{"id":9551,"date":"2022-05-06T23:30:00","date_gmt":"2022-05-06T23:30:00","guid":{"rendered":"http:\/\/ci02a08663d00027e0"},"modified":"2025-10-01T13:04:55","modified_gmt":"2025-10-01T18:04:55","slug":"how-banks-try-to-discredit-bitcoin","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/how-banks-try-to-discredit-bitcoin","title":{"rendered":"How Banks Are Trying To Discredit Bitcoin"},"content":{"rendered":"
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Each year, Bitcoin continues to grow in stature. Bitcoin is going mainstream by every metric \u2014 financial value, adoption rates, transaction volume, you name it. <\/p>\n

But not everyone\u2019s happy Bitcoin adoption is growing. In particular, the banking industry feels threatened by bitcoin\u2019s rise and continues to wage war on the cryptocurrency. <\/p>\n

That banks don\u2019t like Bitcoin shouldn\u2019t be a surprise. Satoshi Nakamoto\u2019s invention is the greatest disruption to the age-old monetary system in decades. As a peer-to-peer network for creating and exchanging value, Bitcoin may render banks useless. <\/p>\n

To protect their position, banking institutions have resorted to the classic tool of warfare: propaganda. By spreading misinformation, banks hope to discredit Bitcoin \u2014 reducing public adoption and encouraging stricter regulation. <\/p>\n

A (Brief) History Of Big Finance\u2019s Propaganda War On Bitcoin <\/h2>\n

From the onset, Big Finance must have realized Bitcoin could potentially disrupt the banking system. But they chose to believe its use would remain restricted to drug dealers<\/a>, computer geeks, cypherpunks, libertarians and other fringe elements. <\/p>\n

But as cryptocurrency adoption grew, especially among institutional investors, panic spread in the banking system. For the first time, the possibility that this \u201cmagic internet money\u201d may displace banks was real. <\/p>\n

Thus, banks launched a coordinated effort to discredit cryptocurrencies. Bitcoin was and is a favorite target, given its status as the world\u2019s first and most popular cryptocurrency. <\/p>\n

In 2014, Jamie Dimon, billionaire President and CEO of JPMorgan Chase, America\u2019s largest bank, declared Bitcoin \u201ca terrible store of value\u201d<\/a> at the World Economic Forum in Davos, Switzerland. However, that didn\u2019t stop the state of New York from issuing licenses to Bitcoin exchanges<\/a> the following year. <\/p>\n

Dimon followed up with his criticism of bitcoin<\/a> in 2015, saying the cryptocurrency would never receive approval from governments. In his words, \u201cNo government will ever support a virtual currency that goes around borders and doesn\u2019t have the same controls.\u201d <\/p>\n

Not satisfied, the JPMorgan Chase supremo launched his biggest attack on Bitcoin yet at the 2015 Barclays Global Financial Services Conference. Not only did he call Bitcoin a fraud similar to Tulipmania<\/a>, but he also threatened to fire anyone who traded Bitcoin<\/a> via his company. <\/p>\n

Dimon isn\u2019t the only Big Finance stalwart who has tried to undermine Bitcoin. President of the European Central Bank Christine Lagarde has also been critical of Bitcoin in the past. <\/p>\n

At a Reuters Next Conference, Lagarde branded bitcoin \u201ca highly speculative asset,\u201d<\/a> adding that it has been used to conduct \u201csome funny business and some interesting and totally reprehensible money laundering activity.\u201d This is even as the European Central Bank was considering launching its digital currency called the digital euro at the time. <\/p>\n

The ECB, too, has often lent itself to the anti-Bitcoin propaganda campaign. In its 2021 Financial Stability Review, the apex banker compared<\/a> surges in bitcoin\u2019s price to the infamous South Sea Bubble<\/a>. \u201c[Bitcoin\u2019s] exorbitant carbon footprint and potential use for illicit purposes are grounds for concern,\u201d it added in the report. <\/p>\n

Even the world\u2019s largest financial institutions have also joined in on the anti-Bitcoin party. For example, the World Bank refused to support El Salvador\u2019s plan to adopt bitcoin as legal tender<\/a>, adducing \u201cenvironmental and transparency shortcomings\u201d of the cryptocurrency. The International Monetary Fund (IMF) also urged<\/a> the Latin American nation to drop Bitcoin early this year. <\/p>\n

Of course, there are many<\/a>, many<\/a> more instances of old-money institutions sowing doubt and spreading misinformation about Bitcoin. Nevertheless, these statements all point to the same conclusion: banks hate Bitcoin and will stop at nothing to discredit it.<\/p>\n

\u201cBitcoin Is Bad, Blockchain Is Good\u201d<\/h2>\n

Some financial players have taken another tack in their disinformation campaign. This involves criticizing Bitcoin but praising the underlying blockchain technology that powers the system. <\/p>\n

Banks see the potential of blockchain technology to revolutionize payments and want to co-opt the technology for their benefit. For example, JPMorgan Chase, the avowed Bitcoin critic, has created a cryptocurrency called \u201cJPMCoin\u201d running on its Quorum blockchain. <\/p>\n

Central banks have also touted blockchain\u2019s capability to power central bank digital currencies (CBDCs) \u2014 cryptocurrencies issued and backed by governments. Such assets are pegged to a fiat currency, like the dollar or euro, much like a stablecoin.<\/p>\n

The Bank for International Settlement (BIS) ripped into cryptos in a June 2021 report<\/a>, describing them as speculative assets used to facilitate money laundering, ransomware attacks and other financial crimes. \u201cBitcoin, in particular, has few redeeming public interest attributes when also considering its wasteful energy footprint,\u201d the report declared. <\/p>\n

