It might be an open door but nobody likes banks, no really, almost nobody does. Let’s evaluate if any of the current stakeholders are happy:
Shareholders: Most bank stocks haven’t really gone anywhere for a decade. Sure perhaps they recovered from the 2008 debacle but in many cases, share prices are just back where they left off in 2007. The point is the rest of the stock market (especially tech) did better so shareholders can’t be too thrilled.
Employees: I’ve yet to meet an employee who’s happy with his or her banking job outside a few high ranked people with fat bonuses. Most employees are pigeonholed working on things they don’t care about. Apathy is probably the 8 to 10 of the banks’ Net Promoter Score employee satisfaction survey.
Customers: Happiness with your bank is typically defined as “I haven’t had issues with them for months, so yeah they are fine”. Has anyone really been delighted with good service, new innovative products, things that actually make your life easier?
So if nobody likes them why are they still around, why do we still use them? The reasons are pretty straightforward:
- Monopolies and regulations: Banks operate in one of the most protected and regulated environments possible. Try starting a new bank, it’s really hard if not impossible. This obviously kills any form of innovation, customer service or productivity gains.
- Until now there was no alternative: We were simply forced to use the existing banking infrastructure, how else could we transact and make payments?
But fret not, an alternative has finally arrived and for the first time, it’s possible to live life with minimal banking interaction. Granted, you’ll be hard-pressed to cut their tentacles entirely for now but with a bit of education, you can kick the habit by 90 per cent. Here’s how:
- Move your cash into crypto assets;
- Use those assets to pay for almost everything;
- Start earning in crypto and never visit the bank again
Sounds too good to be true or too risky? It’s really not that hard to accomplish anymore and you’ll feel a sense of relief in the process, free yourself and take control of your own assets.
Move your cash into crypto assets
Simply use an exchange like Gemini, CoinHako or a Bitcoin ATM to convert your fiat into crypto. Bitcoin is a good entry point but if you don’t like the volatility simply convert to regulated stablecoins like GUSD or USDC or decentralized solutions like DAI.
These stablecoins are a relatively new phenomenon and for now you’ll be limited to the USD but other solutions (like EUR or even currency baskets) are in the works. This way you can hold crypto assets without dealing with the volatility.
The next step to becoming your own bank is to buy a hardware wallet which holds the private keys of your assets. It stores these keys locally on the device so nobody but you can ever gain access to them.
The underlying protocol of Bitcoin has never been hacked but the same cannot be said for exchanges: Not your keys not your Bitcoin is a well-known expression in the industry coined by Andreas Antonopoulos so do invest in your own hardware wallet such as Trezor. After that, you’re in full control 24/7 365 days a year and nobody can freeze your assets or delay payments.
Use those assets to pay for almost everything
But nobody accepts crypto I hear you say? True for now but that’s ok as there are intermediary solutions whereby you’ll never need a bank and can still pay at 95 per cent of places:
- Get a Visa card: Crypto.com or Revolut: Order one of their cards, refill it with Bitcoin and voila, you can pay anywhere that accepts Visa. Yes, this still relies on Visa but let’s go step by step.
- Get cash: Can’t pay with Visa? That’s ok too as there are more and more Bitcoin ATM’s around the world where you can easily withdraw cash from your Bitcoin holdings. In Singapore, you’ll find one in Plaza Singapura for example.
- Pay for services directly with crypto: Over time more and more businesses will start accepting crypto directly. Need to top up your phone, for example, try Bitrefill or book flights at CheapAir.com. Or as a merchant, you can work with PundiX for example.
Start earning in crypto and never visit the bank again
Eventually, you’ll get so used to using crypto you would not want to receive bank account payments anymore. So ask your employer or clients to pay you directly in crypto and close the loop. Especially if you’re receiving international wires because this is a guaranteed cost and headache saver.
Concerned you would get even less interest than in a bank account? Again quite the opposite, there are plenty of 3rd party services like Celcius or Compound that offer anywhere from 1 to 7 per cent on your crypto holdings.
While the above steps might not be practical for most people as of today it does show that for the first time we have an actual alternative to traditional banking. We’re still early in the crypto development cycle so things still come with a steep learning curve.
However, I vividly remember the early days of the internet and the parallels are striking.
In the 90’s sending emails, streaming music, or downloading movies was technically possible but cumbersome and slow.
Regardless, the promise of peer to peer transfer of information was too powerful and the technology improved, services emerged and density of adoption increased; traditional services from back then run on top of the internet today. Let’s not forget the largest listed companies today (Facebook, Amazon, Netflix, Google) did not exist and were unthinkable just 20 years ago.
It is the task of entrepreneurs in the crypto and blockchain industry to do the same thing again, but this time we’re targeting peer to peer transfer of assets. Established middlemen of today will be cut just like the internet did to Blockbuster, the music industry and phone companies.
The difference this time is that we’re going after much higher profile targets. So if you really don’t like banks educate yourself, join a movement that will revolutionise the financial space and make the world a better place.
Kenrick Drijkoningen is the Founding Partner of LuneX Ventures. He was also the former Head of Growth at Golden Gate Ventures.
e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.