Bitcoin – The New Financial Order
A new financial order is emerging which will be radically more transparent than the system which has not fundamentally renovated itself since the crisis of 2008.
PPI scandals. Libor rigging. On and on it goes. The financial services industry fundamentally lost sight of the simple fact that it is not an industry; it’s a service industry to industry. Its job is to back the industrialists of the day.
If we look back at history, power has shifted from hierarchies to the common man with the help of productivity tools and access to finance.
The source of power and wealth has always been property ownership. This has been devolving to the individual slowly, but faster than we realise when we focus on it looking backwards.
Still today, this access to the means of financially enabling our lives is difficult in the so-called developing world (as well as for many in the so-called developed world too). But boy do they have a desire to leapfrog and catch up.
If you are a young, poor African, you know you have to change the rules of the game to win. Heck, just to stay alive. Status quo is going to give you nothing much.
Money is tied intimately with both our identity and specifically our digital identity, but also a country’s sovereignty. It’s the last bastion of power. But it’s also empowering, and it has always followed ideas and those who execute those ideas throughout history.
What Bitcoin does as a currency is enable individuals to transfer wealth between themselves eliminating fees and certain controls. It’s a minor surge towards empowering individuals in the battle between government and the individual. This battle will be fought long and hard as a new common sense emerges and a new financial order becomes clear.
It wasn’t long after meeting Marcus Swanepoel, a key speaker at this year’s Follow the Entrepreneur Conference, and Timothy Stranex that we started to dig into the Bitcoin space and the development of strategies for banks to engage with crypto-currencies. We soon realised that emerging markets would generate huge traction and they will grow strongest.
Where there’s less at stake (no trillion dollar pension industry, Wall Street, City of London, etc), but billions of massively ambitious bottom of the pyramid smart people wanting a ticket upward, widespread adoption could take off like wildfire.
If we fast forward five years, there is no question in my mind that banks will be playing a key role in the Bitcoin ecosystem despite the recent European regulators’ view. And the digital David’s, the entrepreneurs will help those banks re-intermediate themselves into their industries, re-imagined as ecosystems, being massively digitally disrupted.I believe that the banks will not only want to but have to get into the game on Bitcoin and other crypto-currencies.
Students of innovation know two things: innovation always wins – it’s just a question of time, and the layering effect – we still have railroads despite having airplanes, and radio despite having TVs. Bitcoin doesn’t replace everything, but it adds to the world – perhaps revolutionary in its fundamental proposition, but evolutionary in its lift-off in markets.