We spend a good portion of our lives paying for things. Yet anyone with a bank account can probably attest to the fact that it can take days for money transmissions to clear. Banking systems have taken much longer to adapt to the always-on, instant gratification style of life that is the digital age. Some of that can be attributed to the financial world still using legacy computer systems, a reality due to little incentive for it to change.

If you have ever completed a transaction from one bitcoin address to another, the first thing that strikes you is how easy it is. Specify an amount, enter in an address and the process is completed in an instant. It’s something that seems almost magical the first time you do it. You’ll wonder to yourself why payments aren’t always this easy.

There really isn’t much reason for banks to change the status quo. The most important reason for this is stability. This is needed in order to keep the financial system operating smoothly. Imagine for a moment that you go to your bank and cannot withdraw money. Or, all of a sudden, you cannot access your online banking account for days. This could cause pandemonium and economic problems – Cyprus is a recent example of this.

Yes, bitcoin transactions are fast. But one of the reasons why traditional money moves slower is because in there is a rigid system of regulation and stability to prevent fraud. Anywhere that a system of money exists, there is always going to be someone who wants to game it. This is one reason why banks have to be concerned about decentralized currencies like bitcoin. Eventually, they’ll need to provide some sort of defense mechanism for it.

Bitcoin sometimes has a bad reputation, for example, when its reportedly used to buy drugs, launder money or scam people. Yes, bitcoin does have benefits it can lend to our existing money system. But the masses could start to get bad connotations with the term "bitcoin". Banking systems might end up taking advantage of this negative spin going forward.

But it is possible that bitcoin could be used in the background, without people even knowing about it. Just think about the positives of bitcoin: it is fast, it cannot be double-spent and it is decentralized. Instead of bitcoin just being used as person-to-person payments, why couldn’t it be invisible? It could be used just for the pure movement of money by banks instead.

This concept might make more sense. Already, financial institutions have to deal with a degree of complexity that is often hidden from consumers. Things like currency fluctuations, fraud prevention and minimizing credit risks are everyday issues that banking has to contend with as a business. All things considered, they seem to be tackling with these problems with little or no backlash.

Countries like the United States and Europe want highly regulated financial systems. Bank stability is important, but there is another factor to consider. As a percentage of GDP (see above) these regions levy a high tax rate on its citizens and corporations. Regulation gives them control over this system. This is why we’re seeing actions by the United States to regulate currencies like bitcoin and not control it.

Many people point to PayPal as an example of how bitcoin can eventually become successful as a payment method. But it is important to keep in mind that PayPal is a payment system that operates using fiat currencies.

Let’s also not forget the fact that PayPal has a well-developed dispute resolution system. This is why many people swear by using PayPal. When buying things through parties on platforms like Craigslist, PayPal can actually be a useful tool to ensure that transactions are secure. And a massively growing amount of mobile payments are being processed via PayPal.

No system of chargeback dispute resolution exists for bitcoin. There is no entity that can dictate someone return payment for a transaction gone wrong. And while we don’t think too much about the consequences of this right now, it will plague bitcoin’s ability to be used by people. The allure of this type of system for spammers and scammers alike will be too enticing for them to ignore.

It’s important, then, to consider that PayPal is even thinking about using bitcoin. There would be serious risks for them to do so even though they have quickly become a dominant force in mobile payments. The question is whether they think that they can tame the fraud that can happen with bitcoin. With their dispute resolution system, they have a better chance than others do.

It might just be more realistic if bitcoin or other decentralized systems be used as a store of wealth and a quick way to move money around. Again, though, the moving of money is likely what is of most interest to regulators, as they want to know about the flow of cash. They want to control that aspect – accounting for tax revenue is what keeps them running. That will prove to be a continuous challenge for government regulators as more of these currencies appear.

If you think that we’re at a limit for the number of digital currencies with the likes of Bitcoin, Litecoin and others, you’re probably mistaken. There’s too much incentive out there to create these systems as a store of wealth outside of banking. And as long as a market can be created for these platforms, they will continue to persist whether governments and in turn law enforcement agencies want them to or not.

This, in effect, is the delicate balance that decentralized currency advocates and governmental bodies now face. It’s like a long slow dance, where the lead will continue to alternate. Decentralized currencies like bitcoin will make a move, and governments will react. In reality, bitcoin as a way to invisibly move money around isn’t possible. It can reduce friction in the system, but the question of how much is ultimately up to those who create the laws to regulate the system.