There are many advantages to Bitcoin, but one of the most notorious ones is meant to be that the coin is decentralized. The pull of decentralization is so magnetic that there has been a whole industry developed around decentralized finance.
What most people can recognize as the main advantage of no central force controlling people’s money is the lack of corruption.
Corruption is dishonesty by those in power. The greatest lie the world has been led to believe is that the physical currency in reserve banks right now has value.
Unlike gold, the cash we carry in our pockets value is made up and can be printed. Sometimes, banks lie by asserting that your money is in your account, but that is not always the case.
When banks defaulted in the 2007 recession, it was clear that banks could run out of money. Bitcoins’ aim was to replace reserve currency.
Bitcoin and exchanges
What was not made clear was the role that exchanges would play in the mainstream vision of Bitcoin.
The issue with exchanges is that you cannot decide what form they come in. The exchange players worldwide are fast becoming banks. Banks can hold their clients’ funds and help them exchange too.
The beauty of Bitcoins decentralized finance is the peer-to-peer element that means that the value of money you have is genuine and can immediately be transferred. There is complete transparency with Bitcoin, but with banks and exchanges playing more of an intermediary role, Bitcoin’s value can be subverted.
The leading issue exchanges have is that more and more of them are coming at a cost. Instead of delivering the effective peer-to-peer transfer Bitcoin promised, the intermediary exchange element means you have to pay to transfer your funds. Once you pay to buy products, you lose money to the central player, which is the exchange.
Thanks to exchanges, the smooth peer-to-peer goal Bitcoin has is reduced to an illusion.
Many countries, such as India, Mongolia, Switzerland, and the USA, have launched crypto services. Last week, Switzerland’s SEBA bank expanded its crypto services to incorporate six cryptocurrencies. Most of the banks which have launched are there to support wealthy clients who wish to hold and trade crypto.
Who knows how many costs banks crypto-service-users incur. You can gather trading fees. The fees can be a flat fee, based on a 30-day percentage, or depend on the amount being traded.
PayPal is currently one of the leading players, but a flaw in their system is that you cannot buy products with Bitcoin. PayPal has constructed their crypto services so that you have to exchange crypto to purchase goods, which means people may incur costs.
The world needs to go crypto
The only way to avoid having to pay exchange fees is if the whole world accepts crypto. Many countries already have citizens who operate with crypto. According to Statistica, in August 2020, Vietnam, South Africa, Turkey, Peru, Nigeria, Latin America, Europe, and Asian countries all have people who use and own crypto.
What would restore crypto’s authenticity is if crypto wallets remain free of charge, and the need for banks or exchanges is stripped altogether.
If people can pay with crypto directly without an intermediary force, then the decentralized finance, peer-to-peer dream can live on.