For those of you that were around for the internet’s humble beginnings, you’ll remember how difficult it was to access and surf the web. Often, it was painfully difficult—dial-up in particular. And my dad, God bless him, has always been at the cutting edge of technology. He was an early adopter of the internet, even at this rudimentary stage.
Netscape, the first web browser, was a game changer. Suddenly, basic tasks became much simpler through a search function. So for those, like myself, who were technically-challenged, the Internet was much more accessible. And so the floodgates were opened for the masses.
Now, cryptocurrency is having its “Netscape moment.” Banks have now been approved by the office of the controller of currency to be custodians of cryptocurrencies.
What does this mean?
Banks will now be able to hold cryptocurrencies on behalf of their clients. That means more accessibility for the wider public. In the past, it’s as if there was a forcefield around the crypto market, because of the “tech” involved. So banks being able to step in and facilitate the process will allow people to break into the market for the first time.
Until now, cryptocurrency has been a pretty closed market compared to other assets. Only 0.6% of the global population had bought cryptocurrencies until this point—that’s only about 35 to 50 million people. A miniscule number, even nationally, with about $300 billion in circulation.
And before you discount that $300 billion, compare that to the gold market. Depending on the price of gold, there’s roughly $7-8 trillion worth of gold in the markets. The difference is staggering.
Now, the barriers to entry have been lifted.
My Take on Banks Managing Cryptocurrencies
In terms of diversification, cryptocurrency has been an asset worth watching and having. Investors like Paul Tudor Jones, for example, have had a percentage of bitcoin as an inflation hedge. More people will now be able to amass a small percentage of Bitcoin to add to their own portfolios. And as custodians, the banks will be able to facilitate these transactions.
However, I have my own opinions on banks holding crypto. Though the possibility for wider accessibility, I would not choose to have a bank hold my crypto. I’m all about being your own bank. And it’s possible to be your own cryptocurrency banker, through memorization of your pause phrase or your seed key, or having your currency in a cold storage wallet.
What the middleman does is make crypto easier to buy. Even exchanges like Coinbase act as middleman, and they charge a premium for acting as such. That’s one reason why it can be so expensive to break into Crypto. And though having banks facilitate transactions will make the process easier to allocate a small percentage of crypto, it will not necessarily be cheaper.
The Rapid Growth of Cryptocurrencies
We’ve already begun to see the adoption rate increase massively. The Square Cash App just announced that $175 million was transacted in Bitcoin. That’s a 600% increase. PayPal is attempting to break into the cryptocurrency market as well, while a number of other platforms and payment processors are researching ways to adopt. Wall Street has been eyeing it for a while, in fact.
Not too long ago, which you’ll likely remember, many CEOs were claiming the cryptocurrency was a scam. Jamie Dimon, CEO of JPMorgan Chase, famously denounced it as useless and stupid. Yet they’re also buying it while they’re bashing it, and working out how to produce their own cryptocurrencies.
And that’s the other component—banks and other companies, like Facebook’s Libra, are working to create their own currencies and tokens. When it comes to this crypto-space, the opportunities are limitless. I began covering this topic in 2016, and talked about how it was the Wild West of currency. This is still, in 2020, the Wild West. And now, it’s had its “moment” where everything will take off.
Is This The Only Netscape Moment?
In all honesty, we might have several more of these moments where cryptocurrency becomes increasingly accessible. First, we’ll have to get past the obvious—user-friendliness and the shock value of hacking headlines. Then, once banks start to roll out their offerings and people gain more confidence in the process, I believe the adoption rate will continue to skyrocket.
It may be the Wild West for now, but it’s refining and becoming more tame by the day. For the early adopters, there’s still plenty of opportunity in the space, and for those who haven’t entered the space, you may want to consider it. I think there will be incredible things that come from this, in the same way the internet changed the world after its Netscape Moment.
Live your Freedom, Live Your Legacy, On Your Own Terms,
M.C. Laubscher is a husband, dad, podcaster & Cashflow Specialist. He helps business owners and investors create, recover, warehouse & multiply cashflow. You can learn more about exclusive cash flow strategies in M.C.’s new video series at https://www.yourownbankingsystem.com/
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