With the recent explosion of cryptocurrency, a predictable backlash has formed in response. Thanks to projects like Dogecoin, whose founder wrote an op-ed wondering why his joke cryptocurrency that he abandoned is worth $2 billion, the entire market is framed by the mainstream through its most absurd projects. This is certainly a crazy bubble, but speculating and profiting dollars off cryptocurrency is not why it exists. That is the definition of missing the forest for the trees.
Bitcoin was the first cryptocurrency. In bitcoin’s genesis block, a Financial Times article was included, with the text reading: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
That headline is dated three months after Lehman Brothers filed for bankruptcy—kicking off our financial maelstrom that nearly evaporated the entire global economy in 2008 and 2009. Bitcoin was created as a direct repudiation to our financial oligarchy. It is an incorruptible digital ledger with a store of value which cannot be seized by any government or bank. The blockchain system itself has inherent value in a way that our present fiat monetary system does not. The more people who use blockchain, the more valuable the system becomes. It is a lifeline out of the existing financial system which squeezes society ever more by the day.
So, enter Bank of America’s new poor tax on a populace where 57% of Americans have less than $1,000 in their savings account. Per The Wall Street Journal:
Bank of America Corp. has eliminated a free checking account popular with some lower-income customers, requiring them to keep more money at the bank to avoid a monthly fee.
This month, all remaining eBanking customers with the Charlotte, N.C., lender were switched into accounts that charge a $12 monthly fee unless the customer has a direct deposit of $250 or more or a minimum daily balance of $1,500. Some eBanking customers were switched over as early as 2015.
If you’re jobless or underpaid with no direct deposit and less than $1,500 in cash reserves, Bank of America doesn’t want your business unless you’re willing to pay extra to store your wealth in their bank. It’s your money, so why should you pay a premium to store it securely? Isn’t that the entire reason that banks exist?
This—not getting rich off a new bubble—is why we need cryptocurrency. Banking is far more geared towards squeezing profits out of their customers than serving them. You can download a bitcoin cash wallet for free to securely store your wealth, and transactions cost next to nothing. I sent bitcoin cash to a friend yesterday, and the fee was practically $0. As people become more familiar with cryptocurrency and the ecosystem’s user interfaces improve, it will increasingly be viewed as a real competitor to our traditional banking system.
Just so long as there are dependable on/off ramps in and out of the cryptoverse (like Coinbase), and our banks continue their trend of being the greediest humans in history, this problem will worsen for our global banking titans. Bank of America and other banks charge fees like this because we live in a monopolistic market with very little competition in our largest industries. Bank of America wouldn’t be squeezing their poorest customers to use their most basic service if they didn’t think they could get away with it, and this is why we need cryptocurrency to help navigate our way out of this mousetrap. Banks have rigged the game to ensure that they will never face any real competition.
Bitcoin is a loaded gun pointed at every non-U.S. government without its financial house in order. Venezuela, Argentina, Nigeria and a whole host of other countries with social, economic and/or political instability have already demonstrated that people in desperate situations will park their savings in bitcoin if their existing financial system fails them. This is not a theoretical argument anymore. Bitcoin has already irrevocably changed the world. The power of the dollar shields us from that reality here, but we can still mimic these advances, like abandoning traditional banking for simple tasks.
Thanks to the policies of Ronald Reagan, George H.W. Bush and Bill Clinton (and our overall broken culture that worships the Almighty Dollar), Bank of America and their ilk were able to grow to such a gargantuan size that they have now become completely ungovernable. The 2008 crisis proved that there is no such thing as a billionaire criminal in the United States of America, and these banks can literally get away with murder. Cryptocurrency is the natural response to decades—if not centuries—of financial malfeasance by the globe’s most powerful actors. Critics of cryptocurrency like Paul Krugman don’t see the value in it, because they cannot envision anything outside the purview of our existing financial system having value.
Being able to transact and store value outside the existing international financial system is the problem that this clever cryptographic solution solves. Krugman waves his hand away at this desire—assuming that the only peer to peer transactions that people want are criminal—but this just doesn’t match the reality of our fundamentally broken world. If people knew more about these third parties facilitating our typical transactions, they would call them anything but “trusted.”
I used to work for a merchant services company, and they are the third party that Krugman refers to in his thread above. I was trained to—not lie—but obfuscate the truth, in order to funnel as many of America’s small businesses into a system that takes roughly 3% of their revenue (not profits) before it hits their bank account (seriously, check out the endless amount of fees that Visa charges merchants. It’s madness, and my column linked to above is something of a how-to guide for business owners trying to navigate this corrupt and broken process).
If you ran a small business, and you didn’t care how you got your money just so long as you received as much of it as possible, you’d never use a merchant services company if you could get away with it. Bitcoin cash fees are practically zero, transactions are instantaneous, and bitcoin cash can be sold anywhere in the world, with dollars deposited into your account faster than the resolution process of merchant services. With merchant services, you still rely on the traditional banking system—meaning that if you make a sale on Friday or over the weekend, you can’t access your money until the banks reopen for business on Monday (after merchant services companies and the banks have shaved off their cut of your cash).
Bottom-line: as long as the world’s commercial, investment and central banks continue the monopolistic and predatory practices which nearly liquidated the global economy in 2008, cryptocurrency will continue to gain power. Our new Gilded Age has proven that capitalism cannot be constrained by law, so cryptocurrency is an attempt to rein it in through code. That may be an idealistic notion, but it’s infinitely more grounded in reality than expecting the existing international financial system to behave with any measure of empathy or fairness.
Jacob Weindling is a staff writer for Paste politics. Follow him on Twitter at @Jakeweindling.