How Bitcoin (the system), bitcoins (the tokens), or both might be used to bypass the mainstream banking system altogether ?

By Othman Darwish

Central and  commercial  banks around the world are looking at the progress and adoption  of  the digital currency like Bitcoin with a lot of fear. The real threat for banks come from the fact that  people everywhere  start questioning about the real meaning of money;  what is it and why it has a value? With digital currency era and the new innovated  technology like Bitcoin , banks historical role of being custodian on people money, and the central bank and government monopoly  game approaching its end in future .

Bitcoins is new kind of money, it is formed of digital currency , issued and held electronically, and protected  by cryptography. Unlike traditional  fiat-currencies or government-issued money, Bitcoin is not controlled or issued by any government agency, payments and transactions are  exchanged in peer-to-peer networking, dropping  any needs  for trusted intermediaries or banking middlemen. Blockchain ,the technology behind Bitcoin,  acts as global distributed and immutable ledger, the proven secure ledger records every transaction ever made and does not require banks or governments to prove a transaction happened. Accordingly, international remittances and trading no more relaying  on banks to keep things  trusted and secure .

Bitcoins  themselves have a value in real world of currency, unlike fiat currency, no central bank or government printing money to deflate the currency, but computer algorithm run math producing new bitcoins every 10 minutes. Governments  borrow by selling bonds, people buy  bonds because they assume that the government bond is safe investment ,when the government print money to pay off national debt, inflation would rise, and  the value of money will decrease. Bitcoins unlike fait currency cannot be issued by government, thus people realized the intrinsic  value of money by using and saving  Bitcoins, which scare both governments and traditional financial institutions "Banks" .   

On the other hand, Bitcoins transactions fee are markedly less expensive than a similar conventional bank  credit card transaction, due to the fact that Bitcoin relies on a distributed network of miners  rather than a centralized network of banks and processors. Moreover , unlike traditional banks service, Bitcoins transactions  are pseudonymous, a user of the system cannot link the true identity of a user with his real world identity. This feature of the Bitcoin system makes it attractive for users who value their privacy.

Banks as trusted, secure and regulated  entities play historical and  major role in providing financial services. In the era of information technology, an innovated digital currency like Bitcoin has proven the possibility of working in trustless way where both parties to a transaction do not need to know each other, in highly secure tamper resistance, with near zero cost, fast (10 minutes in average), with respect to individuals privacy. This emphasized that Bitcoin as new form of money beat and bypass the traditional banking services, and it is truly give money the real value all over the world, away from governments  monetary policies.