Bitcoin and Central Banks: A Contradictory Connection

Central Banks handle the monetary policies for their respective nations, and you could call them the banks of all banks. They’ve got specific roles like managing fiat money, overseeing bank operations, setting interest rates for loans and investments, and dealing with economic issues like inflation and deflation. As more people start using Bitcoin, we’re seeing Central Banks lose some of their grip. They can't really control how much Bitcoin people trade, and interest rates hardly impact it at all. Plus, in countries where the local currency is really shaky, folks are starting to look at Bitcoin as a better way to keep their money safe. No wonder some Central Banks are looking into a mix of traditional and digital systems. It’s pretty clear that Bitcoin’s rise and the power of Central Banks have an inverse relationship. More Bitcoin adoption means less influence for the banks, and that might be why many countries are still hesitant to make Bitcoin an official currency.

Banks would just enter the same field and let people expose themselves to the space through their services, thus, the balance would be again reached.

I do not like to see people saying that banks deals with monetary... Monetary should deal with money generally and not only fiat. The central banks deals most with fiat but fiat is just the paper money that is also digital that the governments are devaluing in long term. Almost all countries have just one legal tender and which is their local currencies. All we need is the country to support bitcoin and be friendly with it and be accepted for payment. No need of making it a legal tender.

But they can control which coins allowed to trade and which coins get confiscated due to their "tainted" excuse. If the interest rate from local banks has no effect, but if it's from The FED, it affect Bitcoin. Try to search news or thread in this forum that discuss about FOMC meeting. It's possible, but many people need to spend their money to buy something in short term, so investing the whole salary in Bitcoin isn't recommended. I don't see the connection between your idea to adopt Bitcoin as a legal tender when you previously said Bitcoin to be used as a store of value. That's why, almost all countries didn't accept it as legal tender.

Bank is a centralized financial institution that keeps your money as a deposit. And the bank is run according to the policies of the government of a country and for this there is a central bank which controls all the banks. Here of course the bank is responsible for protecting the people's money and giving them security. But Bitcoin is decentralized here you are the owner of your money you have to protect the money yourself so if you lose your Bitcoin due to your own security failure then you have to take the responsibility for it yourself. For this you always have to use a non-custodial wallet and keep your private key very carefully in a secure way it is completely your own responsibility. Because here you can make any amount transaction at any time without any restriction. Bitcoin is freedom so for your freedom you have to take the responsibility for everything yourself

unfortunately, the operation of the central bank does not align with what is happening to bitcoin or not. the commercial banks make their policies based on what they feel is okay for them and what the government wants them to do without considering the effect of such decision on the populace. most of the decisions that are made by the centralized banks including the central banks are tilted more to political policies that benefit key policy makers and not one that benefit the average user of the centralized systems. as long as we don't use bitcoin alone and must relate it to the banking system when we want to either trade or carry out some sort of transaction, we can not say that we are completely free from the influence of commercial banks on us.

Central banks, which want everything centralized and controlled, are the exact opposite of Bitcoin. It's difficult to see the two going hand in hand. However, we should also note that central banks are also starting to show interest in incorporating the system used by Bitcoin, in this case, the use of blockchain. We know that central banks are also developing their own digital currencies (CBDCs). This means that central banks are well aware that they could be left behind if they don't participate in their own digital currency systems. They will also eventually utilize blockchain with their CBDC programs, but even so, there is still a different philosophy and control in this regard than Bitcoin. So, ultimately, only Bitcoin offers freedom. However, the existence of CBDCs also demonstrates that central banks themselves see the enormous potential that Bitcoin will offer in the future. So, this is great news, demonstrating Bitcoin's significant long-term potential.

It will go together, central banks, commercial banks, fiat currencies, CBDCs and Bitcoin as well as altcoins. Even they don't like each other, it's fact and I don't deny it, they will not kill each other, so co-exist with each other is the only possibility. You know, governments and central banks in democrat countries can not take Bitcoin access to their citizens. They were able to do this many years ago when very few people accepted Bitcoin but now, it's too late after Bitcoin has so good adoptiong growth. More important, not only normal citizens but politicians accept Bitcoin too so there are pro-Bitcoin polititcians who will fight till death to defend their accessibility to Bitcoin. Don't worry that governments and central banks will kill and eliminate Bitcoin.

Bitcoin is playing a vital role in serving as an alternative to fiat currency, the purpose was not to fight against fiat, but to help the people ha e an alternative to what they can rely on and use in making payments, being under a decentralized network, all these are the advantages of what we have been seeing with Bitcoin over the years, because the people are the one in demand for it and trying to shift from the usual use of fiat in all they do.

That is the beauty of decentralization, no monetary policy can control your Bitcoin. The government is has no control over your holdings as long as you practice self custody. I might not know what you mean by unstable currency because Bitcoin is still very volatile in nature but on the long-run Bitcoin could help individuals hedge their funds against inflation and currency depreciation and give them profits on their investment since it's an investment opportunity as well. No country would be interested in totally trading it's control over decentralized Bitcoin that it exerts little or no control over, the only way government would even meddle with Bitcoin is by regulating it and that they've always tried to do overtime.

