Goodbye, Gold: The Future of Banking
Our whole monetary and banking system is built around gold’s frailties. Gold has reigned supreme for millennia as the king of settlements – the final balancer between nations, businesses and people.
Some of our favorite stories are tales of pirates, Robin Hood and sophisticated bank robberies. Surprisingly, 4 of the 5 top gold heists occurred within the last hundred years. Only the Spanish gold blunders are in the top five. I guess there’s a reason for Fort Knox.
Gold does have its weaknesses: most notably, it’s slow, heavy and prone to theft. When it comes to speed of settlement, the message is clear: Goodbye, gold.
The Rise of Bitcoin
Bitcoin has proven itself as a store of value, measure of exchange and transfer of value. Settlement between parties is immediate, immutable and trustless. Transfer value is determined at the moment of transaction, and Bitcoin markets are liquid and vibrant.
The benefits of bitcoin are clear: it’s fast, valuable and theft proof. Let’s be honest: it is much faster and cheaper to move 15 Bitcoins then a bar of gold (400 troy ounces). Thus, it is only a matter of time before gold is dethroned as the king of settlements.
Liquidity: Farewell, US Dollar
Newsflash: The US dollar is not stable. It’s a well-controlled fiat currency. The Federal Reserve debases the dollar every year.
The US dollar ceased to function as a store of value in 1933. Any future Central Bank Digital Currency (CBDC) will fail as stablecoins because they are not stable. They will likely fail as digital currency too, due to lack of utility.
Rise of US Treasuries Stablecoins
The US Treasury market is the largest, most liquid market in human history, at $27 trillion. Gold and Bitcoin combined are just a fraction of the Treasury market.
By design, they will never topple US Treasuries.
If the US Treasury issued digital bonds on a blockchain, it would be the most disruptive event in financial history – the king of stablecoins with unrivaled liquidity.
Who needs a US dollar, anyway?
That’s what I’m asking. When we have digital currencies anchored by US Treasury stablecoins (bonds), who really needs the US dollar?
The US government needs the US Dollar even if we do not. The US Treasury will peg the Federal Reserve CBDC value to its Treasury stablecoin and require all payments to and from the US government be payable in CBDC, guaranteeing a large and vibrant market for CBDCs.
Gilman Patrick LLC has authored many informative articles on the impact of blockchain technologies on banking, such as: Banking on the Blockchain, Crypto Pump, Balancing the Fiat Barbell, DeFi New Renaissance.
Coming soon: our white paper on creating a blockchain credit union for world citizens. Stay tuned!
If you’re a financial institution in the process of change, or you know you need to make changes, let’s talk! Schedule a chat today.