Satoshi Nakamoto’s vision vs. the real world: How do Bitcoin and mainstream finance get along?

All great things tower over the storm

Satoshi Nakamoto's vision vs. the real world: How do Bitcoin and mainstream finance get along?

Recently, Bitcoin has weakened again. There’s been a lot of talk of “blockchain scams”. Many people may be starting to think about one question – what’s wrong with Bitcoin? Can it live in harmony with mainstream finance?

First, let’s take a historical perspective on whether bitcoin can fit into mainstream finance.

From the evidence available, cryptocurrencies are closer to the mainstream than ever before. Tech companies like MicroStrategy, Square, and Tesla have all taken an interest and invested heavily in bitcoin.

However, historically, governments will not make peace with anything that is beyond their control. Will governments actively accept bitcoin? The answer is no. While Bitcoin can be adopted by the mainstream, it is being changed to fit in with the mainstream, and even requires compromises in its nature, its independence.

Bitcoin’s Grind with Mainstream Finance
Since the beginning of time, the purpose of governments has always been to lead, control, and manage the affairs of the people, with money being the most prominent part of that.

Bitcoin’s decentralized nature makes it a headache for mainstream finance. In theory, a self-controlled, supersovereign currency is naturally unsuitable for any government. In fact, cryptocurrencies are more of a risk to governments because governments will not inherently accept something they cannot control.

However, blockchain has evolved to the point where it is gradually able to act as a clean bank in cryptocurrency transactions, and as a result, people are starting to understand that money may not always need to be dependent on traditional banks.

In this trend, the concept of Bitcoin has gained the attention of mainstream finance, which also seems to have started adopting it, but in essence, mainstream finance is more inclined to see blockchain as a threat than a component of itself. This dichotomy represents both a challenge and an opportunity for cryptocurrencies.

Bitcoin’s Characteristics and Risks
In a recent interview with Stuart Varney of Fox Business, former U.S. President Donald Trump emphasized his stance against cryptocurrencies, even calling bitcoin a “scam”. Trump believes that the world’s currency should be the U.S. dollar and that people should not own bitcoin – which actually represents the view of most traditional politicians.

Currency has value because it can store value and can be used as a unit of exchange both locally and internationally. Every currency or asset that stands the test of time must have six characteristics – scarcity, divisibility, utility, transportability, durability, and resistance to counterfeiting. The value of bitcoin is fully reflected in these six characteristics. Bitcoin is seen as a potential competitor by governments precisely because it is a challenger to traditional values. As Dario, the founder of the Bridgewater Fund, said, “The biggest risk with Bitcoin is that it’s too successful.”

For now, Bitcoin’s status as a unit of exchange remains controversial, as most businesses do not yet see Bitcoin as a form of payment. While all currencies or things of value, such as physical commodities, gold and gemstones, are backed by physical objects, bitcoin is not backed by physical objects and its value is largely driven by speculative interest, consensus and market demand, so it is prone to bubbles as prices rise and media attention is generated. In addition, cryptocurrency exchanges and storage are frequently plagued by hacking, theft and fraud, creating many additional concerns.

Real-world challenges
If governments continue to fight Bitcoin and other cryptocurrencies based on the current financial system, the cryptocurrency market will face significant challenges. In the future, organizations such as Facebook, Amazon, Google, Apple and others could issue cryptocurrency-like competing products, and these new competing products will be packaged in a big way to brand businesses, states and institutions.

Bitcoin has distinct advantages, but it also has many flaws and is ready to face backlash from the real world. Countries such as the United States and Canada may offer some relatively lax regulation, but most countries will not easily loosen their grip on the currency. Large countries like China and Russia are ready to launch central bank digital currencies, which are backed by the state and would be as convenient as PayPal and WeChat payments, which could put more restrictions on Bitcoin’s viability. The road of confrontation and friction between fiat and cryptocurrencies is destined to be bumpy and unpredictable.

Nonetheless, cryptocurrencies such as Bitcoin will continue to function properly because the decentralized blockchain system allows it to be free from the control of national governments. Bitcoin has been around and evolving for over a decade and has proven itself to be immune to outside interference.

How the concept of Bitcoin fits into mainstream finance
The concept of bitcoin may be adopted by mainstream finance, but it may lose many of its original characteristics. The entry of institutions and big money has taken Bitcoin away from the original purpose of Satoshi Nakamoto’s original design of Bitcoin (peer-to-peer electronic cash) and made it a game of capital, which blocks its integration into mainstream finance in a way that benefits the general public.

It’s estimated that demand for digital forms of currency has more than tripled since the outbreak of the new crown epidemic, and governments and mainstream finance are figuring out how to respond to that demand – with countries ramping up research into digital fiat currencies.

Satoshi Nakamoto’s vision of allowing everyone to transact without any form of human control remains a difficult idea to achieve in the real world of finance, especially when the pricing of mainstream cryptocurrencies is in the hands of Wall Street. Nonetheless, people at the forefront of the times will still not stop exploring blockchain, and the trend of decentralized finance will continue to move forward in the midst of the trials and tribulations with mainstream finance. As Plato said, “All great things tower over the storm”.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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