Cryptocurrency: Banks Propaganda War On Bitcoin

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A Brief History Of Big Banks Propaganda War On Bitcoin

https://bitcoinmagazine.com/business/how-banks-try-to-discredit-bitcoin

It’s no coincidence that as the greatest threat to banking, Bitcoin is
constantly under fire from the industry and its beneficiaries...

Each year, Bitcoin continues to grow in stature. Bitcoin is going
mainstream by every metric — financial value, adoption rates,
transaction volume, you name it.

But not everyone’s happy Bitcoin adoption is growing. In particular,
the banking industry feels threatened by bitcoin’s rise and continues
to wage war on the cryptocurrency.

That banks don’t like Bitcoin shouldn’t be a surprise. Satoshi
Nakamoto’s 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.

To protect their position, banking institutions have resorted to the
classic tool of warfare: propaganda. By spreading misinformation,
banks hope to discredit Bitcoin — reducing public adoption and
encouraging stricter regulation.
A (BRIEF) HISTORY OF BIG FINANCE’S PROPAGANDA WAR ON BITCOIN

>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, computer geeks,
cypherpunks, libertarians and other fringe elements.

But as cryptocurrency adoption grew, especially among institutional
investors, panic spread in the banking system. For the first time, the
possibility that this “magic internet money” may displace banks was
real.

Thus, banks launched a coordinated effort to discredit
cryptocurrencies. Bitcoin was and is a favorite target, given its
status as the world’s first and most popular cryptocurrency.

In 2014, Jamie Dimon, billionaire President and CEO of JPMorgan Chase,
America’s largest bank, declared Bitcoin “a terrible store of value”
at the World Economic Forum in Davos, Switzerland. However, that
didn’t stop the state of New York from issuing licenses to Bitcoin
exchanges the following year.

Dimon followed up with his criticism of bitcoin in 2015, saying the
cryptocurrency would never receive approval from governments. In his
words, “No government will ever support a virtual currency that goes
around borders and doesn’t have the same controls.”

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, but he also threatened to fire anyone who traded Bitcoin
via his company.

Dimon isn’t 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.

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

The ECB, too, has often lent itself to the anti-Bitcoin propaganda
campaign. In its 2021 Financial Stability Review, the apex banker
compared surges in bitcoin’s price to the infamous South Sea Bubble.
“[Bitcoin’s] exorbitant carbon footprint and potential use for illicit
purposes are grounds for concern,” it added in the report.

Even the world’s largest financial institutions have also joined in on
the anti-Bitcoin party. For example, the World Bank refused to support
El Salvador’s plan to adopt bitcoin as legal tender, adducing
“environmental and transparency shortcomings” of the cryptocurrency.
The International Monetary Fund (IMF) also urged the Latin American
nation to drop Bitcoin early this year.

Of course, there are many, many 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.
“BITCOIN IS BAD, BLOCKCHAIN IS GOOD”

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.

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 “JPMCoin” running on its Quorum blockchain.

Central banks have also touted blockchain’s capability to power
central bank digital currencies (CBDCs) — cryptocurrencies issued and
backed by governments. Such assets are pegged to a fiat currency, like
the dollar or euro, much like a stablecoin.

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

Ironically, the BIS advocated for CBDCs in the same report. Here’s an excerpt:

    “Central 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.

    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.”

The “Bitcoin bad, blockchain good!” line has become the favorite
refrain of banks and fintech operators in response to Bitcoin’s
popularity. As always, this argument misses the point.

Without Bitcoin’s decentralized architecture, blockchain-based payment
monetary systems are useless. Permissioned blockchains like Quorum
suffer from centralization and single points of failure — problems
Nakamoto sought to correct by creating Bitcoin.

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’d be all-too-easy to
conduct financial surveillance, implement unpopular monetary policies
and conduct financial discrimination.

A bigger problem with this line of argument is that it fails to
consider Bitcoin’s biggest strength: cryptoeconomics. Satoshi’s
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.
WHY ARE BANKS SCARED OF BITCOIN?

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.

Bitcoin, however, poses a threat to the banking industry’s 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.

But, wait, there’s more.
BETTER AND CHEAPER TRANSACTIONS

Bitcoin makes it possible to transfer money to anyone, instantly,
irrespective of the amount involved or the recipient’s location. And
users can do that without relying on an intermediary like their local
bank.

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.

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.
STORE OF VALUE

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.

But what happens when people figure out they don’t have to rely on
banks to store value?

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.

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 such as futures —
but that won’t save them.
RESISTANCE TO MANIPULATION

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’s biggest banks, including Lehman
Brothers, which later declared bankruptcy.

For instance, banks always lend out more money than they own in what’s
called leveraging. Should everyone decide to withdraw their money from
banks, the entire industry would inevitably crash.

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 money.
BANKS CANNOT KILL BITCOIN

The intensity of the banking industry’s information war shows just how
much they fear Bitcoin — as they should. It’s only a matter of time
before bitcoin permeates every financial sector — offshore
settlements, escrow, payments, asset investments and more.

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.