Into the bank or into bitcoin?

Into the bank or into bitcoin?

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Many ordinary people must be wondering why prices have skyrocketed and why they are finding it more and more difficult to get by. Is it best to just keep holding your wages in the bank, or is it time to get them into another asset, like bitcoin, that can offer some protection?

Banks have morphed into very different organisations

Banks have been with us a very long time. Previous generations might have been far more respectful of banks, recognising a need for their safety and security, or a potential place to get a much needed loan.

However, these days, the role of banks seems to have very much changed. Instead of the secure and risk aversive establishments we used to know, banks appear to have morphed into risky corporations that have been granted huge powers over those whose money they hold.

Fractional reserve (having to hold at least a small portion of your customer’s funds in the bank) has gone out of the window, and now some banks are all in on risk, somehow confident that if the risk should prove too much, the government will just bail them out, obviously with taxpayer’s money or with money printed out of thin air that just dilutes the purchasing power of all ordinary citizens.

What do banks provide us with now?

Banks offer ‘services’ to all their clients, in that they look after their money and also offer loans and various other financial services. So what does the client get out of this? For holding their money, banks give their clients a very small percentage in interest of around under 2%. In the UK, the NatWest Bank offers 4.6% for a fixed rate savings account.

With inflation having been extremely high in the UK over the last couple of years, these interest rates leave the banks’ customers below water. This is without taking into account how central banks have printed enormous amounts of currency since 2022 which has led to people’s purchasing power dwindling at an alarming rate.

Banks no longer fit for a digital age

Banking establishments are very often extremely grandiose, and even though bank branches are being closed at a fast pace, having these establishments in a network across entire countries, with all the maintenance, staff, and upkeep required, must cost a pretty penny, in a day and age when much of this type of business is being carried out online.

Who then would be paying for all this? The customer of course. And on top of this, the bank will tell their customers exactly who they can and who they can’t send money to.

Scams abound in both banking and crypto

Many banks in the UK will not let their customers buy cryptocurrency, and this includes bitcoin. The reasoning is that crypto is a scam, used for money laundering, and for terrorist financing. 

However, if one does a simple Google search for bank fines paid by the major banks for all sorts of criminal activities, including those just mentioned, what is revealed is startling beyond measure.

If crypto companies carry out such activity then they should face the full force of the law. There is no argument with this. However, tarring the whole crypto industry with this same brush is simply wrong, and is done in order to protect the banks, who cannot cope with the competition from a world that is leaving them behind.

Get educated

Therefore, it behoves all those who want to get the most out of their hard-earned money, to do their due diligence into what is the best way for them to protect what they have.

Bitcoin is arguably the least risky of the cryptocurrencies. However, it is still volatile, and large swings up and down can still be experienced. However, if the investor is looking out over the next few years to actually be able to save and grow their wealth, this could be an option.

The alternative is to continue to hold money in the bank, which is losing its purchasing power at an accelerating rate. It should also be borne in mind that every single fiat currency in history has eventually lost all its purchasing power and has gone to zero. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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