame either everyone will demand US$, so no one wants to sell cryptos for fiat. Or, no one wants fiat, which BTC is referenced to when quoting its value, in almost every article BTC value is discussed.



sessinpo TradingTroll Mon, 03/12/2018 - 22:17 Permalink

TradingTroll Mon, 03/12/2018 

This is the same problem the gold and silver bugs have. They weaken themselves by denominating their endgame insurance in fiat


This is not a weakness. It's just the current state of affairs. Fiat IS the world currency reserve. However, btc is a black market of currency to work around banks.

The lightning network is the structure that banks will use to profit from crypto. Even Roger Ver is an advisor for one of JP's companies.

In reply to by TradingTroll

Brazen Heist Mon, 03/12/2018 - 20:59 Permalink

How can the people bring the sick beast that is the bloated State to its knees? STOP FUCKING PAYING TAXES EN MASSE.

There won't be enough prisons. 

Then we'll see how quickly they'll be paying attention to the people's demands. It's only once you hit their pockets that they suddenly give a shit. That's how the system works - MONEY.  Corporations have figured it out, but why haven't the little people? Its YOUR money. Methinks these rat bastards quickly forget who is paying their salaries and who they are supposed to be working for.

The question is, are people ready to be free and unshackle from their their chains and comfortable illusions? YOUR money deserves to go only to deserving governments, not criminal rackets of swine.

If every single worker in the world took 1 day off to protest, the 1% would feel the burn immediately. Hey I know it sounds far fetched, but we can dream can't we? With the internet at our disposal, we can mobilise and start ramming the dildo right back up their assholes. Hit their pockets bichez. Let them know who's the real boss.

snblitz Mon, 03/12/2018 - 21:10 Permalink

Is the author kidding? 

Bitcoin takes 10 minutes to produce each block and and additional hour for that block to be "confirmed".  You are dependent on bitcoin miners as third parties. 

Right now a bitcoin miner can make around US$100,000 creating the next bitcoin block.  We are at 17 million bitcoins mined.  At 21 million there are no more "rewards" for minors.  After that you will have to compensate the miners with transaction fees.  The last time I looked miner revenue was 99.7% from "rewards" and 0.3% from fees.

When the "rewards" are gone, what are the transaction fees going to look like?  In December 2017 people were paying US$24 as a transaction fee and that was when the miners were still getting the "reward".

marsrecords Mon, 03/12/2018 - 21:29 Permalink


Another scam article. Bitcoin is a ponzi scheme project, not a financial "system"

96% of bitcoin is owned by 4% of the addresses

Bitcoin is the ultimate monopoly

They don't even care about the 250 Billion market cap. Chickenshit money.

They want the trillions they can milk from the futures over the years.

A total manipulated money printing machine

JibjeResearch Mon, 03/12/2018 - 22:43 Permalink

It's not Bank vs Bitcoin.

It's Banks vs you, we, us for Bitcoins.

You'll see what I mean when Goldman Sachs is ready to unload shits on everybody.

You guys need nerves of steel against Goldman.

qr259100 Mon, 03/12/2018 - 23:22 Permalink

CloudCoin will own this market in a few years. CloudCoin is ready made for transactions. Bitcoin is a fantastic idea as it potentially gets the money out from under the control of the governments. But it has flaws. The block chain is getting to big to handle so transaction times are getting longer, new quantum computers will be able to crack the encryption and are probably already doing it. It isn’t truly private the public ledger is, well public. I could go on.

For a full analysis of the differences between Bitcoin and CloudCoin and the flaws of the block chain check this site out. CloudCoin

Get a free book called “Beyond Bit Coin” and 5 free coins here.

ElTerco Tue, 03/13/2018 - 02:23 Permalink

So, if something goes wrong, who has the responsibility to resolve the error? Since it is decentralized, I have a feeling no one is going to take responsibility for the error, and it will be difficult or impossible to recover your loses.

anti-cen Tue, 03/13/2018 - 05:31 Permalink

Clearly the author of this report does not know or understand the lightning network that is coming to Bitcoin is a system of small banker hubs that charge both transaction fees and interest on BTC needed to keep the channels open and is welcome to argue with the white paper if he wants too look a fool.

The freedom he talks about must be the freedom of the miners to rip us off and put the fees up to $55 per transaction and to then use the press to blame China or Korea when people wise up and get out as the price crashes.

if you always blame hackers and bad software in wallets when coins go missing then the network is 100% secure but developers like myself on get banned when we talk out or our posts get deleted because really it's one big mafia cartel that you are dealing with and true and logic does not work with these people.