More Proof Centralized Entities Cannot Be Trusted
The tenets of Bitcoin are well known.
Born out of the Great Financial Crisis, the idea was to create a system that operated outside the banks. Here we see 15 years later and people are still being abused by the banking system.
A story is now going viral about a man who had an account closed down after 18 years with a bank.
No Warning or Explanation
This is something we see happening with centralized entities.
In this instance, we are discussing a bank but it could just as easily apply to a social media platform. Whatever the sector, we see this happening on a daily basis.
JP Morgan decided to close this account without any warning. The promise of an explanation also did not come forth. None was provided.
“Confirmed, Chase closed everything down. No warning, no explanation. I had to take all my funds out yesterday and they recommended me to grab all my things in my safety deposit box. I’m also banned from conducting business with Chase.
Nothing in my credit or banking history has been different than the normal transactions I’ve been doing for years. Has this happened to anyone before? I feel like this is a ‘it’s you, not me, please delete my contact info from your phone. Don’t reach out.'”
People are starting to learn what it means to not have sovereignty over one's account. True account ownership is going to become something that is more important going forward.
In fact, this is going to take on epic proportions.
Merging of Social Media and Finance
It should not be lost on anyone that banks are acting like social media companies. In fact, it is likely that we see the two combined in the future, at least to some degree.
This means that these entities will have even a greater impact upon the lives of those using the services. Imagine being able to destroy not only one's digital history but also entire financial livelihood with the cancellation of an account.
It is a reality that many can soon face.
Hive As An Answer
While many might not value true account ownership at the moment, instances like this are only going to make the issue more evident to the masses. These stories have to drive home the point this can happen to anyone.
Therefore, it is vital that people start taking steps to protect themselves.
Here is where duplication and resiliency enter. The key is to decentralize as much as one can. This means that, within the existing system, having multiple accounts with different institutions. Here is where one can protect him or herself.
Another is to utilize a blockchain technology. This provides a defense against the centralized system by moving some assets into the decentralized realm. An ecosystem like Hive can also provide assistance by offering social media features, something not commonly seem. This means these types of activities are done using a key system as opposed to a username and password that is controlled by the company behind a platform.
It Is Theirs
Many write about how social media companies like Facebook and Twitter steal people's data. This is incorrect. They are not stealing anything.
It is not stealing if you already own something.
Data placed on a social media platform using an account provided by the company is not the property of the user. It is the company's. This is a fact that is not up for debate. To believe otherwise is fallacy.
The same is true with any account. You have it only with the permission of a centralized entity. If they are the ones issuing them, they can also revoke it. Hence, it is only on loan.
Understanding ownership is something that few take the time to delve into. This probably is because it was less of an issue in the past. There was a time where companies were happy to have each customer. Now, institutions operate out of a different mindset, often political or ideology driven.
Hence, the power these institutions wield is enormous. It is up to us to ensure we are doing all we can to move away from them, even if only one piece at a time.
Many within cryptocurrency keep some of their assets outside the traditional financial system. This is a smart move.
At the same time, it is of benefit to remove oneself from these social media networks. The idea of feeding the likes of Elon Musk and Mark Zuckerberg more data is sickening. We know that only makes them more powerful.
Network Effects
While these entities are so large, the removal of one person is not an issue. That said, if we understand network effects, we can see how this all changes.
There are "laws" tied to network effects named after Metcalfe and Reed. Without going into the details, basically each concluded that each new node (user) had a greater than +1 impact. Because of the interconnectivity to other nodes, the effect was greater than 1.
Therefore, we can conclude the reverse is also true. For each one that leaves a network, the impact is also greater than 1. Here is where the damage can be done.
Over time, as more exit these institutions, whether it is financial or social media, the impact grows. After all, a social media network with 4 people does not have great value.
We also see this with the compounding nature of finance. As assets are removed from a financial institution, we see a larger impact over time. It is something that accelerates as the removal of some leads to more going out the door. This is a process that repeats on itself.
For now the likes of JP Morgan can afford to send some people packing. However, if it does this in enough instances, with viable option, people will start to leave.
This is where people need to take responsibility for themselves. Each piece of data given to Twitter or Facebook is one more that those companies have to use for empowerment. We know the value of data, at least in [the general sense.
Centralized entities cannot be trust no matter who is behind them. For this reason, we need to build decentralized alternatives.
Posted Using InLeo Alpha
Hive is a prime example of successful decentralisation. We have been able to continue to strive to more enhancements and stronger communities. Well done everyone!
It is creating the model I would say.
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While turning to true account ownership and whatnot is a proper direction, there is also an alternative, and I think in case problems like the one you showed become more widespread, that alternative will be taken. That alternative is to deny the banks the right to choose their customers. They will be forced by law to provide at least basic services to any willing individual or company (they would still be able to harass selected customers by abusing AML laws). In case of constitutional problems of such regulation, a slightly different approach might be taken. The banks might be given a choice: either act like a public institution and be obliged to not discriminate customers for any reason, or be a private company and have to have 100% coverage for all the deposits and loans made, in cash or reserves.
That sounded overly optimistic. There is probably 9 to 1 chance the banks will continue to do as they please. Out of remaining 1 there is 9 to 1 change that some politicians might smell the opportunity to win some points by "doing something", maybe even by taking such drastic measure as described above. Out of remaining 1, 9 to 1 is that banks will reflect on their actions and scale down the abuse. Again out of remaining 1, 9 to 1 is that decentralized solutions will be somewhat viable alternative for desperate customers rejected by banks. And finally the remaining 1 is that those solutions will become mature enough to be a real competition to banking sector. But that tiny chance is still worth pursuing and building for. 👍
Banks are not public like utilities. Even if there are laws passed, which wont happen since the banks run governments, it will be something they ignore.
Bankers never go to jail.
They might not be on paper, but in reality they are. Banks are heavily regulated. You can't just open a bank like you would open a shop that sells shoes. That limits supply. On the other hand there are laws (at least in EU) that force businesses to use banks for payments above certain amount (that artificially increases demand). Also since for businesses and individuals the only form of money other than what is in banks is the cash, and that is in short supply compared to all the money in existence, you could say that money don't exist outside of banks. Being declined service by the banks is therefore akin of being denied the right to even own money or do business. Such a thing can easily become heated political issue, especially if banks start to collude. F.e. decline service based on carbon footprint or other ESG-like score.
As far as I remember couple of years ago there was something along the lines:
How did that end? As far as I know the banks were actually slapped by government for doing that.
Regulation only serves to insulate the banks against competition. As you said, you cant just open one up.
As for regulation, if they ignore it, is it really in effect. US banks have paid over $500 billion in fines since the Great Financial Crisis, meaning that is just a cost of doing business.
Since bankers never face criminal charges, they do what they want.
I had the exact same thing happen to me with a joint checking/saving account I opened up in 2016. They sent me a letter stating I had 14 days to liquidate my account before it was closed for good.
Due to their user agreement, they did not have to give me any reasons why and rebuffed any attempts to figure out the problem. Fuck Chase!