Bankers Are Just Glorified Bookkeepers

in LeoFinance9 months ago

What purpose do bankers serve?

They like to make us think they are so important but when you really analyze it, they do nothing more than bookkeeping. Once we understand this, we can start to wrap our minds around how the system really works.

In the age where we are on a quest to decentralize everything, knowing what each entity's role is helpful.

The fact that most people lack financial and monetary knowledge means the bankers can carry on the charade. That said, it is now time to end it.

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Ledger-Based Money

We discuss the idea of mass adoption of cryptocurrency. Many feel threatened by it, like it is something new. The reality is that we have been used ledger-based money for decades. Banks are not moving money around like we are led to believe. Instead, they simply put numbers in different places on a ledger.

This is called balance sheet banking.

For decades the banking system created their own form of money. This became what is known as the Eurodollar system. It was developed by bankers outside the scope of the governments and central banks. Ultimately, this served to take over the global economy.

Here is where we saw the bankers aim to match the demand for money with the supply. It is something the major central banks cannot do. They like to claim that they can affect the money supply but the truth is they do not.

Notice a trend of the misrepresentation by the entire banking industry?

If we have trillions of dollars moving around the world, yet it exists only in virtual form, what role do bankers really serve?

Ultimately, they just keep track of it all, aka providing a bookkeeping service.

Blockchain Is The Death Of The Banks

What is blockchain? It is distributed ledger technology.

What is cryptocurrency? Distributed ledger-based money.

Do you notice something here? If blockchain is ledger technology and cryptocurrency ledger-based money, isn't it evident that a blockchain can serve as the replacement for the bookkeeping tasks performed by banks?

After all, how often do we actually put cash in a bank for them to keep? Even checks, which were a dominant payment mechanism in the early 1900s, are just the moving around of numbers.

In short, the banks are cooked. They are the poster children for intermediaries that serve little purpose but extract fees. Blockchain can perform the same services for much less.

Some feel that stating the banks are done is a bit over the top. If that is the case, look at what they actually do. FinTech already proved that much of the services banks provide could be replaced with technology. Look at the mortgage industry. In the US, the largest mortgage originators are basically applications.

This is only going to keep expanding.

Decentralized Finance

Certainly there are some things that are beyond the money creation process. For this, we have the introduction of Decentralized Finance (DeFi).

If the bankers could gain control, then it only makes sense to think that DeFi will likely take over the world. The ability to innovate in this area is without limit. Over the next decade, we are going to see applications built that make a great deal of what the bankers do obsolete.

Ultimately, these entities could end up becoming nothing more than front ends, linked on the back end to DeFi applications that are truly running the financial system.

We are watching the end of traditional banking.

Of course, the new system is one that is inclusive and will really provide the resources for massive economic growth over the next few decades. Since the Great Financial Crisis, we saw the lack of USD and collateral in the international banking system caused major problems.

Cryptocurrency solves this.

The Internet Disrupts Industries

Take a look at this list:

  • Travel Agencies
  • Newspapers/Magazines
  • Video Rental
  • Music Distribution
  • Communications
  • Retail Shopping

All of these are industries that were disrupted by the Internet. When that happens, whatever is there tends to get destroyed. While some will adapt, most do not. This is why we saw bankruptcies in each of those industries.

As technology gets more powerful, and more people use it, the scope of what is destroyed only grows. Early on, travel agencies were targeted by online application like Expedia™. While that does not rival a bank, we are a lot further along as compared to 20 years ago.

Blockchain and cryptocurrency are causing havoc within the entire financial sector. Banking is at the top of the list. Software already replaced much of the bookkeeping industry. Now it is going after the ones who dress up as something else.

Questioning what is going to happen with this technology shows a complete lack of understanding how the Internet works. There are some who believe the banks are not vulnerable. The idea is they are "too big to be taken down".

The reality is that FinTech already did a number on them and we are watching the second act unfolding now.

What is different this time, as compared to the Eurodollar system, instead of being narrowly distributed, we see cryptocurrency goes a lot wider.

Remember what file sharing did to the record companies. Essentially, a single application, Napster, destroyed some of the most powerful companies in that realm. While that entity ended up going under, due to being centralized, the idea of file sharing never went away.

Do not underestimate the technology we are dealing with. Over time, it will only grow more powerful as infrastructure is put into place. This will lead to further development, targeting even more areas of the banking system.

In the end, these well dressed bookkeepers will find they have no defense.

How do you see the future of banking? Let us know in the comment section below.


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Bankers do one thing that the decentralized blockchain struggles with, which is lending.

In the early days of bitcoin there were some experiments with lending bitcoin, but
they failed because people absconded with the coins.

