Leveraging Blockchain When a Banking Crisis Hits

The recent banking failures of Credit Suisse and SVB have highlighted the fragility of traditional financial systems. These incidents have left many individuals questioning the security and reliability of the current banking system. However, with the emergence of blockchain technology and the rise of decentralized finance (DeFi), there is now an opportunity for individuals to take further control of their assets. These assets are naturally their financial assets, but also, their identity.

PhotoChromic is a protocol that allows people to mint a soulbound NFT that represents their verifiable identity, and in this blog post, we will explore how this project can help individuals better control their assets and their identity.

The Banking Crisis: A Summary

The recent banking failures have highlighted the fragility of traditional financial systems. Silicon Valley Bank (SVB) was shut down in March 2023 after its investments greatly decreased in value and its depositors withdrew large amounts of money, among other factors. Later in March, First Citizens Bank bought up all deposits and loans of the failed bank. The bank had assets of about $209 billion in December 2022 and was the 16th largest bank in the US.

Silicon Valley Bank saw massive growth between 2019 and 2022, which resulted in it having a significant amount of deposits and assets. While a small amount of those deposits were held in cash, most of the excess was used to buy Treasury bonds and other long-term debts. These assets tend to have relatively low returns but also relatively low risk.

But as the Federal Reserve increased interest rates in response to high inflation, Silicon Valley Bank’s bonds became riskier investments. Because investors could buy bonds at higher interest rates, Silicon Valley Bank’s bonds declined in value.

As this was happening, some of Silicon Valley Bank’s customers — many of whom are in the technology industry — hit financial troubles, and many began to withdraw funds from their accounts. To accommodate these large withdrawals, Silicon Valley Bank decided to sell some of its investments, but those sales came at a loss. SVB lost $1.8 billion, and that marked the beginning of the end for the bank.

The Opportunity Presented

The recent banking failures have presented an opportunity for individuals to take control of their financial assets and their identity. Decentralized finance (DeFi) and blockchain technology offer an alternative to traditional financial systems that are often centralized and prone to failure. By leveraging blockchain technology, individuals can have self-sovereignty over their assets and identity, reducing their dependence on traditional financial institutions.

How Web3 Can Allow People Better Control Over Their Assets, Including Their Identity

Web3, or the decentralized web, is a term used to describe the next generation of the internet, which is built on decentralized technologies such as blockchain. Web3 offers individuals better control over their assets, including their identity, by enabling them to interact with decentralized applications (dApps) that are built on blockchain technology. These dApps allow individuals to transact directly with each other, without the need for intermediaries such as banks or other financial institutions.

PhotoChromic is a protocol that leverages web3 technology to allow individuals to mint a soulbound NFT that represents their verifiable identity. This NFT can be used to verify an individual’s identity in various contexts, such as when opening a bank account or applying for a loan. By having a verifiable identity, individuals can have better control over their financial assets and reduce their dependence on traditional financial institutions.

The Potential Future of Banking and Blockchain

As more people adopt decentralized solutions, the financial landscape will likely undergo significant changes. Some potential developments include:

1. Decentralized Finance (DeFi): DeFi has already been making waves in the financial world, allowing users to access financial services like lending, borrowing, and trading without intermediaries. With secure identity management through protocols like PhotoChromic, DeFi can further expand its reach and offer even more services, including credit scoring, insurance, and mortgages.
2. Digital Identity: PhotoChromic’s soulbound NFTs offer a new way to manage digital identity, which can be extended beyond financial applications. Users can leverage these NFTs for identity verification across various platforms, enhancing privacy and reducing the risk of identity theft.
3. Financial Inclusion: The unbanked and underbanked population can benefit from decentralized financial services powered by blockchain. With verifiable identities through PhotoChromic, these individuals can access a range of financial products and services that were previously inaccessible, enabling them to participate in the global economy.

In conclusion, the recent banking failures of Credit Suisse and SVB have highlighted the fragility of traditional financial systems. However, with the emergence of blockchain technology and the rise of decentralized finance (DeFi), there is now an opportunity for individuals to take control of their financial assets and their identity. PhotoChromic is a protocol that enables individuals to mint a soulbound NFT that represents their verifiable identity, allowing them to have better control over their financial assets and reduce their dependence on traditional financial institutions. The potential future of banking and blockchain is one in which individuals have self-sovereignty over their financial assets and identity, leading to a more decentralized and secure financial system.

Learn more about PhotoChromic at:

Website | White Paper | Medium | Telegram | Telegram Announcements |

About PhotoChromic

PhotoChromic introduces a unique use case for non-fungible tokens (“NFTs”) by integrating them with user identity, to develop a biometrically managed model of Self-Sovereign Identity (“SSI”) on the Blockchain. Using NFTs, PhotoChromic aims to make identity programmable, verifiable, universally addressable, and digitally secured.

Powered by an ERC-20 token, $PHCR, running on the Ethereum blockchain, PhotoChromic addresses the current challenges faced by people the world over, as they pursue ownership over, and the ability to secure, their identity. PhotoChromic gives control and ownership of user identity back to the individual, where it belongs.