Friday, May 3, 2019

$212M in Bitcoin Moved for Just $4, Do We Still Need Banks?

Coinspeaker
$212M in Bitcoin Moved for Just $4, Do We Still Need Banks?

The crypto world is always buzzing with activities. Latest reports reveal that an infamous Bitcoin ‘whale’ has moved a large amount of cryptocurrency in a single transaction. The whale, known as ‘Loaded’ is an old-school investor. They are famous for their posts on mainstay forum BitcoinTalk. The investor has held 40,000 BTC for years and they move it around often.

This time, Loaded paid the Bitcoin blockchain just 0.00074227 BTC ($3.93) to send $211.9 million worth of censorship-resistant digital money. In January 2018, Loaded moved 40,000 BTC ($435 million) for a fee of a mere 0.0001 BTC ($1.09). We also reported another instance in October 2018 where a user moved $194M in BTC with $0.1 fee.

Until now, fierce debates revolve around the capacity of Bitcoin and altcoins to serve as a route for multi-million transactions. Some naysayers doubt the ability of digital currencies to ultimately replace the conventional banking system with seamless blockchain. The latest transaction has again proved that any crypto user can transfer any amount cheaply, directly, and without prior approval requirements.

Some members of the crypto community state that nobody can prove that it is Loader who moved the money this time. However, analysts and commentators believe that it is ‘Loaded’ since nobody else is known to have held that same amount of bitcoins for years.

Loaded prefers ‘SegWit’ Bitcoin address for cheap fees

Back in January 2018, the price of bitcoin was still above $11,000. At that time, Loaded moved their 40,000 BTC ($435 million) and paid a smaller fee of 0.0001 BTC ($1.09) for the transaction. Apparently, it is evident that transaction fees have increased since last year. In the instance of bitcoin, the users come up with their own network fees.

On the other hand, other major payment networks like MasterCard and Visa charge set amounts to use their centralized infrastructure. Loaded’s Bitcoin address is a little bit unique. It starts with ‘bc1’ indicating that it uses Segregated Witness (SegWit) technology.

SegWit enlarges Bitcoin‘s ‘block size limit’ from 1MB to almost 4MB. The enlargement enables miners to fit more transactions into one block. Thus, more transactions can be confirmed concurrently. For the SegWit users, it results in smaller fees. On the other hand, Bitcoin‘s backlog of unconfirmed transactions reduces drastically as users (and wallets) take up the scaling technology.

That serves as a reminder that Bitcoin is actually a “peer-to-peer electronic cash system.” The system supports transactions of hundreds of millions of dollars without seeking permission from anybody. All these transactions cost a few bucks at a time.

Challenges of Withdrawing $1M from a bank

Whenever one goes to any bank to withdraw $1M they always ask for a reason. Why do they ask yet when the depositing was done they never asked any questions? The banks come up with reasons for not allowing the withdrawal of such an amount. They have come up with a list of things that customers must fulfil before they are authorized to withdraw large amounts of cash.

The banks need their customers to meet with the IRS who will then analyze the reasons for the withdrawal. Once the IRS permits the customer to withdraw, the bank needs the customer to come with security while withdrawing large amounts. In some instances, the banks strongly suggest that a cashier’s check is better than cash.

IF one needs cash, they should take cash and not cashier’s checks. Banks also suggest that one should take financial training classes before withdrawing large amounts. That is a ridiculous proposition considering that the account owner already knows about finances. The account owner is financially knowledgeable that is why they have accumulated millions into their account.

Banks also require customers to order cash whenever they want large amounts. Ordering in advance is necessary since their vaults may not hold such large amounts. All these restrictions are nonexistent in the crypto world. Hence, digital currencies are better than fiat and banks whenever executing transactions involving large amounts of money.

$212M in Bitcoin Moved for Just $4, Do We Still Need Banks?



$212M in Bitcoin Moved for Just $4, Do We Still Need Banks?

Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries.


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