Bitcoin a solution to fractional reserve banking

7 Reasons Why Bitcoin is Better than Banking

Peer-to-peer technology is placing more power in the hands of individuals and Bitcoin is a serious upgrade to our money. Decentralization is Bitcoin’s “killer app” and there are several things it can do better than traditional banking. 

#1: You don’t need permission to use it

keys to freedomAccess to banks and credit cards are entirely at the discretion of the banks. There are over a billion people in the world who don’t have access to a bank account. Other people are flat out rejected from opening an account. 

Opening a bank account or applying for a credit card requires filling out long forms and signing contracts that never work in your favour. Bitcoin is free to use and accessible to anyone without limitations. 

#2: There are no spending limits

Fiat operates through fractional reserve banking which means that not everyone can access their money at the same time. For this reason banks need to limit purchases and withdrawals with daily spending limits. 

Bitcoin doesn’t have any spending limits which means you can send as much money as you need. Doesn’t this make better sense than being told how much of your hard earned money you’re allowed to spend?

#3: Quick International Settlement

Have you ever had to wait several days for a bank wire to clear? Although domestic settlements within the same jurisdiction has become more efficient, international trade between banks still has a time delay. 

With Bitcoin, transactions are received instantly and it usually only takes an hour for proper confirmation. The current banking system is outdated and even if they could settle instantly they’d likely still hold on to your money to turn a profit on investments. 

#4: 24/7 Access

Since banks are a permissioned system, your funds are not always available to you. In fact, there are many historical examples of bank runs when depositors are unable to access their money. 

With Bitcoin, as long as you keep your private keys secure you can access your money 24/7. Bitcoin is a global payment system that never stops running and is not limited by “business hours of operation.”

#5: Your Account Cannot be Levied 

When you keep your money stored with a third party you are at their mercy. There are several examples of people unjustly having their banks levied. Recently, governments around the world are being forced to implement bail-in policies. Bail-ins prop up failing banks by going after bond holders and uninsured deposits.

With Bitcoin, as long as you keep your private keys secure from hackers then nobody can touch your money. All coins are locked on the public ledger and private keys determine ownership. There are now private keys based on 24 randomly generated words that you could memorize and store without a trace. 

#6: Lower Fees

currenicesBitcoin is the cheapest way to send international payments. As someone who works online, I’ve tried many different payment options and Bitcoin is the cheapest.

When I send bitcoins, I pay the priority mining fee of .0005 (20 cents). I get paid in bitcoin and when I need to cash out I use the “no fees” option with Quadrigacx. There’s a 0.5% trade fee to sell my coins for CAD but this fee is offset by the 2% arbitrage I make off of the disparity from the USD/BTC to CAD/BTC markets. In the end I actually make an additional 1.5% in profit during the currency conversion. If I pay an additional fee I can have the money in my account on the same day, with arbitrage that still doesn’t cost me a cent. 

Other payment methods (estimates): 

  • International bank wire: between $22-$50 (1-3 days)
  • Paypal: 2.9% plus $0.30, 2.5% foreign exchange fees (takes 3-5 days to deposit into account)
  • Remittances: Between 9-13% (usually takes 5 minutes)
  • Credit cards: 3-5% for merchants, for consumers (assuming you pay on time) annual fee $0-$200, 2.5% foreign currency conversion, many addition fees and interest charges for late payment. 
  • Other e-wallets: There are many different e-wallets but transactions can range from 2-4% on foreign exchange fees, a % or fixed fee for sending and receiving payments and 1-5% for deposits/withdrawals into your bank. 

Most typical Bitcoin payment processors like Coinbase will charge a flat 1% fee for converting bitcoin into your local currency. If Bitcoin ever becomes a globally recognized currency for paying bills then all costs will be reduced to a simple mining fee. 

#7: Your Bitcoins are not IOUs

Many people aren’t aware that the money in their bank accounts are credits that represent a promise to pay. The entire fractional reserve banking system is one massive debt bubble that resembles some sort of elaborate ponzi scheme. Ponzi schemes pay old investors dividends with money coming in from new investors. The global financial system will pay interest on old debt with the creation of new debt. Both schemes have a similar effect of growing the size of the debt because true settlement is impossible. 

debt slave


With Bitcoin your money is cryptographically locked on a public ledger and each coin represents an actual unit of value and not just a promise to pay value at a future date. 




Rocky is a cryptocurrency analyst, strategic consultant, educator, position trader and investor. He started his journey learning about Bitcoin in 2013, became obsessed with it and dropped everything to work full-time in the space since 2015.