Bitcoin (BTC) set a new record for daily transactions on the same day the US government ordered a bank buyout

On Sunday, as the US government worked behind the scenes with two major banks to draft the latest financial rescue plan, the Bitcoin network hit a new all-time high for the number of daily transactions processed. That was more confirmed transactions than it has ever had in its 14-year history, beating the previous record set during the 2017 bull run. Today, JPMorgan Chase bought First Republic after the troubled bank’s assets were seized by regulators, and became the second largest bank failure in US history.

While the two events – Bitcoin’s growing use and the latest example of US financial disaster – are not exactly related, the timing here suggests something about the future of the crypto industry and bitcoin’s possible place in an increasingly dysfunctional economy. As regulators and lawmakers work to slow crypto’s entry into the broader economy, the private banking sector is proving unable to govern itself.

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After weeks of uncertainty and a falling stock price, First Republic was taken over by the Federal Deposit Insurance Corporation (FDIC) in an attempt to prevent a possible bank run, further contagion and withdrawal of the insurance fund’s reserves. The federal bank watchdog immediately sold “everything off [First Republic’s] deposits and pretty much everything [its] assets” to JPMorgan Chase, the largest US bank, which was also given $50 billion in financing to complete the deal. Democratic politicians are likely to challenge the sale, which was reportedly rushed through to close before markets opened on Monday.

“Our government invited us and others to step up, and we did,” JPMorgan CEO Jamie Dimon said. Crypto fans may know Dimon as one of the most high-profile proponents of “blockchain” and a longtime bitcoin critic. First Republic’s failure is second only to Washington Mutual, which failed during the Great Financial Crisis that also gave birth to bitcoin. While some of the blame can be placed on First Republic’s management, economists are largely aligned in believing that the collapse is at least partly due to rising interest rates and the Federal Reserve’s hawkish monetary policy that also brought down Silvergate, Silicon Valley and Signature banks early . this year.

Where this situation aligns with bitcoin in particular is that the crypto industry is part of a broader political shift toward populism. Crypto is not the only movement challenging the authority of central banks and established powers, as many people will see the First Republic bailout as another example of profits being privatized while losses are socialized. In trying to prevent a massive draw on FDIC reserves, policymakers have essentially said that all American banks are too big to fail—a type of moral dilemma that shields a certain class from the consequences of their decisions.

Bitcoin has emerged as an alternative monetary system, which many believe could eventually serve as a legitimate global reserve currency the way the US dollar is today. The system is attractive to some because it follows pre-written rules, including a fixed money issuance schedule by social consensus (as opposed to the political and monetary interests that control the dollar). Bitcoin’s price rose steadily during the last cycle of bank failures, and may also take a surge this time around. This does not necessarily mean that bitcoin is a “hedge” against financial calamity, or that people are choosing “trustless” financial systems over increasingly unreliable banks.

The timing of the Bitcoin blockchain’s latest milestone is purely coincidental. Bitcoin transactions have been on the rise since the launch of Bitcoin Ordinals, which enabled the network to support non-fungible tokens (NFT). More than 2.39 million Ordinals have been “enrolled” to date, according to Glassnode data cited by Blockworks. But while Bitcoin NFTs now account for about half of the transactions on the network (rewarding bitcoin miners with increased transaction fees and potentially helping to secure Bitcoin’s long-term “security budget”), not all bitcoiners are on board with believing that this is a valuable function.

There are many bitcoin purists who believe the network should be preserved for monetary use and that tradable digital collectibles are frivolous. Sorry to them, Bitcoin is an open source network – meaning people are free to use the technology however they want. If Bitcoin has a role to play in the global economy of the future, it is only because people are free to use it as they wish.