Despite the incredible benefits of the financial system as we know it today, certain events make one want to seek out an alternative. Events such as the collapse of bankers, bailouts, corruption, and intentional limitations present a compelling case for digital currencies like bitcoin
In the midst of this, there are at least two prominent propositions suggested in the crypto ethos to fix the global economy: replace the banking system with crypto (especially Bitcoin) or integrate blockchain technology into the traditional financial system’s processes.
Caitlin Long, the founder, and CEO of Custodia Bank, who spoke at Bitcoin 2023 in Miami said that instead of replacing the old traditional financial system with crypto, it is possible and better to have Bitcoin-based banks alongside the old banking model operating together. “I would rather have a world where the two financial systems are developing and have connectivity that each one doesn’t.”
In her opinion, as a Bitcoiner, it will be a terrible situation to be passive while the global financial system collapses, and the world is not ready for hyper-bitcoinization at this moment. The CEO noted that this was the driving force behind the development of Custodia Bank.
Stablecoins, and alternative banking system
Caitlin also noted that stablecoins, are another concern for traditional banking. Citing the recent banks that collapsed in the US, she noted that the rate at which stablecoins grew over the past years was alarming “for a bank that was holding stablecoin reserves to do the traditional borrow short-term and lend long-term”. She also added that Custodia wants to achieve the goal of “creating connectivity safely and soundly so that the two systems don’t cause problems for each other.”
The evident fragility of the Federal System demonstrates that people should explore alternative banking models, according to Mark Connors, Head of Research at 3iQ. Inflation, which has significantly impacted today’s financial world, presents only two options – “keep adding to the money supply or break the banking system.” It was further noted that the key “responsibilities” of the Fed, namely price stability, full employment, and financial stability, are no longer being effectively executed.
In a concerned state, Mark warned that due to the deteriorating nature of the US economy, which has affected the dollar and housing sector, the country will soon resemble Japan. “The next generation of people is going to leave, and you’re going to end up like Japan, where there’s no growth.”
Furthermore, Caitlin informed the audience that as the Fed prints more money, Bitcoin becomes stronger and better. “The more the central banks print, the more it’s an advertisement for Bitcoin. I don’t think it’s a coincidence that Bitcoin is up a lot this year in the face of what’s going on.”
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