The arrogance of Capitalism: Blockchain really never sleeps

CryptoVisum
Jul 21, 2017 · 4 min read

It is quite possible you may have missed the news, over this last week, that the Australian Prudential Regulatory Authority (APRA) has made its move to tighten the strength of the Australian banking sector through increased capital requirements of the four major banks. In absolute lay man’s terms, this means the major Banks need to hold more of their own assets in the aim to strengthen their financial position. This makes great sense if you expect to see greater risk within an economy. At the same time, this is not a surprise by any means as for far too long the Australian people have had their appetite for debt increase to levels that could very well be unsustainable in the long term and it poses the thought as to whether it should really be highlighting the flaw of the local capitalist. After all, if people were borrowing amounts that the banks had complete confidence they could really afford and would really pay it all back, than why would the banks be in any risk, right?

Already we believe that the banks are greedy, and making an enemy out of the banking sector is not hard to do. If APRAs decision shows us anything it is that the industry needs regulatory intervention to uphold its integrity. When banks in the US started selling low doc and no doc mortgage loans to everyone and anyone that could physically sign a contract, it was the general public that didn’t see the crash coming. The same general public that consisted of people who borrowed money they knew would never pay back. Some would call that stealing, but back then it was the banks’ fault as the orchestrators of that sell. Now, in no way is this writer suggesting that the American banker was innocent in the sub-prime lending fiasco, but there is a duty here to at least acknowledge the complete circle of parties prevalent to a collapsing market. As one fictitious capitalist once said, “Greed, for the lack of better term, is good. Greed works.”

What should be taken from that line is: Capitalism in its true nature is good. Capitalism in its true nature works. The frightening truth is that it is the flaws of humanity that undermine the integrity of these systems. The Australian Regulatory system evidently understands this better, it seems, than most other parts of the world. Then again it could be an issue of influential control, and that topic is outside the intention of this piece.

Now, how do you fix the problem of arrogance? Well, one sure way to deal with it is to remove the person’s control of the environment in focus and instead of fixing the “problem” you just remove the need to deal with them. Within the last 48 hours global news has circulated of ex Barclays CEO Antony Jenkins warning that the banking industry faces obsolescence in the next 5–15 years. Jenkins has related this stage of transition to a “Kodak Moment” suggesting that the banks could face a world where they become redundant off the back of technological changes, giving rise to better options for consumers. Reminiscent of Kodak facing the technologically inspired shift of reliance on film for photography.

What local news feeds didn’t express is that it appears that, after departing from the bank, Jenkins was linked to a Bitcoin start up. Being involved in blockchain is an important consideration in re-evaluating Jenkins’ comments about the future of the banking system. This is actually reinforced in yet another announcement earlier in the week that Mastercard and CISCO have followed some fellow large global businesses and joined the Enterprise Ethereum Alliance. This was big news for Ethereum smart-contract advocates as it means more companies are showing interest in adopting or at least working with the blockchain technology. In the midst of the panic over the integrity of domestic wealth it seems the display of arrogance over the control of it has been sidelined.

On the one hand we have the banker who believes their world is untouchable. On the other we have the tech minds that hold both the technical ability (and working towards the technological hardware) and the political desire to bring that world down. If APRA want to continue to maintain integrity in a true capitalist world, they will need to address the existence of this arrogance, but that may now be beyond its capabilities. Once a technology presents the platform for an alternative system that is now easier and cheaper to use, it will be very hard to forcefully stop and no amount of confidence can change that — resulting to mere arrogance.

The message here is that the Australian banking system needs to set aside egoism in such a crucial area. It was a quick reminder by Janet Yellen shortly after Donald Trump was voted in as President of the United States as to who really influences the wealth in America. The Federal Bank was not shy about getting into the public spotlight for this address. Australia has had great success thus far in ensuring the financial viability of its banking system. However, Australia’s history of existence is only short in the greater picture, and with an entire population that potentially fits in the space of some of the world’s biggest cities, it cannot afford the audacity to reiterate the proposal that “Greed is Good.” Lest they be bypassed in the process.

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