Ironically, the BIS advocated for CBDCs in the same report. Here\u2019s an excerpt:<\/p>\n

\n

\u201cCentral bank digital currencies represent a unique opportunity to design a technologically advanced representation of central bank money, one that offers the unique features of finality, liquidity, and integrity. <\/em><\/p>\n<\/blockquote>\n

\n

Such currencies could form the backbone of a highly efficient new digital payment system by enabling broad access and providing strong data governance and privacy standards based on digital ID.\u201d<\/em><\/p>\n<\/blockquote>\n

The \u201cBitcoin bad, blockchain good!\u201d line has become the favorite refrain of banks and fintech operators in response to Bitcoin\u2019s popularity. As always, this argument misses the point. <\/p>\n

Without Bitcoin\u2019s decentralized architecture, blockchain-based payment monetary systems are useless. Permissioned blockchains like Quorum suffer from centralization and single points of failure \u2014 problems Nakamoto sought to correct by creating Bitcoin. <\/p>\n

The same issues plague CBDCs. As I explained in a recent article, centralized control of a digital dollar or pound causes the same problems witnessed with fiat currencies. With central banks controlling every inflow and outflow of money, it\u2019d be all-too-easy to conduct financial surveillance, implement unpopular monetary policies and conduct financial discrimination. <\/p>\n

A bigger problem with this line of argument is that it fails to consider Bitcoin\u2019s biggest strength: cryptoeconomics. Satoshi\u2019s greatest contribution was a novel combination of economic incentives, game theory and applied cryptography necessary for keeping the system secure and useful in the absence of a centralized entity. Centralized blockchains with poor incentives are open to attack just like any other legacy system. <\/p>\n

Why Are Banks Scared Of Bitcoin? <\/h2>\n

Traditional banks have long made money by charging users to store and use their money. The average account holder pays account maintenance fees, debit fees, overdraft fees and a plethora of charges designed to profit the bank. All the while, the bank loans out the money sitting in the account, while giving users only a fraction of the earned interest. <\/p>\n

Bitcoin, however, poses a threat to the banking industry\u2019s revenue model. With cryptocurrencies, there are no institutions helping users to store, manage or use their money. The owner remains completely in control of their bitcoins. <\/p>\n

But, wait, there\u2019s more. <\/p>\n

Better And Cheaper Transactions <\/h3>\n

Bitcoin makes it possible to transfer money to anyone, instantly, irrespective of the amount involved or the recipient\u2019s location. And users can do that without relying on an intermediary like their local bank. <\/p>\n

On average, Bitcoin-powered transactions are faster and cheaper than transactions through banks. Consider how much time it takes to process an international transfer and the hefty fees that banks charge. <\/p>\n

Except for miner fees, people are not paying anyone else to process transactions on the Bitcoin blockchain. And amounts of any size, large or small, can be moved without the usual red tape. In less than 10 minutes, Bitcoin processes an irreversible money transfer. Banks simply cannot match that. <\/p>\n

Store Of Value <\/h3>\n

Banks help customers arrange long-term investments in gold, bonds and other assets, to secure the value of their money. And they charge a fee for custodianship, investment consulting and portfolio management. <\/p>\n

But what happens when people figure out they don\u2019t have to rely on banks to store value? <\/p>\n

Due to its intrinsic properties, Bitcoin is rapidly emerging as a preferred store of value. Bitcoin is scarce (only 21 million units will ever be produced), but also fungible and portable. This makes it even better than traditional stores of values like gold. <\/p>\n

Because anyone can easily buy bitcoin and HODL, banks can no longer make money off shilling asset management plans. Banks, like JPMorgan, have adapted by selling bitcoin-based investments<\/a> such as futures \u2014 but that won\u2019t save them. <\/p>\n

Resistance To Manipulation <\/h3>\n

Banks have long survived by manipulating the financial system for private gains. The 2008 financial crisis resulted from underhanded dealings by some of the world\u2019s biggest banks, including Lehman Brothers, which later declared bankruptcy. <\/p>\n

For instance, banks always <\/em>lend out more money than they own in what\u2019s called leveraging. Should everyone decide to withdraw their money from banks, the entire industry would inevitably crash. <\/p>\n

Bitcoin allows people to be their own banks. Money in a Bitcoin wallet cannot be manipulated or used by anybody apart from the holder. For the first time, people now have the power to control their<\/em> money. <\/p>\n

Banks Cannot Kill Bitcoin <\/h2>\n

The intensity of the banking industry\u2019s information war shows just how much they fear Bitcoin \u2014 as they should. It\u2019s only a matter of time before bitcoin permeates every financial sector \u2014 offshore settlements, escrow, payments, asset investments and more. <\/p>\n

When that happens, banks will become the latest victims of technological disruption. Just as Netflix replaced video rentals and Amazon replaced bookstores, Bitcoin will replace banks. And no amount of doubt-sowing and misinformation will reverse that. <\/p>\n

This is a guest post by Emmanuel Awosika. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or <\/em>Bitcoin Magazine.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s no coincidence that as the greatest threat to banking, Bitcoin is constantly under fire from the industry and its beneficiaries.<\/p>\n","protected":false},"author":3040,"featured_media":4224,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[697,323,59],"class_list":{"0":"post-9551","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-banks","9":"tag-fud","10":"tag-opinion"},"author_data":{"id":3040,"name":"Emmanuel Awosika","nicename":"emmanuel-awosika","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/042ec46c6763623bb5d8fff27f9f9fa046ce9cd57f86537319aafc876cd4e533?s=96&d=robohash&r=g"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/023-btc.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/9551","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3040"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=9551"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/9551\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/4224"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=9551"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=9551"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=9551"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}