This is an opinion editorial by Thibaud Marechal, builder of bitcoin custody provider Knox.
There has been a lot of coverage around the catastrophic failure of FTX, with current developments and warning signs from the past. Will this have an influence on bitcoin in the years to come? I don’t care about shitcoin casinos because most of them will likely be regulated as stock exchanges or shut down due to fraud or outright insolvency. It’s almost done. But what about bitcoin?
Let’s play, play and speculate on the effect FTX will have on the future of bitcoin.
Bitcoin usage will split – gradually then suddenly. It has been in the works since the production of the genesis block on January 3, 2009. There will be two ways to use bitcoin: as black market property or as paper bitcoin on regulated exchanges. This future has almost always been true, but the distinction will soon become clearer. What do I mean by that?
Regulators will regulate; that’s what they do. Bitcoin cannot be regulated, but guard ramps such as exchanges, brokers, and lenders can and will be attacked. Self-custody will most likely be regulated out of the market for most buyers. It will become very difficult to buy bitcoin and take full custody of them on these sites – maybe even nearly impossible. This date is coming soon.
Quick, announce! You still have time before the access ramps close, but how much? Three years or six months? The timeline is unclear. It will soon be impossible to buy bitcoins on an exchange and place those bitcoins in self-custody where you hold your own keys. Most custodial entities — which are trusted third party — will be prevented from allowing users to opt out under the guise of regulatory compliance and consumer protection. You are going to buy paper bitcoin, i.e. fake bitcoin: these are IOUs to gain artificial exposure to the price of bitcoin. You will not be able to claim this IOU and redeem it. Want to keep that bitcoin with keys you control? Forget it, because it will be very hard. Few exchanges will allow users to self-guard and fewer will fight for the right to financial sovereignty. All they will do is sell bitcoin paper or shut down operations for most businesses.
On the one hand, people will buy bitcoin IOUs on custodial entities, forgoing all KYC (know your customer) details, automated tax reporting and no privacy. Bitcoin is going to be used as the underlying asset of the global financial monitoring network, the likes of which we have yet to see. Regulated companies will form a compliance web on top of Bitcoin and prevent you from holding what might have been truly yours. Maybe they’ll even wrap it in a central bank digital currency (CBDC) to protect you against bitcoin’s volatility. You will buy paper bitcoin and you will be happy.
On the other hand, bitcoin will thrive as the tool it always should be: black market money. This will be the start of a new era for Bitcoiners who have no fiat, i.e. Bitcoiners who run full nodes, have full privacy and pay peer-to-peer stuff with their sats hard earned. CoinJoins will be the norm for most users to only share what they want with whom they want in order to protect their personal information from surveillance by on-chain analytics companies. Some will call it a circular economy, others will call it the black market. It will work 100% on trusted networks. Bitcoin will be purchased without KYC between peers, using cash or bank transfers where possible. It will be a small breath of fresh air in the age of digital surveillance and it will last until the rest of the bogus Bitcoin network, suffocated by regulation, finally collapses under its own weight due to massive amounts. fractional reserves. Bitcoin will have succeeded in freeing itself from all state intervention and financial parasites, but this path will be long and winding.
Until then, the price of bitcoin could be severely suppressed for many years and self-custody could be demonized, with heavy fines and government-sponsored intimidation similar to Executive Order 6102. Are you ready, soon? Don’t miss. This is your chance to redeem yourself and choose what is right for you and your family. Until then: tick tock, next block.
This is a guest post by Thibaud Marechal. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.