The crypto crash proves it – Bitcoin’s libertarian dream is over Business

While the freezes were bad news for Bitcoin investors who are already suffering from a historic downturn, they also expose a contradiction at the heart of the cryptocurrency world.

Despite all the industry promises to decentralize finance, those who have traded their money for crypto have done little more than trust one financial guardian over another.

Binance and Celsius customer savings were no longer free to be in Bitcoin. They were always subject to the whims of an intermediary with the power to close its doors and cut off users, as they would with a bank.

The main difference is that if a cryptocurrency company goes bankrupt, there are no regulations protecting deposits.

Yes, Bitcoin technically operates independently of any institution or country, governed solely by the computer code and network of “miners” that maintain it. That is why, strictly speaking, it can never be regulated. You can download your bitcoin to a hard drive and truly own it.

But most people don’t: it’s not worth the effort or the risk. Instead, they store their cryptocurrencies in an online exchange where they can be easily withdrawn and liquidated.

Convenience trumps idealism and, as the current crop of Silicon Valley monopolies has shown, consumers are drifting toward centralization.

Once in an exchange where it can be converted, Bitcoin must interact with the rest of the financial system, which subjects it to regulation.

Coinbase, one of the largest exchanges in the world, handles hundreds of law enforcement requests per week. Those operating in Britain are regulated by the Financial Conduct Authority. Criminals are finding it increasingly difficult to convert stolen cryptos into cash, as they are often seized when they enter an exchange.

As cryptocurrency companies come under closer scrutiny, they will begin to look less representative of the libertarian ideal on which Bitcoin was founded and more like the aging banks they were meant to replace.

At this point, one might begin to wonder where its value comes from. If a few companies have the power to crash the entire market, Bitcoin doesn’t look so free after all.