• Jack Mallers, CEO of BTC payment provider Strike, compares the top cryptocurrency Bitcoin to a central bank.
• The first block in the Bitcoin chain, called the Genesis block, contains a newspaper headline from 2008 about banks seeking emergency assistance.
• Despite being created in protest to such policies as those implemented by central banks and governments, central banks bailing out other banks is exactly what they’re supposed to do.
Bitcoin Compared to a Central Bank
Bitcoin is often thought of as digital gold, a speculative investment, an experiment or decentralized replacement for fiat money. However, Strike CEO Jack Mallers has recently compared it to a central bank — more specifically the “central banking system of the internet.”
The Genesis Block
Within the coinbase of the first block in the Bitcoin chain (known as the Genesis block), there is text that reads “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This refers back to efforts by governments and central banks to save smaller banks from collapse during The Great Financial Crisis of 2008.
Central Banks are designed to control money supply, inflation and interest rates as well as act as lender of last resort — preventing bank runs which occurred prior to 1929 Wall Street Panic. Despite Bitcoin being created in protest against these policies which citizens have no say in — it is ultimately what they are designed for.
Internet Banking System?
This raises questions over whether it is accurate enough to call Bitcoin “the ‘central banking system of the internet'”, or compare it at all with traditional centralized banking systems.
BTC vs Stock Market Since 2008
To help understand this debate further we can look at how BTC performance has compared with stock markets since The Great Financial Crisis. From 2009-2019 BTC rose from 0-3200% while S&P500 stocks grew approximately 180%.