If Bitcoin is meant to be an anonymous, decentralized currency that is free of intermediaries and national restrictions, then today's launch of a new Bitcoin bank, called Circle, might seem deeply antithetical. Circle's website does its utmost to look like that of an ordinary financial service, using words like "withdrawing," "depositing" and "digital money," instead of the usual terms about buying and selling Bitcoins. It follows US anti-money laundering rules, requiring users to identify themselves, and it expects you to connect your Bitcoin account to your normal credit card or bank accounts. Crypto-currency purists just aren't going to dig it, but then again Circle claims to offer some serious advantages that are missing from other, more direct approaches to Bitcoin banking.
It charges no fees for anything (at least not right now), which makes it a relatively friction-free way of accessing money in a range of local currencies; it insures deposits against Mt. Gox-style calamities; it stores "most" of its holdings offline to safeguard it from hackers, and it even has a customer service phone line. For someone with relatives or business interests in other countries, who has to deal with unstable banks or currencies, Circle could well serve as an enticement to use Bitcoin for the first time, which is exactly its stated objective. But of course it glosses over the fact that "digital money" itself can be highly unstable, and the friendly voice at the other end of that customer service line is bound to sound a little hollow if the underlying worth of your savings suddenly plummets.