The Bank of Bitcoin: A Paradigm Shift in Equity Distribution

You pay to play with banks. You get paid to play with Bitcoin.

Crypto Futurist
3 min readJul 27, 2023

In the traditional banking system, shareholders reap the rewards of a bank’s profitability, while customers only benefit indirectly through services and interest rates. However, the emergence of decentralized cryptocurrencies like Bitcoin has introduced a revolutionary concept — “The Bank of Bitcoin” — where equity distribution takes on a whole new meaning and fosters a more inclusive and democratized financial ecosystem.

Redefining Equity in the Bank of Bitcoin

In the Bank of Bitcoin, the notion of equity goes beyond the conventional understanding of shareholder profits. Instead, the equity is collectively owned and distributed among all holders of the native currency, i.e., Bitcoin.

That’s because the supply of the currency used in the Bank of Bitcoin, or the unit of account, if you will, is limited to 21 million bitcoins. So, if you want some bitcoin, you must buy it from someone else. You essentially pay them to take their place in the Bank of Bitcoin’s immutable ledger.

In traditional banks, any increase in equity (profits) is attributed to shareholders. Unlike the fiat banking system, because the supply of bitcoins is limited, any increase in equity—meaning, specifically, the market cap of BTC—directly benefits all holders of the currency of the Bank of Bitcoin, pro rata.

The Absence of Overhead Costs

Traditional banks bear significant overhead costs, including maintaining physical branches, staffing, security, and other operational expenses. In contrast, the Bank of Bitcoin operates on a decentralized blockchain network, eliminating the need for physical infrastructure and reducing administrative expenses.

In the Bank of Bitcoin, miners play a vital role in maintaining the security and integrity of the blockchain. As more users participate in mining and contribute to the network’s security, they, too, share in the benefits through their newly acquired Bitcoin rewards.

Yes, mining costs money. However, miners compete for equity in the system (block rewards and fees), keeping ledger validation costs low—far lower than centralized data centers.

This democratized approach to validation also ensures that no single entity controls the currency or equity distribution.

Stumping the astronomical overhead baked into the traditional financial system allows for more efficient operations and more equitable distribution of resources, as more value can be directly channeled to cryptocurrency holders.

Incentivizing Long-term Participation

The Bank of Bitcoin’s equity distribution model encourages long-term participation and responsible stewardship of the cryptocurrency. Unlike traditional banks, where shareholders may prioritize short-term profits, Bitcoin holders are incentivized to hold onto their assets, increasing the currency’s value and contributing to its stability over time.

This long-term mindset is what makes Bitcoin a store of value. As more and more people buy and hold BTC, fewer bitcoins are available to buy. The reduced supply and increased demand raise the price.

Yes, the price can also fall if demand falls. However, currently, about 70% of bitcoins are held by long-term holders. The ratio of liquid supply to store-of-value is expected to continue to shrink in the coming years until the supply gets crunched down to a single digital portion.

Rising global liquidity (caused by fiat money printing) is a significant driver of the appreciation of traditional store-of-value assets like gold and real estate. But for Bitcoin, so are long-term holders. The exponential rise in long-term deposits in the Bank of Bitcoin assures that the price of BTC will grow far faster than inflation making it the best store of value ever conceived.

Conclusion

The concept of the Bank of Bitcoin represents a paradigm shift in how we perceive equity distribution within a financial system. By embracing decentralization, transparency, and inclusivity, Bitcoin’s equity model ensures that benefits are shared among all currency holders rather than solely benefiting a select group of shareholders.

The Bank of Bitcoin stands as a shining example of a more equitable and people-centric approach to finance. This democratized approach empowers individuals, fosters a sense of community, and encourages responsible participation in the financial ecosystem.

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Crypto Futurist

Pace LaVia is a freelance reporter specializing in cryptocurrency, renewable energy, and other future technologies.