Ignore it at your own peril

Years ago, I was a regular at the Border’s bookshop in Union Sq, San Francisco. I loved it there. I could spend hours browsing books while sipping my latte and overlooking Powell street and the cable cars going up and down.

But one day, everything changed, as soon as I entered I noticed. They were advertising the new Sony eBook reader Border’s edition which was on sale for $400. I was very excited to see it and yet, at the same time, a wave of premature nostalgia invaded my body.

I bought the device immediately because it is a very convenient way to read books while on the move. But as I was handing out my credit card, I thought to myself: This is the end.

A few years later, Borders went out of business. I was right, but I didn’t want to be right this time.

I still prefer paper books and I love browsing the shelves in search of that hidden gem but I have to admit, eBooks are far more convenient, especially when traveling.

Technology is exciting but it leaves you with a bitter taste, a sort of nostalgia of the yesteryear that you could touch and feel as opposed to the shiny immaterial object that can’t be grasped, smelled, or held.

That day at the checkout I put a nail in the coffin of paper books and predicted the demise of offline shops.

Technology is an unstoppable force that wants to get rid of middlemen and dematerialize objects. Vinyls, CDs, DVDs, Books, Maps, all those became a thing of the past the moment someone found a way to digitize them.

My father still refuses to read online newspapers and has to walk for miles to the only shop in town that still sells them. Eventually, even this shop will close.

It’s inevitable, if something can go digital it will go digital and there is nothing we can do about it.

Now, what’s next? Where is the new frontier? Who will be the new Borders, Blockbuster or Kodak?

Money

The internet revolution has decimated many industries but there is one that has been left untouched. Banking and financial services have pretty much run the same way since the 19th century.

In the old times, when money transfer was done by horse, the dollars had to be physically transported from one branch to another, often taking days to arrive.

A bank transfer today still takes days to clear even though the transaction is electronic. Sometimes I wonder if they are still using horses.

Although the financial industry has been forced to embrace technology, they have done so begrudgingly and you can tell by the way they provide their services.

This legacy industry has survived only because there is no competition and because they have been protected by regulations.

The only reason Apple or Google have not entered the money business is that the law does not allow outsiders in.

This has created a monopoly protected by the government that has become stagnant and inefficient. Competition is good and has kept many industries on their toes but the financial sector has been living in a bubble for the last … well, forever.

Until now

The bubble has burst

Bitcoin and the crypto ecosystem are the needles that have burst the bubble of Fiat money and financial services.

A decentralized system that is fast, almost free and that provides all the services of the legacy industry and more, is now threatening banks, money transfers, and brokers.

Western Union

With bitcoin and the Lighting network, you can send and receive payments instantly, globally, and at no cost.

Developing nations are embracing this technology fast and saving up to 25% in fees. Companies like Western Union are losing millions in revenue due to this new technology. They just can’t compete and will go the same way as Borders did. But this time no tears will be shed.

The money transfer industry has been abusing its position and taking advantage of the less fortunate by taking a big cut from people living below the poverty line. This is just unethical.

Bitcoin fixes this.

Banks

Are you happy with your bank?

That was a rhetorical question.

Bitcoin, although far from perfect, offers a more transparent, more efficient, and more secure service compared to the banking industry and it does so with a barebones infrastructure.

While banks need hundreds of buildings, employees, and huge amounts of capital, the Bitcoin network can achieve similar performance with a minimal network.

Despite all this infrastructure, 80% of the planet is either unbanked or underbanked. Now with bitcoin, everyone has a bank in their pocket and can access financial services by using a $100 phone.

With bitcoin, you can pay, receive, borrow, lend, trade, and invest in a secure, cheap, and permissionless way. It pays generous interest rates on deposits and lending is available from 1%.

The banking industry is just one of those old dinosaurs that can’t compete and will have to go.

So long…

Financial services

Brokers, investing firms, pension funds, and the like are opaque, crony, and inefficient industries that won’t be able to compete in an open market against decentralized currencies.

Why would you invest in financial products that offer a yield of 5% if you are lucky when crypto assets have much better yields?

Besides, decentralization gets rid of the middle man and offers a more transparent and efficient way to deal with money.

Brokerage firms know this and are starting to worry… a lot.

Fiat money

We’ve become so used to governments printing money that we don’t find it odd anymore, but the fact that someone up there decides to create monetary assets out of thin air should be at least questionable.

Excessive money printing gives too much power to the issuer and steals wealth from the consumer. Debasing a currency should be illegal and punished by law.

But of course, that’s never going to happen. We’ve put the fox in charge of the hens and now it’s too late to change the system.

Unless…

What if there was a currency operating outside the system, that can’t be manipulated, devalued, or censored?

Well, there is Bitcoin. The first currency that is not issued by governments, that has a predictable monetary issuance, that is anti-inflationary, permissionless, immutable, and scarce.

Fiat money has never had a competitor like this and it’s not really ready for it. Wealth is transferring fast to this new asset class and fiat will keep depreciating fast against it.

Will the dollar and the euro go the same way as Kodak, Blackberry, or Borders? Probably not, but certainly it will lose power and relevance in a global digital world.

Conclusion

Industries and technologies come and go. We used to have telegrams, newspapers, and horses and buggies until they were replaced by something better.

Sometimes it’s sad to see an industry go and other times it was long overdue. We miss vinyls, books, and horses but we won’t miss Western Union, banks, or Wall Street.

The current financial system is broken and Bitcoin could well be the solution. We’ll find out soon enough but in the meantime get ready for the biggest financial revolution you’ll see in your lifetime.

And while you are at it, buy some paper books with bitcoin and support the old industry.