How to Build an “Indestructible Bank”?
The concern of Satoshi Nakamoto of abuse of central powers was very real, and the answer for security and safety is to migrate banks and bank accounts into the blockchain
Today’s #1 risk for banks is abuse of regulatory powers, not information technology
We have seen how vulnerable banks can be to attacks, and not so much to information security attacks but regulatory attacks of abusive nature.
If a bank’s operating platform, its information technology, is robust and solid, it is not so much the risk for a bank — the technology, given that you know what you are doing, is not the problem. Today, the major problem, and risk, lies elsewhere.
No checks and balances to keep excess regulatory powers in check
Recently, in the aftermath of the financial crisis of 2008, we have seen that a huge power grab was administered by bureaucrats having pushed politicians to grant wholly disproportionate powers have in many places been to regulators without any real checks and balances — without any counter power to ensure that any excesses are cut out and that all banks are treated fairly and can be safe. Sometimes, extensive powers could be necessary, at least temporarily, but certainly not without any checks and balances, and certainly not for an unlimited period of time. There must always be a certain level of reason and common sense. Before, a certain reason ruled, but that no longer has been the case.
This kind of evolution over the past 10 years or so, especially over the past 4–5 years, has led to huge risks of abuse of those seemingly limitless powers without any counter powers or real recourse.
It is often said that power corrupts, and absolute power corrupts absolutely.
This indeed has been the case concerning a number of regulators to a rather alarming extent — but not all of them, as there are also many intelligent, really enlightened, human, pragmatic and decent people among them too.
The risk for banks today, it is regulatory abuse — by far.
Too big to fail — or too small to succeed
When it is said that very large banks are “too big to fail”, for the small ones — often the technologically advanced new Fintech startups — it can be increasingly said that they may be “too small to succeed” — not because of being financially or otherwise weak, but because they do not have the scale of resources to sustain very prolonged attacks like the big ones could weather — at the same time, the big banks most often are publicly listed, which makes any vicious regulatory attacks in the shadows, the kind of backstabbing, more difficult.
How to make a bank safe and indestructible?
So, if a healthy bank can be broken through gross abuse of regulatory powers, how can we build a bank that is indestructible?
Leveraging the power of the blockchain
The answer is that the bank needs to be put into the blockchain, or that the blockchain is the bank.
Why? Because a proper blockchain is decentralized, without any centralized control or central authority. A traditional centralized ledger, closed loop bank can be attacked, but not the decentralized, distributed ledger blockchains that by definition are neither a counterparty nor any centralized organization that could be pulled off the plug.
Such trustless, counterparty-less structures enable the distribution of the ledger, the accounts and the transactions, and if one tries to hit one node, or a server, of the blockchain, the other nodes will prevail, a bit like the ancient monster Hydra recreating two heads to replace any head cut off, and only get stronger.
The concern of Satoshi Nakamoto was exactly this, the possibility of central authorities abusing their powers and destroying private property like that, when he created the unbreakable, genuinely decentralizedbitcoin. His concern was very real and very pertinent: it has been proven true so many times thereafter.
This ideological dimension is very dear to us, as we have indeed seen such limitless abuse. Our project is based on the exactly same concern amplified by real world experiences, and how advanced technology can be leveraged to make banking safe again — use blockchain to create unbreakable structures for the safety of all who use them.
Blockchain is the answer to create an “unbreakable bank”
In brief, Blockchain is the way to create an unbreakable bank, and in fact to move and morph the bank into the blockchain. Eventually, this will make the banks and bank accounts disappear as we know them. This is the future: The blockchain becomes the bank.
More information about our project on its website.