Bitfinex’s “bail-in” scheme after a major theft raised questions regarding its risk and fund management. What can we learn from the recent bail-in event? To answer, a look at the result of the bail-in, and how it differs from central bank bailouts is necessary.
Also read: Bitfinex ‘Leaning Towards’ Bail-In, Haircut for All BTC Traders
With central bank bailout schemes in place around the world, many who are new to the concept of Bitcoin tend to see fiat money in banks as being safer due to its “backing”. However, governments and central banks can refuse any “hand-out” to save failing banks in the event of a crisis.
Understanding Central Bank Bailouts
Wealth is transferred but never destroyed. With this idea in mind, central bank bailouts are simply a transfer of funds from one place to another –– tap the reserves and borrow if