For the unbankables

When someone starts learning about Bitcoin, they usually gain a lot of knowledge in a number of tangential topics as well. Public key cryptography, data security, application specific integrated circuits and even different schools of economics suddenly become topics related to one another. However, the topic that comes up the most often appears to be the banking system and its many inadequacies.

The banking system when it works properly is very useful. It allows one access to one's savings from anywhere around the world and to send money to anyone else in an expedient fashion. Virtually anyone in the developed world has a bank account and people using credit cards for their purchases is a common sight. However, we don't live in an ideal world, and there are many ways the banking systems fails a lot of people.

The biggest problem with the current banking system is how reliant people are on it. When you get paid, you receive your money in a form of a cheque or a wire transfer. When you have to pay your rent, you usually write a cheque. When you're making a big purchase, you don't bring a wallet of cash with you, but instead use a credit card. Travelling with cash is a liability, so we use the cards as well. A lot of our shopping is done online, and Amazon doesn't take cash...

The unbankables

Now, imagine if one day you were cut out from the system entirely. How much of a struggle it would be to function as before? Well, there are a lot of people that struggle with this issue:

We have to remember - banks are private businesses and they can boot you out of the system for any reason. Selling guns with a license? Can't have that. Licensed Medical Marijuana Producer? Nope. Adult film actress? Go away. Something Bitcoin related? We don't want to do business with you.

Banks have an agenda

Since banks are private companies, they can close the account of anyone that doesn't fit with their agenda. That's all well and good for a company to pick who they want to work with, but the big problem is that this damages a lot of people and businesses.

Perhaps it is time to start seeing banking in another light? A video on Net Neutrality from PBS Idea Channel comes to mind. (sections around 2:28, 3:35, 4:14, 5:26 and 6:32 are of particular interest).

One could see that in the modern, digital world the banking industry could start to be seen as a common carrier.

Considering a bank to be a common carrier might be useful since just as buses are expected to transport everyone with a valid ticket and freight companies should transport anything that is paid for without discrimination, so should the banks accept anyone's money, store it as needed and transfer that money to whomever the account holder chooses without discrimination. In an era where we can communicate with one another freely and without bounds, why should our money be barred from following due to corporate's policies?

This could help address many issues people have with the modern banking. Looking back at Andreas M. Antonopoulos' Senate Hearing on Bitcoin and reading the transcript, we can see this statement:

When CAVirtex testified before this committee they stated they would like to see bitcoin regulations put in place as soon as possible to give clarity on how bitcoin is classified.  They believe, and they told this committee, that this would allow bitcoin to thrive in Canada.

When one stops and thinks about this issue from CAVirtex's perspective, the problem for them to offer the best business they can to their customers is not the lack of regulations for Bitcoin in Canada, but the animosity of Canadian banks towards Bitcoin companies. Banks refuse to do business with them since there is no regulation, so Bitcoin companies think that regulation will give them access to banking. The issue is therefore not with the lack of regulation, but with the unwillingness of banks to operate a legal business' bank account.

A missed opportunity

As I mentioned over half a year ago, the MintChip project is a really sad missed opportunity. It could've been an ideal solution - a government run, apolitical banking solution for everyone. It was shaping to be like a common carrier for money. Nobody would have to pay exuberant bank fees just because they have a low credit score, nobody would be denied an account due to past mistakes. Well, maybe Ecuador will follow through with their idea, but banning its only competitor, Bitcoin, is not faring well...

Bitcoin and beyond

If the banking system will not budge, we will have to make it obsolete with other technologies.

Bitcoin is one approach - it already is inclusive, fast and cheap to use. The only thing that needs work is price stability and accessibility to a common person, but with so many people working in this space - it's only a matter of time.

Crypto 2.0 is another approach that can solve the same issue. While those systems would not be burdened with price fluctuations, their infrastructure is a lot younger and less mature than Bitcoin's.

In conclusion

In conclusion, while the banking system is a useful concept, the current political implementation leaves much to be desired. There are too many people that get denied the access to what is an essential tool in the modern society based on arbitrary decisions by the banks in question. Perhaps a more inclusive approach is in order to make them relevant in the coming age of Bitcoin and similar systems.

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