Bitcoin already has prevailed, the banks are also noticing this and are skeptical and at the same time perplex of what may also come in at the cause of time, because bitcoin is what everyone has always wanted to be identified with, am not also surprised that most of the users under banks including its regulators have also developed interest about bitcoin in secret, despite the claim that they are against it, you don't literally know what they are up to in the closet and what their portfolio worth in bitcoin.ir

Yes, that's right. Fiat will experience devaluation in the long term. And I think that contradicts their monetary policy objective of maintaining fiat stability. If that is indeed their goal, then fiat should not experience devaluation. But we can see the reality. However I feel that the currencies of the world should be the same, where all countries using the same currency. And I think the answer is Bitcoin. Other options are gold and silver. But we know that gold and silver are not scarce. So once again the answer is Bitcoin. The value of Bitcoin does not experience devaluation in the long term. And its decentralized system allows everyone in the world to own it or even access it from anywhere. You may feel that Bitcoin does not need to be made legal tender. But for me, it is necessary to save finances from devaluation.

If we want to be honest with our self, Central Bank policy is completely different from the way Bitcoin work. The way they work is different and it's not like Central Bank want it in the first place, they don't have the means to ban it completely, unless Bitcoin is trying to fit into been a legal tender. In many countries, Bitcoin act as an asset that's why Security Exchange commission are the ones trying to make adjustments but sometimes central comes in since there is transaction involvement. The CBDC you are talking about are thing of 20/21, they are fading out due to lack of adoption. US was exploring it and was about to launch it but along the line, they stopped due to some one or two issues with the new government. Now, there is nothing serious about CBDC development. My country did created one and I can boldly tell you that the CBDC ENaira failed beautifully, one of the worst project central bank sent money for to develop what doesn't have adoption.

Of course, were it not for monetary inflation what exactly would the central banks be doing? Hold meetings and panels on economic data to justify their overpaid and useless jobs? A country that is on the Bitcoin standard is unable to print money, and trying to manipulate the interest rates without the ability to print money is even more dangerous than what they have been doing so far. They don't want to give up the power, they are addicted to it. A lot of people would lose their useless jobs too. Wrong. The EU is set to introduce its CBDC this year. This threat is never going away until bureaucracy and centralized systems are completely destroyed.

It's their timeline that can be missed and delayed many times but at least there is a time point for speculation and expectation too. There are some websites for CBDC trackers. https://cbdctracker.org/ https://www.atlanticcouncil.org/cbdctracker/ Click on their website filters, and type or choose Euro Area, you will see that it's in Pilot Phase.

Good point. Even in a Bitcoin-only economy, Banks can simply offer credit in Bitcoin or altcoins, investment banking (stocks measured in BTC), and other money-related services. Some already today offer Bitcoin HODL services to those who want to be "safe" (e.g. because they're afraid of the "$5 wrench attack" or losing their keys, but on the other hand don't trust "Bitcoin exchanges") and of course Bitcoin-based financial products like ETFs. Even if it doesn't look so at a first glance, this point is very relevant for the importance of Central Banks in relation to Bitcoin, because Central Banks have a symbiotic association with commercial banks: central banks only have power if commercial banks require their services. Thus, if banks give out only Bitcoin or altcoins (everything non-fiat) as credit, then Central Banks' power is gone. Of course this is a theoretic point, that will not made be possible by the regulations probably once one currency comes close to disappear due to BTC. Now I think that describes the relation Central Banks - Bitcoin in the last adoption stages, when Bitcoin is already relevant enough as a currency and not only as a speculative risk asset. In our current early adoption stage however the relation can however be inverted, i.e. "parallel": i.e. if people perceive too much fiat is printed, they could buy Bitcoin, and make it more relevant, while when central banks are more austere, they could lose interest and purchase fiat-based products instead (like bonds). The "M2 vs. Bitcoin price" charts which are circulating in this forum every now and then show that at least sometimes this seems to be the case.

Yeah, nobody in the world would agree to give more BTC or crypto-related services than the tested with time fiat services But with people taking interest, bigger players do the same - and those who will be the first will reap the most attention / people base / profit..

Central banks and Bitcoin have no competition, they have different functions, the former is centralized while the latter is decentralized. Bitcoin was not created to abolish the centralized financial systems, it was created for people and entities that wants privacy where they will be in total control of their finance. Bitcoin provides the opposite of what traditional currencies stands for and it gives us choice to choose privacy or government regulations. The major difference between Bitcoin and fiat is that Bitcoin is a hedge against inflation because of it's limited supply and that is the advantage that it's holders have. Also government policies don't concern Bitcoin if you are holding it in a none custodial wallet.

BTC is not a private blockchain per se, but it is truly the best alternative out there for fiat. And policies may do whatevs, the question is how much they want to go after people that use BTC

The central bank's monetary policy is always based on statistics from inflation, employment, and others. And these data affect the people. Key government officials and big corporations may influence Central Bank policies but it is assumed that it is for the good of the masses. Most governments will not want to make a currency they cannot control a legal tender. In some countries, government regulations are making Bitcoin use difficult without KYC. But to enjoy the privacy and freedom benefits of Bitcoin, one had to strive to avoid centralized systems.