The War For Money: The Bankers vs The Crypto Community

“He who controls the money supply of a nation controls the nation.”
-James A. Garfield

An epic battle is shaping up over the future of money.

On one side you have the Bankers. They want your money. They want you to trust them. They seek to centralize power for themselves by bringing everyone’s money under their control.

Their power is holding your money.

On the other side you have the Crypto Community. They want you to hold your own money. They want you to trust a decentralized network and a distributed ledger. They seek to decentralize power by bringing money under the control of everyone, and thus no one.

Their power is that no one person can stop Bitcoin — the decentralized currency of the internet that runs everywhere, and nowhere.

Today, these two groups and ideologies are squaring off over the future of money and how it will be issued, held, transacted, and regulated.

The Battle of the Payment Rails

From my perspective, at the heart of the war for the future of money is the impending battle over who will issue the dominant digital currencies of the future, and thus who will control the networks or “rails” upon which a majority of payments and transfers of value take place.

The currency of the Crypto Community in the war for money is bitcoin, and its rails are the open bitcoin blockchain network.

The currency of the Bankers in the coming war for money will be fiat currency-backed digital assets (Dollar coin, Euro coin, etc.) issued by banks and, eventually, even central banks. The rails for these currencies will initially be private versions of layer 1 blockchain technologies, modified to fit the existing global banking & payments system.

Who will win this war? Let’s look at some of the advantages of each side:

The Crypto Community Advantages: An open source and decentralized approach, with immutable distributed ledgers powering “trustless” public transactions.

Businesses and developers don’t need permission or approval to join. They just start building. This is how the Internet grew — with open standards and a hands-off approach.

Crypto transactions are peer-to-peer, 24/7, often charge next to no fees, don’t take bankers holidays or weekends off, and generally provide final settlement in seconds to minutes.

Younger generations have a dislike or distrust for traditional banks, and a growing affinity for cryptocurrencies and peer-to-peer systems.

The Bankers Advantages: Close ties and influence with global regulatory regimes, existing control and exclusive handling of the fiat currency money supply, and their ability to leverage the large existing banking system and payment rails.

Banker transactions are regulated, often insured and provide a safety net of sorts to customers, but can take several days to settle and are often costly at a % of the overall transaction.

Bankers are also used to and relatively adept at the AML and KYC policies and procedures that large scale payments and banking operations require in order to regulate money flows and deter terrorist financing — though the Crypto Community goes to lengths to report that the largest money laundering scandals are happening within the existing banking system with fiat currencies.

Whatever your viewpoint, older generations and the mainstream majority of consumers hold a tremendous amount of trust in regulated banking institutions, and distrust cryptocurrencies or find them too complicated to use :).

Different Markets, Different Winners

My belief is that both groups will win across different markets that play to their relative strengths, while increased regulation in the US and globally will begin to drive the warring camps closer together in their approaches to scale.

New fintech and bank upstarts are coming online and will begin to challenge more traditional banks and their models, using native blockchain technology approaches and without the hangover of large legacy systems, slow moving cultures, and existing risks and regulations.

Meanwhile, large existing banks with multi billion dollar balance sheets, like JP Morgan with JPM Coin, are catching on to the power and possibilities of blockchain and digital assets to reduce their costs and streamline transactions, and are making moves to defend their turf.

How do you think the war will play out? I’d welcome your thoughts and comments.

Whatever you believe, get your popcorn ready and pick a side as the war for money unfolds.

*Disclosure: I’m involved in banking & payments related ventures on distributed ledger and run a fund that invests in the digital currency space. Follow me on Twitter at chancebar or get in touch with me at ChanceBarnett.com