Well, I guess you're asking a few questions:

1) Is a world where many users use ewallets/ebanks more centralized than a world where everyone uses their own client software?  Answer: yes.

2) Isn't that increased centralization a problem? Answer: not necessarily.

People need to distinguish between coercive centralization and voluntarily centralization. Centralization of government power, for example, is bad, because people are being coerced into doing what they'd otherwise not do - this is problematic morally, but also can lead to harmful real-world consequences. BUT, this is wholly different than voluntary centralization.

Take the example of Walmart (huge mega-retailer here in the US). Walmart has centralized the distribution of products, and you can find anything you want inside the store. So is this harmful in the same way that coercive government centralization is harmful? I don't think so. If centralization is occurring, but it's occurring voluntarily based on market signals, then that should be taken as a sign that efficiencies and value are being created by that centralization. When the centralization is forced, however, it is unlikely that efficiencies and value are being created (if they were, then the centralization would have occured voluntarily anyway), and thus such coercion should be fought against and resisted.

Bitcoiners are happy to fight against the coercive centralization in the realm of money (vis-a-vis central banks and fiat currency), but sometimes that justified antagonism spills over into also fighting against voluntary centralization, which is problematic.

Centralization can be good or bad, and it typically depends on whether it's occurring under coercion or by choice. If Bitcoiners in the future tend to centralize funds held via ebanks, then so be it. A) there's nothing you can morally do to stop it (other than pleading with people) and B) it likely represents efficiency and value gains which ought not be interfered with anyway.  

Does this make Bitcoin less "safe" or less "secure" with voluntary centralization? I'm not sure... it's possible that if safety/security is handled largely by professional private institutions, we'd see a safer and happier blockchain than if it could not be centralized in such a way. Admittedly, some degree of decentralization is lost in this process, but security gains from other dynamics may compensate for this. Also, perfect security is only achievable by spending infinite funds... thus there is always a tradeoff between security and efficiency. The marketplace might discover that the optimal balance means most funds are held by ebanks (but again, you always have a choice to hold your own!)

If all Bitcoins were held at a handful of large US banks, then I'd be worried. But that will never happen, and thus I am not bothered by some marginal or even significant voluntary centralization short of that occurrence.

An "abduction pin" would have helped in this case.  Too bad the banks don't offer this.

Put in the pin and the cops are silently notified.  Balance could be reported as overdrawn or allow access to a subset of funds.

On the other hand, Bitcoin offers some good reasons to not to use banks at all.


You don't need to let third parties in control of your information. You could hide the information from yourself and set a time for it to be released, using the timestamp. Time is your bank.

I don't know how nLockTime works, but if it does what it says...


Somehow this could be automated.

Banks lend a theoretically limitless supply of money into existence using a debt-based mechanism that would never mathematically work (compound interest) with a finite number of currency units, such as bitcoin. The only way banks could utilize bitcoins under their present and historical lending architecture would be to use bitcoin as a reserve currency unit upon which notes would be fractionally lent–––like issuing 2 MtGox btc codes for every 1 btc on reserve. Double spending is a nonissue as long as people spend the MtGox codes in lieu of actual bitcoins and never redeem them. Banks once similarly lent gold certificates based upon physical gold reserves, yet these certificates devolved into the purely fiat money we use today. Cent-per-cent gold convertibility or bitcoin convertibility of notes may seem fine and may appease people for some time, but it's a slippery slope towards centralized money. But why use a proxy for bitcoins, when one can use actual bitcoins?

This fractional lending is the tool used by banks to cause the recent crash. Because eventually, you've lent $1000 out, and sold that debt, but only have $100, and realize the $1000 can't be collected, making the debt worthless.

"Natural selection" and "Survival of the fittest" would deem that your organization fall, and in a BTC economy, you'd need real BTC to bail you out. In the current setting however, the reserve just prints more money, diluting the existing value of the $ as a whole, and the bank continues to run its scam.

So I guess a more focused question would be, would the world as a whole be better served by a currency like BTC, where the network doesn't care if your economy collapses due to a shortage of reserves?

The crash was caused more by artificially low interest rates that allowed the economy to grow too fast causing supply to outpace demand and then causing prices to drop.

And to answer the OP; No I wouldn't trust banks with bitcoins.  Banks are highly regulated by the government and it would be counter to the advantages of bitcoins to do that.  In truth, bitcoins are best suited as a means of transferring wealth (possibly as an international standard of exchange) and not as a store of wealth.  It is interesting to see the recent price stability but the price is mostly speculation driven. The US currency money supply and interest rates are controlled by the Fed to minimize inflation and wild changes in prices, even to the point of allowing big increases in unemployment.  Bitcoin has no control mechanism, actually large mining pools could exert some control with changes in fee rules but there would be a huge backlash from that.  The Fed is independent from the normal governmental institutions so they can make unpopular, but necessary, changes, much like how the Supreme Court is unelected.

Investment banks are already eyeing bitcoin.
(Commercial banks? Not so much.)