Adaptation or extinction: Dollars in a digital asset era
In a world where the almighty US Dollar is teetering on the financial abyss, its worth eroded by inflation and the reckless proliferation of money to cover ever-escalating national debts, SWIFT’s capacity to transfer funds ‘swiftly’ suddenly seems like a distraction. As the global financial landscape undergoes tectonic shifts, banks, payment giants, and financial cooperatives are beginning to grasp the urgency of seeking alternatives to the USD. This realization has ignited investments in digital assets including Bitcoin, USDC, and XRP, currencies offering both safe havens from inflation and secure, low-cost transactions beyond the USD.
Prominent financial institutions like VISA, MasterCard, Citi, Fidelity, and PayPal have embarked on a strategic pivot towards non-Dollar currencies. This isn’t mere happenstance; it’s an acknowledgment of the Dollar’s decline, a result of the relentless money-printing spree required to service our ever-mounting national debts. These financial behemoths have grasped that the traditional financial system is no longer capable of protecting the wealth and financial stability of individuals and organizations in this turbulent financial climate.
It is imperative that we take time to recall that local banks and credit unions are not just purveyors of accelerating payments. Community banks, and particularly credit unions, are the bastions of decentralized, democratic control over capital, serving as safekeepers for the collective fruits of communal labor and nurturing wealth through financial literacy.
SWIFT, NACHA, and FedNow may offer ‘cheaper’ or ‘faster’ payments, but they fundamentally fall short of addressing the real challenges facing consumers and communities across the globe. Instead of focusing solely on hastening fiat currency transactions, financial cooperatives must explore digital assets as next-generation savings technologies, offering individuals and businesses a means to fortify their wealth and secure their financial future.
The US Dollar, for decades considered the global reserve currency, now finds itself in an existential crisis. Today, the Dollar is in a precarious position, threatening the purchasing power of all who hold it. Inflation has insidiously undermined the Dollar’s value, rendering it increasingly unsuitable for meaningful long-term saving and investing strategies. This devaluation isn’t just a concern for Americans; it has far-reaching consequences, given the Dollar’s role as the global reserve currency.
In recognition of the impending Dollar devaluation, prescient payment processors have taken the plunge, shifting their offerings and investments towards digital assets. Bitcoin, often hailed as “digital gold,” has gained significant attention, especially by the Millennials and Gen Z, 60% of whom own digital assets in some for or fashion. Its limited supply and decentralized nature make it a compelling choice for preserving wealth. Digital assets like USDC, XRP, and XLM offer a seamless means of transacting and transferring value across borders, free from the threat of the Dollar’s devaluation.
‘Faster, better payments’ might be good marketing, but the true mission of local banks and credit unions goes far beyond mere transaction speed. These institutions are the bedrock of communities, offering decentralized, democratic control over capital and serve as custodians of the collective fruits of communal labor. They empower individuals to manage their finances responsibly and promote financial literacy within their communities. Local community financial cooperatives find their strength in the ability to support and serve their members in the preservation and accumulation of wealth.
SWIFT and NACHA, enduring pillars of the traditional banking system, excel at efficiently facilitating global and domestic payments. However, the ‘cheaper’ or ‘faster’ payments they offer fail to address the fundamental issue – the devaluation of the asset itself. Moving fiat currency more quickly and inexpensively might offer momentary relief to the average worker, but it doesn’t address the core problem of a currency rapidly losing its value.
To better serve their communities and combat the Dollar’s devaluation, financial cooperatives will bridge decentralized financial networks and digital assets with the traditional finance models their members already trust. Leaders in this space will successfully offer next-generation savings and wealth accumulation technologies which include security, transparency, and the potential for appreciation – something fiat currencies cannot provide.
Here are three practical product offerings your members are already looking for:
- Education and advocacy: Educate your members about the benefits of digital assets. By offering information and guidance on acquiring, storing, and using digital currencies, you’ll empower your members to make informed decisions about wealth preservation.
- Custodial solutions: Provide secure custody solutions for vaulting digital assets, ensuring safe storage and management. This builds trust and confidence among members, encouraging responsible, revenue generating adoption.
- Digital transaction integration: Integrate digital payment options and exchange capability into your services, allowing members to transact with digital assets seamlessly, eliminating the need for currency conversions and the risks associated with fiat ‘assets.’
Inevitably, many leaders will resist the realities which are quickly unfolding, leaving their institutions vulnerable to the fates of video rental stores, traditional taxicabs, and travel agencies. Streaming videos, ridesharing, and web-based travel bookings tell us precisely what will happen as money continues to merge with the internet as streaming data.
In stark contrast, the farsighted few and courageous leaders will partner with innovators and thought leaders in the industry to seize this opportunity and develop sustainable strategies, digital asset offerings, and responsible use of data, positioning their local financial cooperatives as the trusted storehouses for wealth in the era of digital assets and digital disruption.
DaLand has earned its reputation as THE Next Generation CUSO by our willingness to engage in difficult subjects, guided to sustainable solutions by our core-centric philosophy and unwavering support of local leaders in the community cooperative space. We’d love to hear from you!
