German media outlet Handelsblatt reported a new bill that would make it legal for banks in Germany to hold Bitcoin. The report added that Sven Hildebrandt, Head of Distributed Ledger Consulting said Germany was on its way to becoming a “crypto-heaven.”
Combining crypto and traditional banking is a double edged sword. On one hand, when Canada approves Bitcoin funds, or Bakkt releases an exchange tailored for big investors, holdrs get excited about the price going up. On the other, the actual ingenuity of Bitcoin becomes irrelevant.
Bitcoin is cool because you don’t need a bank to keep it safe and it doesn’t take up room. All you need is to write down a password, hide it, and then never worry about a third party losing your funds. Still, Warren Buffett doesn’t even use a cell phone so who really expects someone like that to create a crypto wallet.
These banks will also be allowed to sell Bitcoin as well, but not buy it back. The demographic of investors that want to buy Bitcoin from a bank and keep it there seem less likely to withdraw it to an online spot exchange and sell it there. This could be good for the bullish case with there being less supply, but then again, the investors will probably be able to find someone to sell it for them.
I can’t help but feel like it’s pointless to buy Bitcoin and give it to a bank. You could easily watch a 5 minute YouTube video and have it be even more protected. If a customer calls up and is able to sell their bag through the bank, that would be more intriguing, but also would make it a full fledged exchange.
I held Bitcoin on an exchange for a long time, but after seeing so many exchange hacks, I found it worth while to create a wallet. In the end, it took way less time than I expected, especially because there are wallets with great user experiences, like Exodus.
There are no size limit to wallets, no fees (other than those inherent to blockchain transactions) and it’s as easy as setting up a Facebook account. With all that, I would be surprised to see an excessive demand for banking Bitcoin.