The crypto crash proves it Bitcoin’s libertarian dream is over – The Telegraph

While the freezes were bad news for Bitcoin investors that are already suffering a historic downturn, they also expose a contradiction at the heart of the cryptocurrency world.

For all the industrys promises of decentralising finance, those who have exchanged their cash for crypto have done little more than put their faith in one financial gatekeeper over another.

Binance and Celsius customers savings were no more free for being in Bitcoin. They were still subject to the whims of an intermediary with the power to shut its doors and cut off users, just as they would be with a bank.

The key difference is that if a cryptocurrency company goes bust, there is no regulation protecting deposits.

Yes, Bitcoin technically operates independently of any institution or country, governed only by computer code and the network of miners that maintain it. This is why, strictly, it can never be regulated. You can download your bitcoin on to a hard drive and truly own it.

But most people dont: it is not worth the hassle or the risk. Instead, they store their cryptocurrencies in an online exchange where it can be easily withdrawn and liquidated.

Convenience wins over idealism, and as the current crop of Silicon Valley monopolies has shown, consumers drift towards centralisation.

Once it sits in an exchange where it can be converted, Bitcoin must interact with the rest of the financial system, making it subject to regulation.

Coinbase, one of the worlds biggest exchanges, deals with hundreds of law enforcement requests a week. Those operating in Britain are regulated by the Financial Conduct Authority. Criminals are finding it increasingly difficult to convert stolen crypto into cash, because it is often seized when it enters an exchange.

As cryptocurrency companies come under closer scrutiny, they will start looking less representative of the libertarian ideal on which Bitcoin was founded and more like the ageing banks it was meant to replace.

At that point, we might start to wonder where its value comes from. If a couple of companies have the power to crash the entire market, Bitcoin does not look so free after all.

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The crypto crash proves it Bitcoin's libertarian dream is over - The Telegraph