How Blockchain will Cause Banking to Implode

In late 2018, banks started to embrace blockchain instead of downplaying it as they did in 2016.

This is because blockchain was replacing their role as keepers and carriers of money and they are afraid of losing their relevance.

If you can’t beat them, join them!

Because of this fear, some banks have embraced cash from crypto transactions, connecting the regulated cash industry with the unregulated crypto industry.

In 2018 alone, nearly $1b was lost to hacking in the unregulated crypto industry, a large increase from the $266m lost in 2017.

We expect that this trend will continue as more people shift to cryptocurrencies.

This increased volatility will then drag the banks that interface between crypto and cash.

The Difference in Dharma of Crypto and Cash

Although the technology in crypto exchanges is a bit different from the crypto transfer mechanisms in banks, the core principles are the same — both rely on encryption to secure financial data which is then exposed in order to be more readily accessible.

In other words, the new system sacrifices security, a core quality or dharma of the banking industry, for speed and low cost, a core quality or dharma of the IT industry.

By losing its core gradually, the banking system will also gradually lose its real relevance and go out of its dharma, creating a risk of its implosion in the future (something bad or adharmic*), most likely through overtrading.

*In eastern philosophy, there is no good or bad, just dharmic or adharmic

Our economic model has factored this in way back in 2013 and has predicted a future year when this will likely happen, just as it correctly predicted a financial anomaly happening in Q4 of 2017 to Q1 of 2018.

Update March 2023: Collapse of Crypto Banks and the Solution

As predicted, the banks that entered the crypto fray imploded due to the difference in dharma.

Silvergate Bank collapsed in March 2023 after the FTX collapse. Around 90% of the bank’s deposits were from crypto holders.

Silicon Valley Bank collapsed from the downturn in venture capital from the rise in interest rates.

You could say that quantitative easing increased money supply unnaturally which led to speculative behavior into crpyto and startups.

Supereconomics solves the crash from speculative behavior by establishing a moneyless system as a counterweight or competition to the financial system.

Unlike the financial system that uses interest rates, the moneyless system uses a markup in every transaction.