Within a few short years we could find our banking system is bankrupt. No, I’m not trying to predict another subprime mortgage collapse, and this isn’t another anti-Trump message of doom (although his lack of understanding of ‘the cyber’ and affinity with traditional business models will not help the United States of America weather such disruption). Instead, the rise of the ‘Blockchain’ simply renders banks unnecessary.
Why do banks exist?
Banks exist because storing your cash under your mattress isn’t very secure. But what is it about banks that makes them a safer place for your hard-earned wedge?
According to legend, the the Knights Templar invented the first form of modern banking in the 12th century. They would take in money from Christian crusaders, pilgrims and travellers in return for a slip of parchment that detailed their deposit. Further along their journey they could swap their parchment at a ‘Templar House’ for gold, silver and whatever-the-hell-myhrr-is up to the value they had deposited. Sound familiar?
As for security, the Knights Templar were some of the most fearsome warriors around. They didn’t need to chain their pens to the desks, if you nicked one you’d do well if you only lost a hand…
The first Templar banking system relied on low literacy levels. Basically, the hope was that the parchment could easily be overlooked by groups of medieval chavs rifling through your pockets looking for gold coins. Eventually, the parchments were written in code (encrypted) to avoid them being tampered with. Ironically, it is encryption which is the basis for Blockchain, which may end up destroying this old-style of banking.