Basically, we need a development where governments legislate to make smart contracts on the blockchain legally enforceable, and then we can move forward with decentralised blockchain lending.

Do not forget that even a blockchain bank can disappear into the air, where you deposited your funds)

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Why would you want governments involved in anything?

Have you not seen the corruption?

As for the lending on blockchain, balance sheet banking has excelled at lending for over 70 years. Since blockchain is digital ledger technology, there is no reason for it to not excel in the same manner.

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Suppose you lend me 1 bitcoin and I abscond with it. "But it's in the digital ledger", you cry.

I say, "So? You can't prove the pseudonymous address you sent the coins to belongs to me, and even if you could, you can't make me give 'em back".

Actually you can, by taking me to a court (run by the govt) and sue me under laws passed by the govt.

But if you don't believe in government and won't touch those government-run things like courts and laws with a bargepole, well you ain't ever going to get your coins back...

And what collateral are you putting up for the 1 Bitcoin?

That is what lending is about, collateralization.

There was a banking system that lends trillions of dollars per day without courts or governments. It has been operating for more than 70 years.

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I think blockchains will replace the banks due to the ledger technology but I am still a little bit confused on whether or not Defi will replace banks. Most of the farms seem to be the same and most of the farm tokens also don't really keep up in price at all.

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Well you are looking at DeFi now. What about collateralized lending through DeFi? How about swap systems?

There are tons of things that banks do internationally that can be replaced by DeFi.

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Yes, it could but I find that most of the Defi systems seem to be built on trust and people are chasing after yield. So most of the platforms look like they kind of die down after a while. While it's true the yield is higher, I don't really trust holding most farm tokens.

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I feel the people who work for the banks make the consumers frustrated more than the banking concept itself. It's kind of painful to see how the people get older and have frustrating banking experience. It's good to see how the digitization can change this, crypto even more so.

I dont think older people are going to embrace a lot of the newer technology. So we see how this is going to be another generational thing.

Have to clear out the Boomers before the banks are truly in trouble.

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Banks have destroyed the lives of many people. It is time to remove them from people's everyday lives. I'm happy to help put them to rest. 😁

They have served a good purpose too. It only one sided.

Lending tends to improve lives and help society with forward progress. However, failure to pay leads to bad consequences.

They are rent seekers though and skimming off the top has cost people trillions of dollars.

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Just by looking at how many ways of spending crypto nowadays and one can realize banks are cooked. Crypto is over a decade old, but the true progress in eating the banks lunch has stated a mere few years ago. Look at what Binance has done in this regard and it's clear where we're heading.

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Yes, they are already studying the life and work of Monsieur Joseph Guillotin)

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I would say that the real move in crypto, as it applies to the bankers, happened in the last few years. For most of the existence of crypto, we see very little that affected much.

With what was developed in the last 3-4 years, it accelerated things. I believe this will only continue at a faster pace.

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Good reflections!

In time, we’ll probably see the banks moving further and further towards providing services of some kind to retain customers as the need for traditional banking declines.

Hopefully it all benefits the consumer in the end!

for now, they remain for us an intermediate link between the crypto exchange and the cache.

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I have a feeling it will end up like the newspapers: generational.

When I go walking through my neighborhood, I can usually tell where the older people are. The ones with a paper in front of their house is not usually a young couple.

Banks will hang onto their old (as in age) customers. But over time they will die off and the younger generations will not even start with banks.

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The banking system is going fully digital whereby u can do documentations even at the comfort of your homes

Yes, they want to be like something, digital, but they are still far from the blockchain.

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The banking system was digital for decades. In fact, money was digital for the last 100 years. Look at the payment with checks. That was a digital payment system. The money was actually moved via just an accounting system.

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Banks are on there knees right now. Most people didn't know what the actual functions of banks was. Now thanks to Blockchain and Crypto there functions has become near obsolete because it can now be done 100x faster and cheaper.

Until the powers that be show the banks their place, I do not think that soon we will see them kneeling with outstretched hands. Many banks declare themselves bankrupt, and, after some time, reappear. As long as there are grandmothers who put a part of their pension on deposit in a bank, banks will exist.

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Yes, when you've been in the game for awhile, you'll always find a way. However, when you zoom ahead. The grandchildren of those grandmothers might not be using banks to deposit their pensions. Banks wouldn't let go without a big fight but the odds are heavily stacked against them if they continue with the old model. We'll see how it goes in the near to distant future.

You need to understand that most banks are small hucksters that depend on one or several large wallets. Look at Igor Kolomoisky, the founder of the Privat financial group...does this cheerful Jew want to exchange shadow operations for an open blockchain? I doubt it very much, and all Privat banks obey the snap of his fingers.

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Banks are on there knees right now.

