Tearing Banks Apart & Watching Them Bleed
How Uphold.com, bitcoin and their Apps are Killing the Banks
I hate banks and banksters, both categorically. From the simpering money barristas of my local branch in Berlin to the smirking Croesus Jamie Dimon, they all repulse me equally, although for very different reasons. This isn’t an unusual sentiment. Most people hate banks and banksters, and with good reason. Some because of how they shake the global economy with their fractional reserve bullshit and betting stupid with other peoples’ money. Some because of how for thirty years or more global finance has hoovered up huge numbers of bright kids who might otherwise have done something productive with their lives, but instead were indoctrinated in the big con of profiting from the inefficiencies of moving money from point A to point B or converting it from asset class A to asset class B.
My long-standing and intense hatred of banks and banksters stems from how they ruined the two cities I once loved best: London, where I spent my childhood and studied, and New York, where I worked for twenty years and watched a diverse and edgy metropolis transform into a jewel encrusted godemiché for the titans of global finance — that rigged rodeo of greed — to screw themselves, each other, and everybody else.
And so you can imagine my glee to have lived to witness the beginning of the inevitable demise of banks and banksters. What began as the boring business of providing a safe place for Joe Schmo’s surplus earnings and a convenient spot for Jane Johnson to borrow money for her dream house or new business, what became an intensely consolidated government-subsidized global Ponzi scheme that collapses predictably every ten years or so, is now poised to be ripped to pieces by fintech in general, and specifically by Uphold, bitcoin, and the apps built on top of both.
How do the banksters afford to pay themselves such big bonuses every year? And what makes me believe Uphold and bitcoin are going to devastate the revenue streams that feed those bonuses? Let’s take a look.
Deposit Account-related revenue is going away. When cash lives in the cloud and can be moved as fast as email — Uphold and to a lesser/slower extent bitcoin — banks can say good-bye to billions of dollars of annual overdraft fees. When having an account for any currency and any form of value in the cloud is free, banks are going to have a rather tough time charging monthly account maintenance fees to their (mostly poor and laboring class) clients who can’t keep a minimum balance.
Cash Transfer-related revenue is going the way of the postal stamp. Uphold makes transferring any currency in any amount to anyone in the world instant and free, as compared to taking a few days and costing twenty euros for wire transfers. Bitcoin is nearly as fast and cheap and has the added benefit of being able (with some cost and difficulty) to be transformed (via bitcoin exchanges) into spendable fiat just about anywhere in the world. Merchants can accept client payments with Uphold for a miniscule fraction of what they pay to receive payments via credit and debit cards that run through the Balkanized and purposefully slow bank networks.
You can be sure merchants will move to digital cash denominated in the same fiat currencies as their costs and expenses (thereby adding 3–5% to their skimpy bottom line) much faster than they moved to e-commerce, and that the big e-commerce players (like Amazon) will move to accepting digital cash payments fastest. This is where Uphold has a big advantage over bitcoin — few merchants can afford to gamble that bitcoin’s price won’t drop against thier home currency. Even fewer want the headache of thinking in BTC.
Lending — the only useful thing banks do (especially loans of local people’s money to provide working capital for local businesses), before they went full Old Man Potter on the world — is going to be disintermediated by peer-to-peer platforms. The disintermediation of lenders (the Lyfting, if you will — I despise Uber — something I’ll get to in a bit) didn’t start with digital cash, but Uphold’s cloud money will accelerate it, removing all the friction between lenders and borrowers, so that loans can be made between any two people in the world, making credit as free-flowing as email.
Capital-raising — all the too-big-to-fail banks make billions from underwriting debt and equity for companies, which is just the transformation of one sort of asset — cash — into another sort of asset — a share or a bond. In an analog financial system, this makes sense — it’s slow and costly to transform cash into IPO stock, just as it’s slow and costly to physically move money from one bank’s closed network to another’s. But in a digital world — in the world that you, me, this blog, and all the banksters inhabit— Uphold has demonstrated that converting assets can be as instant and free as moving them, as instant and free as everything else in our digital lives.
This is the principal tech magic that Uphold has achieved since its founding — starting with enabling the conversion of bitcoin to fiat currencies, then adding precious metals, and now something completely new and unkown — VOX, an in-platform currency for a Virtual Reality platform that hasn’t even launched yet.
Uphold supporting Vox like they do bitcoin (and so much VOX value in the company’s full reserve) has really twisted some nipples in the famously nipple-sore crypto community (I’m looking at you /bitcoin sub-reddit), but few have stopped to consider what it means if Uphold’s little experiment works. If Uphold can give an unknown and unloved cryptocurrency convertibility into all the other assets they support — from Zlotys to Palladium to Bitcoin — they can do it for any other unknown asset, like shares of a start-up or the debt of a small sovereign nation.
Investment banks and all their cheeseball Stratton Oakmont hustling and unearned oil painting probity are going away. Retail banks and their germ-covered ATMs are going away too. Those weird intermediary banks that invariably lose track of your wire, probably because they are too busy helping narcos and keptocrats empty their dumptrucks full of dirty cash into a system that is as hypocritical as it is greedy — they are all going away too.
It’s all going away because of this cloud money revolution, led by Uphold and bitcoin. I’m not saying that Uphold is better known or bigger or more pervasive than bitcoin (yet) — it lacks the anti-authoritarian (down with Central Banks!) fever and casino glitz that drives most bitcoiner interest in the cryptocurrency. What I’m saying is that Uphold’s cloud money platform is and will continue to be more useful to everyone in the world than bitcoin, ethereum, ripple, or any other exotic and complicated digital money protocol. Useful gets adopted, difficult gets forgotten.
