Anytime a written piece about the financial services space begins with “as of this writing,” it’s usually about one of two things: GameStop’s stock price or the price of bitcoin. In this case, it’s the latter – and the price in question is $55,026. But here’s the problem: Too many analysts and even journalists are equating cryptocurrency with a correlating price point. Bad move, says Daniel Gouldman, CEO and co-founder of global blockchain platform Ternio. Gouldman recently told PYMNTS that cryptocurrency – and the blockchain on which it is built – is a much larger world than bitcoin. And that world, he said, is not in some faraway financial galaxy – it’s right here, right now.
“What’s happening right now is a convergence,” Gouldman said. “Blockchain technology is the underlying rail. It’s a better, cheaper, faster solution, and it’s the 21st-century modern technology for the banking system.”
And he’s fine with his conviction that the biggest banks in the world don’t yet know or understand it. And even if they get the message tomorrow, he said, they’ll face a lot of business challenges because they’re late to the game. FinTechs like Ternio have already figured out their ‘faster, better, cheaper’ offerings, Gouldman noted, meaning that banks will face an uphill challenge as they enter into an already developed market.
“There are banks right now that don’t even know what’s actually happening and how it’s going to totally change their world beneath their feet,” Gouldman said. “There are a lot of ways to make money in cryptocurrency other than just trading bitcoin. You’re seeing it today with Coinbase, Binance and many other large players in the space. I think it’s the future of all money.”
The Right Crypto For The Right Use Case
While people tend to swirl cryptocurrencies around in their minds as a single thing, every individual iteration has its own uses. As Gouldman explained, bitcoin works terrifically well as a store of value, but its blockchain is slower than others (though still faster than ACH or the wires), so if speed is a primary concern, it’s not ideal. Ethereum, with its non-fungible tokens and highly developed decentralized finance offerings like smart contracts, is poised to create products that will remake banking as we know it. But the fees and speed of a platform can be an issue – which has led to the development of yet other blockchain specializing in faster and cheaper transactions.
Crypto is a big world, Gouldman noted – and it’s important to avoid the temptation to “bucket everything into bitcoin” because that obscures what is already in the market and how it’s being used.
“The world’s most important cryptocurrency is the digital dollar,” he said. “China’s embrace of the digital RMB is a defensive posture because their citizens are using digital dollars to buy bitcoin and other cryptos. It’s their entry point. And if we’re smart, we’ll embrace it and continue extending our reach globally because the digital dollar is the default currency for everyone in cryptocurrency.”
That means we aren’t waiting for a future where there is a stable, easily transacted digital currency, said Gouldman, because that day has already arrived. He believes we are reaching “a moment of inflection in the entire use of money,” as technology makes it possible for consumers to truly participate in the age of self-custody. Consumers no longer have to put their money in the bank for practical reasons – theoretically, it’s possible to store a billion dollars on a thumb drive.
Money as software, he said, is increasingly shaping up to be the future of money – a future that banks should be preparing for but often aren’t.
Pulling Into The Modern Era
Nobody wants to be the last buggy whip maker in a market dominated by cars – and yet, a lot of banks seem awfully committed to that path, Gouldman observed. Not all of them, but enough that he can’t help but want to encourage them to keep right on procrastinating because the longer they do, the longer Ternio has to operate in a great wide-open greenfield, snapping up customers before BoA comes along. But while the banks ignoring the concurrent rise of crypto and FinTech is great for Ternio, it’s bad for the banks, which Gouldman predicted would get a “shellacking.” That’s because the dominant payments tech to which we’re accustomed today is pushing 50 years old, he said – and it needs to be replaced with something more attuned to modern needs.
“We’re using really, really old technology. It might as well be the Model T. Is there any other technology that we use today that comes from 1973?” Gouldman asked.
Banks will face a challenge in the growing crypto landscape. Along with it comes the reality that the blockchain shapes up to be the smarter, safer, faster rail that the system has long needed. They can build the infrastructure internally to jump on, buy it via acquisition or attempt to sit it out. If they do sit it out, they will find their lunch getting eaten by up-and-coming players ready to ride the modern rails.
Of the three options, Gouldman believes the second one is most likely. He expects to see consolidation in the space in the months ahead – because the change is coming, and the only players that have any chance of surviving, let alone thriving, need to be ready to get on board (yesterday).
“My guess is that there’s going to be a lot of consolidation, a lot of buying because banks aren’t going to be able to do it themselves,” he said. “I don’t know if that will happen at the end of 2021. But I do think the rise of FinTechs is going to be very much in play alongside the rise of crypto. It’s a very scary place out there if you are a bank today.”