Owning vs Accessing Money

When you put money in a bank, something subtle happens. You don’t own that money anymore — not in the strictest sense. You have a claim against the bank. A legal promise that you can get it back. The money itself belongs to the bank.

This is how fractional reserve banking works, as covered way back in Part 1. Your deposit gets lent out. The bank creates new money against it. Your claim is real, but it’s a claim against an institution, not direct ownership of anything.

For most people, most of the time, this is fine. The claim is honoured. The system works.

But the distinction matters when things go wrong.

Cyprus in 2013: the government seized a percentage of large bank deposits to fund a bailout. People woke up to find their savings had been taken — legally — without warning. Lebanon in 2019: banks froze accounts during a financial crisis. Depositors couldn’t access their own money for years. Argentina has imposed currency controls and withdrawal limits so many times it barely makes headlines anymore.

In each case, people who believed they owned money discovered they owned a promise. And the promise was being rewritten.

Bitcoin in self-custody doesn’t work this way. The private key is the ownership. Not a claim. Not a promise. The cryptography itself. Nobody can rewrite it because there’s no institution holding the other end.

This is what “be your own bank” actually means — not just a catchy phrase, but a description of a genuinely different relationship with money.

Tomorrow: a story — Canada froze bank accounts without a court order. In 2022.

— The Daily Bit