BitCoin vs Banks - Technological Disruption Can Revolutionize Banking
I think we're at a defining moment in the financial system. A lot of people have said the revolution has occurred. I'm not so sure it has occurred yet, but it has the potential to be there.
Today, banks are really at the heart of the financial system. Without banks it would be very difficult to make payments, it'd be difficult to create credit and it would be difficult to create money.
Recently we've seen a lot of technological disruptors enter financial services. Some examples would include not only digital currencies like bitcoin, but also peer to peer lenders, crowd source funding and a whole variety of other innovations that people are coming up with to not use deposits to fund lending.
BitCoin is this unusual creature because we're not sure who created it or exactly when it was created. It's really a series of protocols about how one person or entity can make a transaction with another.
Banks are classic intermediaries. They're there between two people who are making payments. What bitcoin allows is for that intermediary to longer have to be there.
If the central bank in your country is behaving badly, then you want to try to find some alternative. So in countries like Argentina when the central bank is creating a lot of inflation and making it very difficult to make payments and putting in all sorts of controls, bitcoin is a terrific alternative.
In most other countries the central banks are not behaving that badly, so it doesn't provide that important of an alternative. But it does put a discipline on central banks because if those central banks do start behaving badly there's this easy alternative for people to turn to.
It so far hasn't really taken off a unit of account, medium of exchange of value, the classic things we associate with money, but it has the potential to do so.
One of the potential revolutionary aspects of all this innovation is that banks shouldn't think of themselves as financial institutions, but really data analytics companies. Anyone who might have the data in order to do credit analysis and who might also have access to financing, say a Google or Amazon who can issue debts in the public markets, could now provide credit and now do credit scoring and figure out who should be getting credit and who couldn't on a profitable basis.
It's quite possible that some large tech firm could use information the kinds of things that you purchase, the kinds of things that you do searches for, even your location, to provide a lot more information to a lender to say, "Hey, this person has good credit."
The question is:
- How much value is in that additional information?
- How much are we willing to give up our privacy to increase our effective credit score and get additional access to credit?
This is a real call to arms to banks to rethink the way they operate, that they really should be data analitics firms who happen to be providing finance because it's going to be that firms that have a lot of data about people are going to be entering finance and banks better be prepared for that otherwise banks may not be around for very long.
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I think it makes perfect sense that the banks should get into data analytics and issue credit if they can also issue debt. Personally, I cannot stand banks and their fees, which I liken to legalized robbery. Ideally I would love to live off alt coins and convert to fiat when I need to make purchases. I dream about buying a sizable piece of property with BTC (or STEEM???). I'm partial to bartering for goods and services where credit may not be necessary too. I wonder if that will also have a renaissance?
I've seen some interesting sites before that were like eBay for bartering.
LET systems in many communities are popping up all over the place and I find that very encouraging. Here at the farm, we barter for a lot of things in our community. The man doesn't have to know about everything we trade, right?
I believe bitcoin will create a big impact eventually in developing countries especially in Africa and others. Developing countries have a lot of unbanked populace living in hard to reach areas. However payment solutions like mobile money platforms using phones have been a great success but yet still every country has its own mobile money platform which doesn't render it boarderless like bitcoin does. The uniqueness with bitcoin is that you can exchange it across boarders and at a minimal cost.
This ought to save the world a lot in cross boarder transaction costs and save time transacting.
Agreed. I heard they sell minutes of phone time in Africa as currency. It's called M Pesa.