GrunkleBitcoin

I asked perplexity if I payed for friends and family bills with BTC would that break banking ledgers. I fear that financial governance will never be broken. My great grand children will still be financial slaves. Paying in BTC for others does not “break” banking ledgers in a technical sense, but it can route economic activity around them and erode their relevance and fee revenue if done at scale in a circular way. In practice, this looks less like crashing the banking system and more like gradually shrinking the share of payments and savings that ever touch bank rails.[1][2][3][4] ## What BTC payments actually do to banks - **Bypass, don’t delete, bank records** - When you settle value peer‑to‑peer in bitcoin, the transaction never appears on bank payment rails, so no deposit/withdrawal/transfer entry is created in the bank’s internal ledger for that flow.[2][5] - Banks still maintain ledgers for any fiat accounts involved (payroll, taxes, occasional on/off‑ramps), but a growing slice of “real” commerce can clear without generating banking entries at all.[4][1] - **Erode fee and data streams, not core accounting** - Studies on blockchain and banking show that decentralized payments can significantly reduce traditional transaction costs and the role of intermediaries in processing and settlement.[3][6] - As more people pay and get paid in crypto within circular economies, banks lose payment fees and behavioral data, even though their ledgers for remaining deposits and loans continue to function normally.[7][1][2] ## Role of circular and proxy payments - **Bitcoin circular economies** - BTC‑based local economies (e.g., “Bitcoin Beach”-style communities) show that wages, retail spending, and savings can circulate largely outside the banking system while remaining economically meaningful.[8][1] - In these setups, bank ledgers see only infrequent bridge transactions (e.g., occasional fiat inflows or compliance‑driven exits), while most day‑to‑day flows settle on the Bitcoin ledger or L2s.[6][1] - **Paying “on behalf of” others** - If you pay merchants or counterparties in BTC on behalf of people who would otherwise use cards or bank transfers, you are effectively proxy‑routing their demand away from bank rails and replacing multiple card/ACH entries with on‑chain or Lightning entries.[2][6] - That reduces transaction count and fee volume in banking systems, but unless it becomes systemic, it shows up as gradual disintermediation, not as broken accounting inside banks. ## What it would take to truly stress banks - **Scale and substitution threshold** - Empirical work on crypto and banking suggests that cryptocurrencies become a serious threat to banks only when a substantial portion of daily payments can be handled directly in wallets, bypassing accounts and fees.[4][2] - To move from “nuisance” to “structural stress,” BTC payments would need to capture a meaningful share of deposits (as stores of value) and recurring payments (as a medium of exchange), shrinking banks’ low‑cost funding base and fee lines at the same time.[3][4] - **Likely response from the system** - As blockchain‑based payments grow, banks and regulators tend to respond by integrating crypto rails, issuing their own tokens or stablecoins, or tightening rules on on/off‑ramps rather than letting their ledgers become obsolete overnight.[5][9][3] - This means the more realistic outcome is coexistence and partial migration of payments off bank ledgers, not a clean “break,” unless policy or crisis dynamics accelerate the shift dramatically. So, paying in BTC for others can meaningfully hollow out the role of bank ledgers as the default record of economic life if it becomes widespread, but it undermines them by substitution and circumvention, not by directly corrupting or crashing their internal accounting. Sources [1] The Power of Bitcoin Circular Economies - D-Central Technologies

D-Central

The Power of Bitcoin Circular Economies - D-Central

In the digital age, Bitcoin has emerged not just as a pioneering cryptocurrency but as a beacon of financial innovation, challenging traditional mo...

[2] Is Traditional Banking Under Threat from Cryptocurrency? - Koombea

Koombea

Is Traditional Banking Under Threat from Cryptocurrency?

Have you noticed that more and more online businesses seem to state that they will accept Bitcoin as payment? This is cryptocurrency in action…

[3] Analyzing the impact of blockchain technology on banking ...

Frontiers | Analyzing the impact of blockchain technology on banking transaction costs using the random forest method

[4] [PDF] Cryptocurrency Adoption and Its Effect on Traditional Banking Systems 📄.pdf [5] How Blockchain Revolutionises Cross-Border Payments - Thunes

How Blockchain Revolutionises Cross-Border Payments | Thunes

[6] Off-Chain Transactions: Overview, Benefits, and What Matters to ...

Off-Chain Transactions: Overview, Benefits, and What Matters to Enterprises

Uncover the role of off-chain in blockchain, its advantages, and challenges, and learn how Kaleido expertly integrates off-chain and on-chain eleme...

[7] How does the use of cryptocurrency affect circular economy ... https://www.sciencedirect.com/science/article/pii/S2666790824001150 [8] Crypto Circular Economy: Promoting Sustainability in Finance

simple.app

Where cash meets crypto

Simple is a crypto and fiat neobank, helping you manage your finances within one secure platform for all transactions.

[9] Stablecoins payments infrastructure for modern finance - McKinsey https://www.mckinsey.com/industries/financial-services/our-insights/the-stable-door-opens-how-tokenized-cash-enables-next-gen-payments [10] Circular Economy and Central Bank Digital Currency - PMC

Circular Economy and Central Bank Digital Currency - PMC

The emergence of central bank digital currency (CBDC) provides an opportunity for central banks to make an important contribution to the transition...

GrunkleBitcoin yesterday

Every movement has a spearhead. But it’s the staff drives adoption.

GrunkleBitcoin yesterday

Capture and control. We are Doomed.

