What is Bitcoin and why are banks and law enforcement authorities concerned?

Bitcoin Questions and AnswersCategory: General questionsWhat is Bitcoin and why are banks and law enforcement authorities concerned?

Jake asked 2 years ago

Can you please explain to me to in plain and simple English as to what Bitcoin is and why banks and law enforcement authorities would be concerned about it? Thanks.

1 Answers
Ofir Beigel answered 2 years ago

Excellent question Jake,
I guess they are many reasons that they may be concerned about, but here are a few I can think of:

  1. Bitcoin is sometimes used for illegal purposes (just like any other form of cash) and instead of tackling the actual problem (the suppliers) they are trying to tackle the payment method. This is basically the same as saying “people use Dollar bills to buy drugs, so let’s ban dollar bills”.
  2. Bitcoin is basically unenforceable, meaning no one controls it – and that scares a lot of authorities. In my opinion it scares them not necessarily for the right reasons. The way I see it they are mainly concerned of losing their power and authority. Here’s a really great talk by Andreas Antonopoulos explaining this matter a bit more in depth. 

Of course if you ask them they’ll probably say it’s a currency used by rapists, drug dealers and criminals. That’s basically the claim that comes against any new disruptive technology (that’s what was also said about the Internet in its early days).

Ofir Beigel replied 2 years ago

I think banks will be concerned because:
1. It undermines their power and questions the actual need for a bank
2. Fiat currency is being exchange into Bitcoin which causes them to lose money on fees

Law enforcement would be concerned due to:
1. Untraceable currency – could lead to illegal transactions
2. Unenforceable currency – hard to control it / stop people from using it

Hope this helped a bit

Jake replied 2 years ago

Hello Ofir,

What are the most important concerns that Bitcoin would cause for Banks? Aside from being very difficult to regulate and control? Any 4 to 6 reasons in plain simple English would be great.

I’m trying to put this together in a Powerpoint presentation slide that keep things in plain and simple easy to understand every day English.

At the moment I kept the points altogether to explain why both banks and law enforcement authorities are concerned, however I am not sure if there are enough major important points that I should make on 2 separate slides instead:

E.G. On 1 slide, stating the main points as to why banks are concerned, and then on another slide stating the points as to why law enforcement authorities are concerned.

At the moment I have it on 1 slide like this, with 3 main points, and I always try to keep 6 bullet points maximum:

Why are banks and law enforcement authorities concerned?

-Bitcoin is hard to or impossible to regulate
-Bitcoin can be used to conceal illegal activities
-Bitcoin can disrupt the value of real money

Any additional advice is much appreciated. I wasn’t sure if there would be enough valid major points to make for either category (bank, law enforcement); more than 6 points for either category, if there isn’t I’d keep it all onto one slide.

I saw some articles when I googled why are banks concerned about bitcoin? But they weren’t organized and clear using bullet points to highlight clearly like how you had explained it clearly to me in plain English.

Such as this one for example: “Why are bankers afraid of Bitcoin’s impact? Easy, it will lead to ripples across the financial sector, it will create new winners and losers, and it will likely decentralize banking services and create micro markets to an extent not seen since the advances of the barter economy and the market economy combined. In fact, this is what the Internet of Value is all about—erasing the distinction between bartering, money and service exchange in any market. Once each potential good has a financially tradable and storable equivalent, “a bitcoin,” if you will, trade will explode in a myriad of directions impossible to predict by current algorithms. Intermediaries will come and go, and the end points of exchange nodes will become more important. To many bankers, this is a scary thought. To everyone else it is likely quite liberating.” from here: http://fortune.com/2014/11/20/why-banks-fear-bitcoin/

As you can see that explanation was very wordy and not in every day plain English. But from what I understand from it is that it would disrupt the value of real money in the real world.

Another one is slightly better here: http://www.coindesk.com/real-reason-banks-dont-like-bitcoin/

Thank you I really appreciate your help.

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