We are certainly living in a world where up is down and left is right.
- Bitcoin is used for illegal activities.
- Only drug dealers, gun runners, and hookers would use Bitcoin.
- Bitcoin's only use case is to launder money.
These are some of the accusations that were levied against the top cryptocurrency.
We cannot deny that Bitcoin and other cryptocurrencies are used for illegal activities. Simply because it is rather new to the game, that does not mean that somehow cryptocurrency is exempt from human behavior.
Of course, the regulators hate that they have little control over the leading cryptocurrencies. Since they are decentralized, there is nothing they can really do to stop the transactions. That said, one advantage is that the distributed ledgers are public, thus open to scrutiny.
All this flies in the face of what recently came out.
It seems the banking system is not quite as pure as they make out to be. Leading the charge is Deutsche Bank, being the top advocate of criminal activity.
What took place? Basically a money laundering operation over the course of a couple decades that would make Al Capone blush.
A recent release of FinCEN activity reveals that the banking knowingly sent through more than $2 trillion worth of transactions that were laundering money. This was done for people such as Russian oligarchs avoiding sanctions as well as those conducting embezzlement. Leading the way was Germany's top bank, Deutsche, pushing through $1.3 trillion.
Isn't it ironic that the bankers were the main culprits launching the FUD attacks at Bitcoin and other cryptocurrencies? It stands to reason that, if Bitcoin was used for illegal activities, the bankers did not want the competition.
Ushering In A New Era
This revelation, which came from leaked documents, comes at a perfect time. While the SEC is apt to get excited about the mania is DeFi, this could put the regulators off a bit. After all, there are many agencies within the government responsible for overseeing this activity. The SEC might not be the main bank regulator yet they are capable of pursuing fraud.
DeFi takes a lot of this off the table. Using decentralized ledgers, the ability to hide transactions is minimized. Certainly, there are ways to mask who is the account holder, as evidenced by the fact that nobody knows who Satoshi is even though that wallet holds over a billion dollars in BTC.
One thing that we are most likely to see is KYC and AML pushed even harder when it comes to DeFi. Regulators are not apt to let people operate without supervision (surveillance). Of course, this only applies to individuals, not those who are operating the system themselves. Here is where the bankers have an advantage.
Of course, there are those who make the case that why should people not try to avoid the sanctions of a warmongering country like the United States? At the same time, tax avoidance is something that many favor, especially those of Libertarian thought. After all, taking money from someone is considered theft by many, whether it is stolen by a banker, a neighbor, or the government.
Whatever the view on this topic, there is no denying the greed of bankers, coupled with their position of power, makes them very dangerous. For decades, they operated without much hindrance, pillaging wherever they saw fit.
Now, with cryptocurrency, there is actually an opportunity to circumvent their system. It is likely that Wall Street (just more expensive bankers) will dominate Bitcoin over time. However, with the ability to create other currencies with the click of a few buttons, individuals will always have the freedom to move around what the bankers do.
After all, at the core of all this is technology. This means that the bankers and regulators have to move faster than innovation. Incidently, we have a model which shows how slow they can be. Over the last couple decades, much of the banking industry's traditional revenue streams were lost to FinTech companies. They were able to enter the market offering services for less money with more convenience. The mortgage industry now has more loans originating through FinTech than the traditional banking system.
This shows how vulnerable they can be. The typical banker playbook, attack it, bride politicians to outlaw it, and then buy it, does not always work when it comes to technology. Innovation simply moves at a pace faster than the bankers can move.
Odds are little will come of this recent event. The bankers are basically untouchable from a prosecution standpoint. There will likely be some political grandstanding but do not expect anything with any bite.
However, in the meantime, we can keep expanding and developing. Cryptocurrency is gaining in power by the day. The numbers are still minuscule compared to the traditional system, yet gains are being made.
We could see a turning point over the next couple years. For this reason, let the bankers keep doing what they always did. In the end, they will end up like record executives who did not adapt to what was taking place.
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