The thing I rant the most about is our financial institutions and the thing I would love to change the most to enable people to have fair access to wealth creation is our financial system.
It is no secret that I have a deep dislike of the crappy investment products most people end up being put into by financial advisors, and the pillaging of the average person’s monies by our current financial system.
The entire financial system as we currently know it has been designed to serve a very few and keep the vast majority of people in ignorance and fear and broke!
It siphons off trillions of dollars and pounds and euros and pesos and rands… in fees, commissions, interest charges, and other costs for simply facilitating transactions between people like you and me.
Consider your day to day transaction account. It contains your money. All the bank does is keep track of the amounts coming and going – all done by machines. For this automated service, it skims a bit off the top here and there and charges you a whole bunch of transaction fees, account fees and a bunch of other things.
Your savings account is even worse. The bank essentially holds a big pile of your money which it loans out to other people for a juicy interest charge. Then it pays you a tiny fraction of the interest it collects while keeping most of the proceeds for itself.
I could keep going down the line for all the various financial products – mortgages, insurance, credit cards, overdrafts, and on and on.
Finally, technology is finally tearing down this inefficient and one sided system.
In the process, it’s creating an entirely new model – one that’s far more efficient, transparent, and fair.
Even more exciting – ok maybe not, but definitely as exciting – if you understand what’s happening and you get involved in this huge transformation with a small investment, there is the potential to make an absolute fortune and accelerate your wealth journey.
But before I get into the details, let me give you a brief history lesson.
It’ll show you why this enormous sea change can finally happen.
A Simple Equation Created Our Very Flawed Financial System
We can trace the origins of our modern financial system back to medieval and Renaissance Italy.
During the 1300s, banking families like the Bardis and Peruzzis quickly established vast amounts of wealth in Florence.
Of course, Medici is the name most people recognize immediately – both because of the family’s financial innovations as well as its cultural significance in other areas like religion, politics, and art.
From its founding in 1397, Giovanni de’ Medici’s Bank quickly grew to prominence as one of the largest financial institutions in the world.
And at the heart of that growth was a relatively simple “code” employed by Giovanni’s son Cosimo that still underpins much of the financial system to this day.
It’s called double-entry bookkeeping. While it was probably invented just before the Medici Bank was founded, Cosimo made it an integral part of the family business.
Here’s the equation: Assets = liabilities + equity.
This system of accounting allowed the Medici Bank to keep better track of its business dealings… to avoid errors… boost reliability… and attract larger and larger amounts of capital.
In a word, they built trust.
And a century after its founding, the Medici Bank had locations all the way to London. You might say the Medici Bank became the first global financial company.
Financial institutions mostly operate on that same trust model to this day.
They are the centralized depositories of information – who has what and where it’s going – allowing them to control the entire system and to siphon off massive amounts of money in the process.
And until very recently, there was no way to improve or circumvent that process…
Flipping the Trust Code
The modern banking system is built on that trust code. A comprehensive ledger system that accurately tracks value as it moves around the world.
But blockchain technology takes the same idea and improves it.
But what sets it apart is that blockchain technology doesn’t need a centralized information keeper, it’s specifically designed to operate without one.
Enter the world of Decentralised Finance – DeFi as the cool kids call it. 😉 that I believe will completely disrupt the traditional financial sector.
Blockchain networks can store data and verify it publicly. These networks are a permanent record of all transactions as they take place. And yet, it’s still possible to anonymise the information in ways that prevent fraud or other security breaches.
It’s a trust system without the need for the trust code.
Finance companies are the ultimate middlemen.
They borrow money cheaply from one set of investors and lend it to another at a profit…
Or they buy stock from one group of investors, then immediately sell it to another for the difference between the buy and sell prices. This is called the spread.
It’s estimated the finance sector extracts over $9.28 trillion annually from the global economy. That’s more money than the utilities, communication services, and real estate sectors combined.
DeFi finally offers solutions to replace the high-cost middlemen with low-cost ones.
It uses blockchain technology to prevent manipulation without relying on third parties.
Eventually, it’ll make banking, borrowing, lending, brokerage, and investing more accessible and cheaper for billions of people.
That’s because blockchain apps – called decentralized apps or dApps – use cutting-edge technology like cryptography and smart contracts to prevent third-party tampering without relying on a middleman.
They allow users to trade billions of dollars in assets… and all without any human intervention.
There are dApps for banking services, gaming, stock prices, weather, insurance, and sports scores. But the difference is dApps are run on blockchains instead of over the internet.
These projects are springing up overnight and threaten to upend the business models of just about every traditional financial firm in the world.
And it’s my belief that eventually stocks, bonds, titles of ownership, music rights (everything of value) will have its ownership rights secured by a blockchain.
You’ll be able to exchange that value with a click of a mouse. Best of all, there won’t be any middleman standing in your way or taking a cut.
I anticipate that DeFi will evolve into a multi trillion-dollar financial system run for the people… by the people… and one that’s truly global and operates with complete transparency.
Opening the Financial Profits to Us.
Not only is DeFi changing the way the financial system works, it is also making the transactional profits from banking transaction verifications available to us – everyday investors.
This is super sexy and it provides an opportunity for you and me to not only get capital growth through the value of our crypto tokens increasing in value, we can now also put them to work to earn income and generate yields.
In last month’s Wealth Builders Club Masterclass I unpacked the wealth creation opportunities being created by Blockchain development and DeFi and in this month’s Wealth Builders Club Masterclass I’ve shared how you can generate income from your crypto holding too.
How to Earn An Income From Your Crypto Holdings.
In it, I’ll explain the most exciting opportunities in DeFi today – “Staking” and Yield Farming”
They’re a brand-new way for blockchain projects to drive the adoption of their technology by allowing investors to take part and cash in on a crypto’s success.
The blockchain is poised to reverse the power of the financial system from the hands of a few to the many. Distributing the information and power equally all around the world. And as it plays out, we will all benefit from a faster, fairer, less fee-driven system.
While the transition is still in its infancy, progress is happening rapidly. This is the time to get involved.
P.S. Join the Wealth Builders Club TODAY and get this upcoming masterclass, last months masterclass on the Blockchain and DeFi and 12 months of upcoming Masterclasses – PLUS a “Get Sh*t Done” implementation week with Ann every quarter.