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    Does the New Bitcoin Bank Defeat the Purpose of Bitcoin?

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    Daniel Stuckey

    Contributor

    Here's yet another sign that bitcoin is a legit currency: A new bank for bitcoin is up and running at Bitcoin-Central.net. With euro signs in its eyes, French bitcoin exchange Paymium says it plans to regulate and institutionalize the crypto-currency with Bitcoin Central, bringing along insurance standards guaranteed by the French version of FDIC. My eyebrow just hit the ceiling.

    Regulating bitcoin? Banking it? Issuing bank cards? Gaining 'attractivity' from second and third-round investors? It's a classic sell-out story cruising along under some shield of financial nerdery. That bitcoin is money, and money is bitcoin, seems to have led these determined guys into the savagery of orthodox financial standards. In itself, the very idea of a centralized, compliant, investment-seizing bitcoin bank defies the earliest notions of the untraceable currency. Just have a look at some of Bitcoin Central's boasted advantages, as posted in an announcement:

    • Each user will soon be able to order its own debit card that will use their EUR and BTC balance to honor purchases and cash withdrawals
    • We'll have direct access to the banking networks which will let us 100% automate all incoming and outgoing transfers
    • Corporations will have an actual financial institution talking with them if they wish to start accepting Bitcoin and be safe from a regulatory point of view
    • Paymium will have a much better legal standing and a much higher attractivity for second and third-round investors

    Let's go back in history to the original unveiling of bitcoin as we know it today. Here's the first sentence from the abstract that bitcoin's pseudonymous creator(s) Satoshi Nakamoto published: "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."

    Like an eager child opening his Christmas presents without first reading the card from his aging grandparents, the guys at Bitcoin Central don't seem to give a shit about the founding principles of the P2P system in place.

    This isn't to say Bitcoin Central is one-of-a-kind in taking its exploitative shake out of the market. It's also not to say there's anything innocent or unassuming about the bitcoin market. It's just incredible to think that banking away bitcoins and coincidentally identifying (or at least keeping records on) bitcoin users is a real plan. It almost seems like a dare.

    Basically, if the bigger picture of the bitcoin market is a chaotic free-for-all with a few solid algorithms and ceilings in place, these guys are postering it with corporate sensibility and bureaucratic ambassadorship. 

    The encrypted Internet is as much a safe haven for capitalist trickery and price gouging as it is a place to sell tennis rackets and child porn. And yes, bitcoin definitely facilitates these grotesquely criminal transactions and behavior, but it also represents one of the largest decentralized monetary systems ever known ($140 million USD in circulation and counting), which is at least awe-inspiring when looking over Nakamoto's primary aims. Bitcoin has become the Bittorrent of money, (If you're still unfamiliar with how the currency works, skim the rest of the OG paper). 

    To me it feels like these French dudes are bringing saltpeter to a rave. We'd call them "narcs" in another age. Efforts to cooperate with governing financial bodies signals nothing short of self-fascinated greed and far-reaching justification. But we'll let the markets decide. Comments on the Bitcoin Central announcement thread tend toward gleeful, but I don't think I'll be signing up.

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