It’s a comparison to your traditional bank account. At chase bank you don’t physically own the money in your account - it’s in a banks database. With Bitcoin you own that coin and it’s stored in your own digital wallet. Like cash v bank account, but Bitcoin is safer and easier to store than cash.
Who cares? You should. Bitcoin offers a public audit trail less commonly known as triple-entry bookkeeping or momentum accounting. Chase still uses double entry.
What's more Chase charges $25 per month to keep an open checking account, keeps only a small portion of your funds on hand and may both lock you out of your account and freeze your funds on a whim whereas Bitcoin won't.
I think the key benefit of bitcoin here is that you have a choice as to who holds your bitcoin for you, as opposed to there being only one option: storing your money with a bank. You can store bitcoin with an online wallet or on your home computer, and there are risks in both cases. E.g. if you are afraid of getting hacked, or accidentally destroying your own keys (common enough to be a real concern), you may determine that storing your bitcoin with a service like Coinbase is better for you personally in your specific context.
The advantage of bitcoin is being able to have that option, not that it's always necessarily better to store bitcoin on your own.
Bitcoin, just like traditional money, can exist as a non-blockchain ledger entry in bank's computer system. This is how most exchanges and custodial wallets work.
The difference is, you can also self-custody your Bitcoin. Obviously what's in your custody is just a private key; but for all intents and purposes that is self-custody. You are the sole person in control of those coins.
So Bitcoin gives you the choice of how you want to store it. Traditional money does not give you that choice. At a certain point there are physical and practical limits to how much cash you can self-custody (not to mention transport or transfer from one place or person to another).
Consider the difference between a Bitcoin and dollars in your bank account. You can own Bitcoin but your bank account just shows how much dollars your bank owes you, you don't own any of the dollars yourself.
One of the major advantages bitcoin has is that it is decentralized. Placing your money in a bitcoin bank is simply unneeded.
Sure, keeping your BTC in an exchange's account may make it faster to exchange your BTC to USD, and you may see less transaction fees, but at the end of the day it means you have to trust the exchange to do the right thing.
Want to keep your coins safe? Secure your wallet.dat.
A checking account is closer to the intuitive "this account has X amount of money"; the transactions are "add X money to the account" and "subtract X money to the account".
With Bitcoin, it's as if you had thousands of tiny checking accounts, every time you received money created a new one, and you could withdraw each account only once, and always for the full value (if you wanted to use only part of an account, you had to send the rest to a new account).
It's difficult to buy stocks if you don't even have a bank account. Why wouldn't Bitcoin be a "savings account"? I use it as a savings account, it's really great. I put money that I don't need today there so I can have the same or higher buying power in the long term, regardless of inflation.
Bitcoin gives individuals the ability to better protect their wealth/savings by storing it in a form where it can easily be hidden (thus protected). It amazes me some people think that's a bad thing.
With Bitcoin, I don't have to keep my savings in the bank even if I choose to use a bank for other services. As someone whose had their bank account frozen before, this is of great value to me.
I could use banks or Lightning like a checking account, while keeping the majority of my savings under my control.
So where do the $2000 go when I hand the bills over? Surely they keep it somewhere. And when I want to take it out, they give it back to me (obviously not the same bills).
But yeah, I don't really know how banks work and what they do. But for the average jo (me included) is is all extremely simple to use - which is my point, that Bitcoins are not.
I've never really internalized this, but is part of the reason people like bitcoin because it's the online equivalent of cash - No fees plus guaranteed good funds? This article suggests that, but that doesn't make any sense to me. If THAT'S why you like bitcoin, man you're gonna LOVE what I've been building, it's actually the literal online version of cash.
Well, one benefit I can think of is that keeping cash in a bank, just to keep you debit card funded, is a bad investment (I'll just ignore for now the question as to whether bitcoin is a BETTER investment :)
reply