With the emergence of bitcoin and other digital currencies, the viability of the banking sector’s future has been called into question. Why? Well, at the heart of the banking system’s power are it’s close relationships with central banks around the globe. The central banks control the supply and price of money while their friends in the private banking sector “help” the public decide what to do with that money by giving them access to capital markets and keeping hard earned cash safe within their vaults. Bitcoin decentralizes this process in that money no longer comes from the ivory tower of central banks, people can sidestep the banking system by gaining direct access to capital markets & monetary safe keeping (i.e. bitcoin wallets) without paying fees to now inefficient middle men. So what does the future hold?
There are two factors at play in this story. The first being that the banking system model has gone relatively unchanged for hundreds of years and is fundamentally ingrained in the consciousness of society. People are used to banks and keeping their money safe within the security of their vaults. Paychecks are regularly deposited into checking accounts. Bills are paid via direct deposit withdrawn from their accounts. In short, the populace has accepted the banking system as a critical and basic requirement of a normal functioning society and would seemingly be sensitive to any changes in this structure as it deals with money…arguably the most important topic of all.
However, there is a second factor in this narrative. This is the very fact that the banking system has not sustained a substantive change in quite some time. And while people may accept banks as an a priori requirement of maintaining a civil community, there is burgeoning discontent with the current system. Movements like Occupy Wall Street and the anger levied towards the bailouts are prime examples of the attitude bubbling up through the national dialogue. Couple this with the annihilation of the middle class and you have the ingredients for discontent towards those in power…and the banks can definitely be classified as “those in power”. Sooner or later, when people lose all of their purchasing power they will look to those who have it all, and you better bet Wall Street will be on the right side of the trade.
Bitcoin, I believe, is the outgrowth of the aforementioned disgruntlement. It gives the population a means to opt out of the current monetary system, one that has seen little to no innovation over the years. Disruption is the name of the game when it comes to cryptocurrencies and the leader in the space, bitcoin, will disrupt the current system. Unfortunately I don’t think things will change until there is an utter collapse in the monetary fairyland we live in today. While the masses may hate Wall Street and the banking system they will surely hate change more than anything else. Change scares people and digital money is a big change for us.
Bitcoin wins in the monetary reset but the powers that be will not engage in a controlled demolition of the system that works so well for them and their cohorts. They will fight until the bitter end until they have to capitulate. And capitulate to Bitcoin they will – and once this world of money surrenders to the unstoppable force of decentralization everything else will follow.
