Each time crypto “moons”, it is a step closer to the banks’ decline. Here is why.

By BBAMarketPerspectives | The Brave New After-World of Bitcoin | 29 Jun 2021

Each time crypto “moons”, it is a step closer to the banks’ decline. Here is why.

Banks getting disintermediated

Banks have been the financial stalwarts of all time since they were designed and created to benefit society as a whole. But this has taken a huge shift and for the most part, their profit-seeking, blood-thirsty nature in benefiting their executives at the expense of society has led to a revolutionary cry that has been answered by the blockchain.

In the 2008 financial crisis engineered by the bank and rescued by the Fed, foreclosures and bankruptcies were made possible because of the greed washing through the financial system with derivative product after derivative product became packaged with highly risky collaterals comprising loans to individuals who should have never been given the home loans given their inability to pay back should the musical chairs stop. Instead of letting the entire system implode and reset, the Fed pumped in billions of dollars, ballooned its balanced sheet, got the banks out of the mess through taxpayers’ money, and have since been unable to do a proper reset or landing of the financial system plane.

This has required it to place our entire global financial system at its mercy. Its tools to engineer rescues and even prop up zombie firms are just endless, and at the compromise of a bigger problem that continues to snowball as we speak. When will the music stop and Piper paid? No body knows at this juncture. But somewhere down the line, one of the generations after us is likely to pay the price. A much bigger one, than if it were to happen during our time (for obvious reasons).

Collapse of market

It was out of that 2008 financial mess that the first whitepaper by a Japanese sounding name came about on a digital asset that could be mined in limited supply and that would one day play a huge role in the current financial system. A handful of individuals took it seriously to a certain extent and started spreading this vision… until it got to where it is today – at $36,000 a Bitcoin, more than 10,000 cryptocurrencies, and a sprawling $1 trillion-dollar crypto market capitalization that rivals the biggest companies worldwide.

Having a token with some imputed value (there is no intrinsic value of the tokens in and of themselves) is not what scares the banks and the elite of the current financial system. Shouting “to the moon” on Twitter and Reddit will do them no harm any more than a colleague farting in the office.

What scares them is the fact that their lunch, dinner, breakfast, supper and their children’s food will also be taken off the table. Plate by plate, meal by meal.

What are you talking about, Chief Editor? You ask.

Well, I’m talking about disintermediation. In the traditional world of finance, the middleman is always that financial institution, “diligently” taking a cut of EVERY transaction you make to line its pockets and pay fat bonuses to undeserving fat cats who conceive every possible way of milking the system for all its worth.

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Disintermediation is here.

But this is going to change sooner than later. Because the blockchain is now coming in with smaller companies who work on it and use it to find a way through smart contracts afforded by its technology. Sending money to someone in another part of the world? And pay Western Union or your local bank that ridiculous percentage? What did they do to deserve that amount of money? Security? Anonymity? Well, security depends on whether the person over at the other end has to go over to his institution or local bank to withdraw the amount, with thugs waiting outside. Anonymity? Forget it.

Money and headache

Remember, the banks are not set up for your benefit. They are set up for THEIR profits. The name of the game is always profits. To whom? Well, the shareholders, the executives. It was fine when there is a level of sharing, giving and taking, where everybody wins. But not so with the current set up. And this is where blockchain and cryptocurrencies come into change this forever.

The technology is simple – security, transparency, speed are all inbuilt into that algorithm that rules the transaction. A small transaction fee will be taken to reward those who help to verify the transaction. Of course, this algorithm can be tweaked to include a small fee for the company that set up this system. Yet, it will be difficult for a cumbersome bank bloated with fat cats requiring millions of dollars in salaries and bonuses to bring their fees to match that blockchain transaction fee. All that blockchain tech company needs, is to drive traction for many many multiples of transactions to be sufficiently profitable.

You are your own bank - in control of finances for real

And mind you, it will not just be that one company, but many others that will follow in its footsteps for insurance (#NexusMutual), stock exchanges (#FTX), lending/borrowing (UniSwap,Sushiswap?), etc. and just about anything requiring a financial transaction. All that blockchain company has to do is to find a niche with sufficient transactions to be profitable, derive the algorithm and rules, and those who are willing to play by it, will be able to transact and profit from it directly, without a financial institution in the centre of it.

This decentralised feature is poised to WIPE OUT huge amounts of revenue streams. Imagine the risk sharing approach of insurance companies now disintermediated. They will no longer be able to pay out to themselves and their insurance agents fat fees for selling products that seek to line their pockets with commissions rather than help customers. Imagine investment products instantly customised by the blockchain and payouts with dividends settled quickly without going through clearing houses because the algorithm in the blockchain already takes care of this. No unnecessary fees, and you keep your part of the money.

screaming woman - disintermediation by altcoins

And guess what?

This technology will cut down these fat, bloated institutions down to size. Diminished in their capacities, they will be forced to innovate (which is the name of the game) to thrive, or be obsolete and close down. The truly decentralised world will be better off without this. All made possible through the blockchain.

banks and systems

If you want to know how you can participate in this and profit from it early on, stay tuned to our other articles that we produce. Remember, all these do not constitute investment advice. Do your own due diligence. Our role here is to open your mind to understand the macro view and see the possibilities behind all that you are about experience in the blockchain world.

Long live crypto!

Yours,

Chief Editor

BBA Market Perspectives