Does the bank of tomorrow hold no funds?
We believe that the business of consumer banking is in direct conflict with consumer interest. The profit made by consumer banks (and distributed to their shareholders) from consumer deposits is redirected away from consumers to their own benefit. This seems fundamentally broken.
The problem with banking as we know it is that the profits are for the few and the losses are socialised.
At a high-level the value proposition of consumer banks can be summarised as so:
- They look after your money, make sure it is “safe”
- They make your own money spendable
- They grant you credit leveraged from a fraction of your neighbour’s money
- They gamble your money for their own profit
Thanks to Ethereum, the World Computer, we now have the means to offer a credible alternative and we think we can do much better. We can create a banking experience where we never need to touch your money, an experience with transparency builtin by definition on this public network.
The Dawn of the New Economy
The emergence of Ethereum, the World Computer or the Trust Machine, presents us with a future whereby consumers’ relationship with institutions can be built on tech rather than on trust. There will always be some level of trust involved, we aim to limit that to a manageable number of lines of immutable and publicly auditable code.
We don’t want to minimise the amount of trust our users have to have in us.
TokenCard has no access to your crypto-assets and you don’t have to trust us when we say this, just go and check out the code. I am delighted to be able to say that:
TokenCard is the first and only non-custodial, direct-to-consumer experience that enables payments in the real world.
So where does decentralisation comes into play? To be honest, I am of the opinion that no company is truly decentralised and happy to hear alternative POVs on this though. That said I do believe that we are decentralised where it matters the most: in our relationship with our users’ crypto-assets. We are very proud of our non-custodial relationship with our user’s crypto-assets.
However, having no access to the users’ funds is no mean feat. On the plus side, we hope it means that we appeal to people who like the idea of decentralisation, we can be trustless for the most part. On the flip side, it means that if someone is out of our risk appetite or doing something nefarious through our product we can merely remove their access to our products, we can’t touch/seize their crypto-assets.
One of the most exciting things here at TokenCard is that we pose no threat to our users’ funds — since they never have to leave their own wallet unless they are intending to send some crypto to us to convert to fiat. With all the exchange hacks happening on a recurring basis, the industry is feeling the cost of custody and surely most of you see the benefits of owning your own crypto, of having self-sovereign ownership over your assets.
An Ethereum-native consumer experience
We are delivering self-sovereign finance. Each of our users deploy their own instance of the Contract Wallet that governs their relationship with us and the TokenCard. We have no access right to your funds. It mimics the functionality of a consumer bank account: spending limits, lists of payees, and well … most obviously the (Token)Card. Our relationship with our users is defined by approximately 2500 lines of Solidity (including comments) go and check it out for yourself!
We are building a participatory banking experience and we figured: why reproduce the inequality inherent in the legacy consumer banking business models? If you are building a system offering an alternative, why not actually challenge the status quo? We want everyone to be able to participate in the growth of this new economy, we want everyone to be able to benefit from any upside. More on this to come …
In the age of Web3
As an ex-Semantic Webber the term Web3 is a strange one for me, but alas onwards and upwards!
We think transparency is critical for us to realise our dreams, and our business model is a key part of it. We’re considering the implementation of a subscription-based model, with no hidden fees, as it could be a way to solve the incentivisation inbalance I eluded to above. We want to live in a world whereby our users and we are aligned, when we add value, we can be reimbursed for that effort.
If users are paying us a fee for our services, we are aligned to their interests/well being: our goal is to maximize the utility of our services, not to hoard our user’s assets so that we can profit for them in the future.
While having no access to our users’ funds challenges the current regulatory frameworks, I’m confident we will see a movement towards projects building services that minimise the amount of data and assets they handle on behalf of their customers. Vitalik’s articulates this nicely in Control as Liability:
Control over users’ data and digital possessions and activity is rapidly moving from an asset to a liability.
Where we are and what’s coming next
- We have built a challenger bank and an Ethereum project in two years.
- We have delivered on our whitepaper (all but the 0 balance card, which we are working on)
- Your fiat balance is custodial: it is held with a regulated UK/EU bank.
- We know how to minimise this custodial access via our 0 balance card
- We are waiting for sign off from regulator and key partners before we try and get it out in front of you
- Note that this is only possible via Smart Contracts
- We are custodians of KYC data, we are looking at how we can deploy self-sovereign identity We are thinking about how we can use Zero Knowledge tech to bring credible privacy to this non-custodial world
As a closing thought (which I am stealing from Mel co-founder and CEO of TokenCard):
Uber, the world’s largest taxi company owns no vehicles, Facebook the world’s most popular media owner creates no content, Alibaba, the most valuable retailer has no inventory and Airbnb the world’s largest accommodation provider owns no real estate. Something interesting is happening
— Tom Goodwin in TechCrunch, March 2015
What if the consumer banking experience of the future is one where the service provider holds no customer deposits (that is, in technical terms, no client money)?
This post is based on a talk I gave at ETHLDN on May 08. If you want to dive deeper, the whole talk [38:32] is available here, along with the slides.
In this post, I wanted to share the vision we are working towards at TokenCard, and particularly the role the contract wallet plays in our service offering. We will dive deeper into the mechanics of the wallet in the upcoming posts.
In case you missed it, we opened the registration to the TokenCard alpha. You can join here. The debit cards are currently available for iPhone owners living in the UK or any of the 31 countries of the European Economic Area.
— 🎮 Discord| 👽 Reddit | 🐦 Twitter | 📜 Whitepaper| 🕸️ Website —