Rather most of their costumers. Similarly to a prisoner or a slave. But cryptocurrencies can free/liberate them.

I am not sure it is all out there but moving in that direction. People didnt know newspapers were done until it stopped showing up one day. It took about a decade before the Internet made an impact.

I expect the same with banking. The more time that passes, the more alternate services tied to blockchain will be used.

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I think one of the reasons why banks and bankers demonizes Blockchain technology is it's ability to actually replace it. But then, banks are doing too much. The sovereignty they acquire from the government makes them ruthless in dealing with people, it's hard to swallow when they've realized a tech could do their job, in a more decentralized and cheaper way.

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That is true. They are trying to protect what they have. This is something that cannot be avoided. Many industries tried to stop the progress of the Internet.

It didnt work.

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Exactly, while this is protecting the progress or reach of Blockchain technology, I think stopping that progress only slows the process, I feel banks wouldn't have it their way for too long.

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You need to start not with banks, but with fiscal authorities. If the fiscals are not against the blockchain, banks will die by themselves.

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But do we really have government agencies that are truly for the inculcation of Blockchain technology?

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I doubt it very much, I think that everything rests on enthusiasts.

I think the banks will die eventually, but it will take some time!!

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Of course.

25 years into the Internet in the developed world and there are still newspapers floating around. So things take time to die off.

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#ModernDayLoanSharks is what I reference them as

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It looks like Modern Talking, they also ... sing?)

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At the interest rates they were charging, I am not sure you could find loan sharks to match that.

It isnt as if they were charging 18%.

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It just a matter of time technology will take over the world because it bring Less work and required less money,banker is cooked ,we still have many institute that is cooked, just because to take our money and can take control of our life

Yes, but we're not getting any younger)

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Marc Andreeson said a decade ago that software will eat the world.

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Who would have thought online shopping will be a thing of the present decades back, look back in the 80s and you won't imagine seating in your house and get whatever you ordered online delivered to you. This tells us what lies ahead which we can't even imagine is possible yet with blockchain.

Now it is going after the ones who dress up as something else.

Lol, they really are good at looking very important, I have a banker friend that already quit his job for crypto, he sees the potential, sadly while he might have made a good move he is going about crypto the wrong way, recruiting for all those crappy Bitcoin mining stuff out there.

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Just show him his name, where he belongs, land him a bit)...challenge him to a tournament in Splinterlands)

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I created a Hive account for him almost a year ago, I showed him Splinterlands and all that am doing investing almost nothing.

Last time he told me he lost money in a Bitcoin mining platform called Bitclub, exactly the way I started and lost money.

He just don't want to learn, one of those after hypes.

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Some teachers beat their students if they don't want to learn and obey)

Lol, he's a grown up.

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So much the worse for him.)

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And I actually see him doing well on Hive, probably Leofinance in particular being a banker from a banking background. I checked on him last week during the UST crash and reminded him of Hive, hopefully he shows up at my place again I give it another shot at letting him see the opportunities here.

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Things changed over the last 40 years, that is true. The Internet upended everything. Now we are at a time where it seems things are moving even faster than in the past.

Hence we can expect disruptions to occur in shorter time windows.

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Blockchain will not only kill banks and credit communities, it will destroy kickbacks, because open access allows you to trace every transaction. This will deprive corrupt officials of the opportunity to do their business quietly in fact, the whole construction business is based on this, land markets, obtaining licenses and permits to open a business, you can trace everything, and they cannot hide anything from those who voted for them in parliamentary elections and things like that.

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That is true also. There are going to be a lot of things destroyed by the technology that is being developed. As more innovation takes place, we are going to see a massive paradigm shift arising.

This will filter through to most industries. It is hard to envision how it will exactly look but we have some general idea.

The digital world is becoming more important with each passing day.

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Anyone who sees a danger for himself, like a horse in blinders, will not see the importance of future changes and will not bend his behavioral line)

Very accurate. Most seem to have blinders on.

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It was as if I was expecting something of this topic. I just got a perfect word for bankers right now. They are employed for record keeping and not really banking job itself. The fact that you can even perform so many tasks yourself on a mobile bank app makes their work less needed and almost useless. Traditional banking should just go down the drain and give room for Blockchain tech to take over.

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Hey there,I love this article, I'm currently living in a country envolved in a economical war, where lots of differents interests converges, trapping regular people without acces to international currency in a lifestyle characterized by unnecessary poverty.Step by step cryptocurrencies are giving an opportunity to these people, to have better life conditions, and survive to the ego of those who have the economic,military and political power on his hands, and uses these power as a weapon against them.🏅🏅🏅🏅🏅

very well explained

Internet has replaced the traditional system in a lot of fields. However, I think banking is stronger. Blockchain would replace them but not it the near future

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