When Uphold started two years ago I used my account to hold bitcoin and convert it back and forth to fiat currency. Last year I was pleased to discover that I could pay any of my European or US friends with Uphold money — instantly and for free — and that Uphold money could be withdrawn to my friends’ bank accounts. By the end of this year — if Uphold delivers on its promises — I’ll be able to automatically distribute my paycheck among various currency cards in my Uphold account using Bitwage (an Uphold app), lend some Rupees out via P2P functionality, and pay for a pint of beer with instant value conversion from my Google Stock card.
In less than three years and for less than USD20 million of capital raised ($35,000 of which is from your humble narrator), Uphold has created Arthur-C.-Clarke-level technology that is going to shrink banks back down to the stature they merit — safety deposit boxes — and send hundreds of thousands of banksters to the unemployment lines. By cracking the riddle of how to attach value to information and further enabling any form of value to be transformed into any other (however recondite), Uphold has unleashed the Internet of Money (I could personally do without the TM that Uphold insists on putting at the end of that phrase) and spelled the doom of the undisclosed risk factories previously known as banks and the money terrorists who ran them.
Compare Uphold’s remarkable, world-transforming technology to Uber, that Silicon Valley darling into whose bottomless money pit investors have dropped USD9 billion over the last six years. Uber is a company whose technology consists of replacing a taxi dispatcher with an app, accomplished mostly by distributing USD9billion of investor money to drivers and riders all over the world. Despite its recent “bytes & atoms” rebranding, Uber is as far from teleportation as Twitter is from A.I. It is essentially a very inefficient car-focused global charity.
Not all technology that is adopted is transformative — how long before Uber is shattered by self-driving cars or gnawed ragged by competitors like Lyft? — but all transformative technology is eventually adopted. While bitcoin falters with no use-case except the same speculative gambling that is the defining characteristic of the legacy system it hopes to replace, Uphold surges. I’ve looked at 40 apps being built on top of Uphold’s API — each app targeting different use-cases, market segments, and geographies, all plugging into cloud money platform that makes possible the heretofore impossible.
Last week I was sent a Cadoo by the Uphold executive who convinced me to invest two years ago when the company was still called Bitreserve. What’s a Cadoo? A Cadoo is an e-card with Uphold money attached. It’s also an Uphold app that you can check out at cadoo.io. An e-card with money? No big deal, right? Except, yes, it is actually a big deal, because if you can attach money to an e-card, you can attach money to any Internet content — you can hide it in games, unlock it in exchange for clicks, pin it to emojis, etc. Attaching value to Internet content is only possible once you figure out how to make I.P. compatible money, which is what Uphold has uniquely and without much fanfare accomplished.
Thanks to Uphold, in the future you won’t get paid every two weeks. You’ll get paid every hour, maybe every minute, certainly every day. You’ll instantly convert your wages into commodities like gold or silver. Or you’ll convert your labor into a loan or a stock and then convert it back to fiat again in order to pay your rent or buy a cup of coffee. Old Herr Marx thought all profit was stolen labor in a capitalist system. By creating a system that removes all the costs and delays from the moving and converting of value in any form — VOX, USD, APPL — Uphold makes possible the lossless conversion of labor into capital and capital into labor (e.g, when I pay my cleaning lady from the GLD card in my Uphold wallet). Now THAT is transformative.
As we embark upon this glorious voyage to a bankless future, a world where everyone with access to Angry Birds also has access to a money account and associated services, a cloud-based account that’s as easy to open and use as email, a world where the best commercial real estate in our great cities isn’t occupied by branches of that perfidious greed weed, a world where borrowing money is as easy as getting someone to accept your friend request on Facebook and where banker bonuses go the way of the buggy whip, won’t you all please join me in singing that great and hopeful anthem, the Battle Hymn of the Cloud Money Revolution:
Mine eyes have seen the glory of the coming of Cloud Money; It is trampling out banks’ love of nickel-and-diming me; Bitcoin hath loosed the fateful lightning of its more-or-less swift BTC; Cloud Money is marching on.
Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Cloud Money is marching on.
I have seen bitcoin in the watch fires of a hundred reddit threads; They have built bitcoin an altar in their hearts and in their heads; They can see BTC @ gold parity even when they take their meds; Cloud money’s day is marching on.
Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Cloud money’s day is marching on.
I have read fiery Uphold blog posts writ in burnished rows of text; “As ye know about Netscape’s demise, so shall BTC be next; Let the smart-money bet on Uphold, and not some hot crypto mess.” Cloud money is marching on.
Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Since Cloud money is marching on.
Bitcoin has sounded forth the trumpet that shall never call retreat; Smart VC’s and the Winkletwins — no way can they be beat; If only Ross Ulbricht had run Silk Road from somewhere like Mozambique; Cloud money is marching on.
Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Cloud Money is marching on.
In the beauty of Satoshi’s mind was born our beloved BTC, Pretty fast, nearly free, and with real-time transparency: But to understand it you need a neckbeard and a PhD; While Cloud Money is marching on.
Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! While Cloud Money is marching on.
Cloud money is coming like the glory of a mass bankster suicide, It’s a boon to everyone except those banks too big to die, When Uphold’s transparency reigns supreme, there’ll be no way for them to lie, Cloud money is marching on.
Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Glory! Glory! Hallelujah! Cloud money is marching on.