In A World Of Capital Controls, Bitcoin Reigns Supreme

This is an opinion editorial by Craig Deutsch, organizer of Asheville Bitcoiners, designer of The Bitcoin Game and junior editor at Bitcoin Magazine.

You may have seen or heard about people in Lebanon robbing banks for their own money. They’re no Butch Cassidy, but are just trying to get their own money out of the bank.

Lebanon is facing an economic crisis and banks responded by locking depositors out of their own accounts. As a result, multiple banks have been held up by their customers, who are only looking to withdraw their own money.

Capital Controls And Capital FIt is well known that there are certain countries that have more favorable privacy and tax customs when it comes to banking. With the release of the Panama Papers and the Pandora Papers, finances of current and former world leaders and more than 100 other politicians were released to the public, proving that the wealthy elite have ways to store their money in offshore accounts and shell corporations, while everyday people are locked out of their bank accounts.

The reality of capital controls is becoming more and more apparent as global tensions up. When Russia first invaded Ukraine, there was a story about the wife of a wealthy politician getting caught fleeing the country with suitcases full of dollars and euros. I already listed plenty of examples of countries tightening their citizens’ monetary leashes. It is only a matter of time before people recognize that bitcoin is the solution to monetary restrictions and outright control.

Bitcoin Knows No Borders

According to Western Union, it can take anywhere from 24 hours to five days to send money internationally. From SWIFT’s website:

“There are a number of reasons why cross-border payments may be delayed or held up. Firstly, not all account balances can be updated outside the operating hours of local settlement systems. Delays can also arise if compliance checks need to be carried out, especially when a payment passes through different countries and jurisdictions.”

Let’s unpack SWIFT’s statement and compare it to Bitcoin:

“Firstly, not all account balances can be updated outside the operating hours of local settlement systems.” Bitcoin runs 24/7, 365 days per year. It has been running almost nonstop for over 5,000 days. It is possible and common for users to send money outside of typical business hours, on weekends and holidays. Bitcoin settles transactions with finality in blocks nearly every 10 minutes.

“Delays can also arise if compliance checks need to be carried out, especially when a payment passes through different countries and jurisdictions.” Bitcoin needs no compliance checks. Nodes verify whether the transaction follows the rules of bitcoin, by ensuring the bitcoin is coming from a valid unspent transaction output, and that it is not being double-spent. There are no governments, authorities, people with guns, banks or central third parties that are required to complete the payment. Just miners, who are rewarded in bitcoin by expending energy and for including valid transactions in blocks.

There is nothing stopping me from sending bitcoin to anyone else anywhere in the world, regardless of their country, nationality, race, religion, age or whether or not they are on a sanctions list. Bitcoin knows nothing about its users and it knows no borders.

Bitcoin lives everywhere and nowhere; the ledger of all transactions is stored in a distributed manner on computers called nodes that are running the bitcoin software. If someone is trying to escape capital controls or oppression of any kind, they can leave the country with the clothes on their back and still access all of their bitcoin by remembering their seed phrase and recovering their funds when they get to a safe place.

Leaving one’s country due to capital controls, oppression or war is an extreme example and a majorly useful albeit drastic use-case, but even the ability to travel with a significant amount of funds is an impressive use-case. One anonymous Reddit user claims to have exited a country with $1 million of bitcoin by keeping their seed phrase with them on the flight.

Source: bitcoinmagazine.com