The internet has transformed our access to information. Gone are the days of solely relying on libraries and schools; now, data is instantly available. Everything happens online, yet banks still resemble old-school information systems:
- Speed: Transfers still take days, not seconds.
- Access: Many services cater only to specific groups, like U.S. residents.
- Costs: Fees remain high.
There's a need for an "Internet Bank"—a digital platform where anyone can transact freely, without boundaries. It should be a system so seamlessly integrated with the internet that its use feels magical.
Many have tried to realize this vision, like the OG X.com. They had a powerful mission: reduce costs across banking, investing, insurance, and financial planning. Yet, they failed and ended up building on the traditional institutions they aimed to challenge (pre-Paypal merge), ultimately offering a sleek interface without much change. Nearly all past attempts stumbled because they couldn't break free from the incumbents.
Crypto changes that. Users can hold assets in digital wallets, transact via blockchain networks, and even manage complex financial activities like insurance and loans directly on the blockchain. Despite crypto's ability to fix the problem, it's still broken because people don't trust crypto to replace their banks. Here's why:
- Custody risk: Insolvency, private key loss
- Transactional risk: Phishing, scams
- Protocol risk: Hacks, rugs
The Internet Bank must solve this and aggregate the various technologies that crypto has built into an experience that can be used by billions of people worldwide.
This Internet Bank, powered by crypto, has key advantages over its TradFi counterparts:
- Access: Instant, borderless account setup
- Speed: 24/7 instant transactions
- Costs: Significantly less operational costs than any TradFi institution
- Permission: Interoperability with all blockchains and parts of the new financial infrastructure
- Self-sovereign: Users have true ownership over their own money
The Internet Bank is also a great business. Similar to normal banks, the Internet Bank thrives with economies of scale, meaning the more assets inside, the more services it may offer at better prices. The Internet Bank can also dictate winners/losers of protocols/networks, indirectly control trillions in customer assets, and be the key interface to consumer finances.
We are finally at the inflection point of having the right tools, technology, and adoption to actualize the Internet Bank. Most importantly, the Internet Bank can deliver on the promises of crypto (banking the unbanked, democratizing financial services, building self-sovereign financial tools, etc.) And once the ball starts rolling, it will be impossible to stop the Internet Bank.
This isn't a "bank"; it's the natural evolution. I'm obsessed with this idea of the Internet Bank. If you want to chat about it, please DM me here.