Building Sustainable Wealth Outside Of Legacy Banking: A New Model For A New Era It's time for a new financial system that rewards all of its participants, not just a select few.
By Kurt Ivy Edited by Jessica Thomas
Opinions expressed by Entrepreneur contributors are their own.
The prime use case of cryptocurrency was as a replacement for traditional fiat currency. On the Bitcoin genesis block was printed a message about how the banks were being bailed out after the market crash, a clear indication of the intention of this new technology. A similar message was repeated in 2020, though fewer people are aware of this later reference to money printing.
Although the use-cases have broadened considerably, this still remains a pivotal aim of cryptocurrencies and NFTs. It offers wealth generation mechanisms that are unparalleled in the classical investment industry and has provided a means for all classes of investors to create long-lasting wealth. It also provides opportunities for micro-finance, to bank the unbanked, and to help out those in emerging markets to gain a financial foothold.
All of this is happening outside of the controlled, centralized, legacy banking sector, which often hindered the many from acquiring wealth and enabled the few to hold onto it.
The issues of centralized banking
The problems contained within the traditional banking model are far too many to list in a single article. But it's obvious that it promotes the centralization of wealth and enables a few key individuals to hold not just financial power, but also significant political power. All of this centralization of power can culminate in a devastating resolution such as war. The banking system and political governance system are inexorably intertwined.
On a similarly worrying note, banks are the ones responsible for determining whether or not you get a mortgage, and at what price. Even so, they are known to switch customers to higher rates to earn more profit while misleading their customers. They determine loans of all kinds. Accounts can be frozen for activities that go against their terms and conditions. Redlining is a policy where lenders identify minority groups that are more likely to default on loans and mortgages. Those of particular ethnic backgrounds are given worse rates, almost a form of institutional racism.
Fiat interest rates are now effectively negative when all fees are accounted for. If you pay $10 a month to store your money and earn $0.50 in interest, then you are still paying for the privilege of owning an account (though it may not be marketed as a negative interest rate). At one time, those who put money in a fiat bank account were rewarded, as is the case in all organic systems of economic investment such as cryptocurrency.
It's difficult to set up an account, and there are reams of red tape associated with all kinds of financial activity, intimately tied in with the legacy banking sector. The charges and fees are extremely high compared to what's on offer. Even if you do get rich, it will be very slow, and you will pay dearly for every dollar you make.
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Create sustainable wealth with Web3 solutions
A number of innovative Web3 projects are providing mechanisms that can enable people to safely invest in cryptocurrencies and build sustainable wealth for the future, in a shorter time frame. At present, though the crypto markets are rising year on year, most investments are made through guesswork. There are no reliable metrics to assess what makes for a coin or project with powerful long-term viability.
New projects like Defy Trends offer a solution by assigning each coin a score based on a number of reliable metrics including social sentiment, on-chain data, off-chain data and deep web analytics. This is exactly what individuals and businesses need so they can build diverse portfolios of strong Web3 companies and projects. It provides advanced traders and novice investors with a framework to objectively analyze token value.
This will assist in long-term wealth generation and can also help in terms of preserving currency. Tools like this perform due diligence so investors do not get scammed, something all too common in the crypto markets. The first lesson in wealth preservation is to learn to hold onto it, then grow it securely. Traders and investors need help correctly interpreting the crypto markets in order to preserve and grow long-term wealth.
Other companies like Circle and CoinsPaid help existing businesses make a seamless transition to cryptocurrency in a cost-effective manner. They offer a quick way for businesses to get onboarded onto cryptocurrency while preserving existing processes, so there is no disruption in business. All customers receive a crypto payment processor under their own brand out of the box within a month. It allows instant payment in more than 30 cryptocurrencies and provides a built-in exchange for 20 fiat currencies. This is the power of the blockchain at work.
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Expansive wealth opportunities
Web3 companies like this are instrumental in making the transition from legacy banking to modern cryptocurrency. Red tape is avoided, efficiency is enhanced, transfers are quick and immutable, and cross-border payment is effortless when using distributed ledger technology.
But the advantages extend beyond this into completely new paradigms of investment. The real estate market, currently saturated by a small number of wealthy elites, is being reopened in a different way. There are VR-enhanced metaverses where you can purchase your own "space" and sell NFTs through it. The music industry is also being redefined with concerts that can be attended virtually, with recording artists paid in crypto.
The NFT market has already exploded, with one collection selling for $69 million, despite being just pieces of digital art. There are also multiple opportunities in decentralized finance such as yield farming and cross-chain liquid staking, invented by Ankr. These can be compared to financial derivatives in the crypto market. Any financial tool in the legacy banking industry can quite easily be put onto a blockchain and streamlined for optimal results.
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Retain ownership of earned wealth
The new model of Web3 investment is not only reopening access to existing markets. It is creating entirely new paradigms and new forms of wealth generation and preservation.
Perhaps the biggest benefit is that Web3 will allow you to preserve the wealth you have already made. Nobody has access to your crypto wallet except you, in contrast to a bank account you only have a "right" to access.
In the legacy banking sector, your currency will be eaten up or effectively stolen through charges, fees, inflation, taxes and the many other creative ways through which centralized finance takes what is yours and confiscates it. I call this the Poor Tax. The money we have to pay when we have no money. It doesn't make sense. It doesn't seem like society should be able to function this way. But there is hope.
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