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The End of Banks

Today for my job I had to deal with a bank, like with many other days in my line of work. Today we needed to redo a wire request, because our electronic signatures we placed on the PDF was not good enough, and they would prefer that we place a physical signature on a sheet, scan it and send it in. Because that is so much safer, and no one could lift my signature from something else and apply it to that pdf (eyeroll).

About every other transaction I have with banks is negative, or has some very dumb either internal or regulatory requirement. It is red tape on top of red tape, because banks are an extension of the government at this point, so highly regulated they honestly can’t really innovate except at the edges. This may come off as an ignorant rant but I worked at a Credit Union in executive position, so I’m familiar with these things both as a customer and as employee.

Besides inconvenience there are other scarier stuff that happen at banks, like when a relative of mine who wanted to withdrawal $5000 in cash was told no he couldn’t. It was over their limit for the branch. Also when you do anything “suspicious” they will report you directly to the government, this isn’t their choice, this is a requirement of running a bank in the US. Yes yes bad people do bad things and banks are one way to catch them, but when your government in a 2nd degree way has full control of your money and can monitor you if they deem it necessary, I think that falls into the potentially scary category, but maybe I’ve just read too much history or have too little faith that humanity is now different 🙂

All that to say, every time I have one of these negative interactions, or see a person’s freedom eroded it just makes me realize how wonderful and freeing crypto is. Right now in the wild west of crypto you can “be your own bank” which includes all the risks of that but all the potential rewards as well. No one can say “no you can’t move those funds” “no you can’t borrow that money” “no you can’t buy that asset”. Besides that there are financial rewards. There is a whole area in crypto called “defi” or Decentralized Finance, the main goal is to use this crazy crypto stuff to make completely permission-less and low risk banking products. Right now using my Ethereum or other collateral, I can go get a loan. There is no id required, no paperwork to sign, if I have the assets as collateral its as easy as a couple of clicks. Can you imagine doing that with your house, and not having to fill out literally hundreds of pages of paper work and spending $1000’s on fees, its not here yet but there are people working on it. In addition if I want to earn some extra money on my dollars, no problem a few clicks and I’m earning 2 – 25% using different methods.

For a person who has always loved economics and finance crypto and defi is a wonderland of experiments and cool ideas. For the average person, it could mean earning 5X more on your savings, it could mean getting that quick loan you need without selling your assets. At this point in time there is risks of course, risks that the programs running these systems aren’t built properly, or one of the central parties helping to create items in this ecosystem (i.e. Coinbase and Circle with USDC) blows up in some capacity. So as with the nature of this industry, buyer beware. But the rewards may outweigh the risks in the end, that is my bet at least. This is an area you should learn more about, its the future of finance, and usually when you are in early on something benefits accrue to you in many ways.