GrunkleBitcoin 4 days ago

Bank controlled governance in all its glory!

GrunkleBitcoin 5 days ago

I can see it going this way. Using "Blockchain" to compete with BRICs. In your best Trump voice........WRONG A BTC‑collateralized, dollar‑interfaced energy bloc can be specified as a layered system: Bitcoin is the treasury asset and settlement rail for cross‑border energy and capital flows, while invoicing, accounting, and taxation remain in fiat (primarily dollars and local currencies).[1][2][3] ## 1. Actors And Balance Sheets **Core actors** - Sovereign treasuries and central banks in the Americas holding BTC as part of reserves, alongside dollars, Treasuries, and gold, under Strategic Bitcoin Reserve‑style frameworks.[3][1] - State‑owned or aligned energy companies (oil, gas, hydro, geothermal) holding BTC as working capital and collateral for export contracts and BTC‑backed bonds, similar to how El Salvador’s LaGeo underpins the “volcano bond” concept.[2][4] - Regulated financial intermediaries (banks, brokers, exchanges, custodians) providing BTC custody, hedging, and settlement services, building on growing institutional BTC demand and futures infrastructure.[5][6] **Balance‑sheet design** - Treasuries allocate a defined share of reserves to BTC under statute (e.g., BTC acquired over time, locked for a minimum horizon, with explicit reporting), echoing the BITCOIN Act’s Strategic Bitcoin Reserve proposal.[1][3] - Energy firms hold a BTC “buffer” sized to several months of export revenues, used to settle net positions with counterparties and to back BTC‑linked debt instruments (e.g., volcano‑style bonds financing new energy capacity).[4][2] ## 2. Contract And Settlement Architecture **Invoicing vs settlement** - Long‑term energy contracts (oil, LNG, electricity) are **invoiced** in dollars or local fiat for legal and accounting clarity, but include a clause that final settlement may occur in BTC at an agreed reference rate (e.g., daily VWAP from a designated BTC index).[5][2] - Day‑to‑day tax liabilities, salaries, and local prices remain in fiat; firms convert BTC settlement receipts into domestic currency as needed for obligations, preserving familiar unit‑of‑account conventions.[7][4] **Settlement flow** - On delivery, the buyer’s bank or energy trader instructs a BTC payment from its custodian or L2 channel to the seller’s designated on‑chain address or institutional wallet, with the fiat amount notionally converted at the agreed BTC/USD rate.[6][5] - If either side is constrained by sanctions or banking access, they can still adhere to the nominal dollar price while practically settling net flows in BTC, as seen in Venezuela’s use of crypto rails around sanctions.[8][9] ## 3. Risk Management And Market Infrastructure **Hedging BTC exposure** - Because invoices are fiat‑denominated, both exporter and importer hedge BTC price risk using listed BTC futures and options (CME, Coinbase Derivatives, etc.), which already offer cash‑settled contracts of various sizes.[10][11][12] - Central banks and sovereign funds can manage BTC share of reserves via long‑dated derivatives and rebalancing rules, similar to how they manage gold and FX portfolios, using institutional frameworks now being built out.[6][3] **Custody and compliance** - Sovereign BTC holdings are stored in multi‑site, hardware‑secured custody networks with strict key‑management rules, mirroring the Strategic Bitcoin Reserve’s envisioned decentralized custody facilities.[3][1] - Regulated custodians provide segregated accounts for state entities and energy firms, with clear reporting standards to satisfy auditors and rating agencies while still allowing on‑chain settlement.[6][3] ## 4. Legal, Tax, And Reporting Layer **Accounting and tax systems** - BTC is classified as a reserve or investment asset for states and as inventory/financial asset for firms; realized BTC gains and losses are measured in fiat for tax and reporting, using standard mark‑to‑market rules.[7][3] - Tax codes continue to assess corporate income, VAT, royalties, and payroll in fiat terms; even where BTC is legal tender, as in El Salvador, practical tax assessment and financial statements remain largely dollar‑based.[2][4] **Disclosure and regulation** - Sovereigns publish periodic reports on BTC holdings, acquisition methods, and valuation, modeled on the public transparency requirements in proposals like the BITCOIN Act.[1][3] - Payment stablecoins are regulated under statutes similar to the GENIUS‑style frameworks, so dollar‑stablecoins coexist with BTC in the bloc, enabling on‑chain fiat‑proxy liquidity while BTC remains the ultimate savings and settlement asset.[3] ## 5. Bloc Coordination And Capture Points **Coordination mechanisms** - Member states sign MOUs or treaties committing to: - Maintain some BTC reserves. - Accept BTC for a portion of energy exports. - Harmonize KYC/AML rules for BTC settlement channels.[7][3] - A regional body or working group (similar to OPEC‑type forums) periodically reviews BTC usage, reserve targets, and standard contract terms, updating reference indices and legal language as markets mature.[7] **Capture and control surfaces** - Because custody, derivatives, and compliance rails are run by regulated entities, the bloc’s BTC flows remain subject to blacklisting, margin constraints, and pressure from U.S. and allied regulators, as illustrated by sanctions actions against crypto intermediaries used for sanctioned oil trade.[13][14][8] - The design therefore creates a layered reality: BTC is the hard reserve and settlement rail, but policy leverage still operates through regulation of exchanges, custodians, futures venues, and stablecoin issuers that sit between miners/treasuries and end users.[13][6][3] [1](https://www.congress.gov/bill/118th-congress/senate-bill/4912/all-info) [2](