Regulations Will Lead to a Two-Tiered Bitcoin Society

OpinionFTX is the best excuse to further control bitcoin and remove the possibility for self-custody or true ownership. There has been a lot coverage about the FTX disaster, including current developments and warning signs from years past. Will this have an impact on bitcoin in the future? I don’t care much about shitcoin casino, as most of them will likely be regulated as securities Exchanges or shut down due outright fraud or insolvencies. This is almost a done deal. But what about bitcoin? Let’s speculate about the impact FTX will have upon the future of bitcoin. Bitcoin usage will split, slowly and then suddenly. Since the January 3, 2009 genesis block was created, this has been in the works. There will be two options for using bitcoin: as a black-market good or as paper bitcoin on regulated markets. This has been true almost all of my life, but it will soon become clearer. What does that mean? Regulators will regulate. That’s what they do. Bitcoin cannot be regulated. However, custodial ramps like brokers, exchanges and lenders can be and will be regulated. Most buyers will be able to keep their bitcoins in self-custody. It will be very difficult to buy bitcoins and have full custody on these platforms — possibly even impossible. This date is fast approaching. There is still time before the on ramps close, but how much? Do you want to wait three years or six months? It is not clear when the timeline will be. It will soon become impossible to buy bitcoins on an exchange and then move the bitcoin into self-custody, where you own your keys. Under the cover of consumer protection and regulatory compliance, most custodial entities — trusted third parties — won’t allow users to withdraw. To artificially expose the bitcoin price, you will purchase paper bitcoin (aka fake bitcoin). You won’t be able claim the IOU or redeem it. You want to keep that bitcoin with keys you control? It will be difficult. Few exchanges will allow users self-custody, and fewer will fight to protect financial sovereignty. They will sell paper bitcoins or cease operations for most businesses. On the one hand, people will purchase bitcoin IOUs from custodial entities, which will give up all KYC (know your customer) details, automated tax reporting, and zero privacy. Bitcoin will be the underlying asset of the global financial surveillance network. This is something we have yet to see. Regulated companies will create a network of compliance over Bitcoin to prevent you from obtaining what could have been yours. They may even wrap it in a central bank digital currency, (CBDC), to protect you from the volatility of bitcoin. You will be happy if you buy paper bitcoin. On the other side, bitcoin will thrive as the black market money it was meant to be. This will mark the beginning of a new era in Bitcoin for those who have zero fiat. That is, Bitcoiners with full nodes and full privacy who pay peer-to-peer to get stuff with their hard-earned money. CoinJoins will become the norm for most users. They can only share what they wish with whomever they choose to protect their personal data from being viewed by chain analysis companies. It will be called a circular economy by some, while others will call the black market. It will be 100% dependent on trust networks. Bitcoin can be purchased without KYC by peers using cash or bank wires whenever possible. It will be a small breather in this era of digital surveillance. It will last until the rest, which is choked by regulation and weighed down by large fractional reserves, collapses under its own weight. Bitcoin will have freed itself from financial parasites and state intervention, but it will take a long time before the price of bitcoin is allowed to rise again. Self-custody could be stigmatized with hefty fines or government-sponsored intimidations, similar to Executive Order 6102. Are you ready? Don’t miss this opportunity. This is your chance for self-repair and to choose what’s best for you and your family. This guest post is by Thibaud Marechal. These opinions are not necessarily those of Bitcoin Magazine or BTC Inc. Tagsterms:custodialSelf CustodyRegulationCustodyExchanges


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