Tesla & decentralized value creation
On a seemingly mundane Monday morning in February a couple billion dollars evaporated from the banking system. That otherwise mundane day featured Tesla’s announcement that they had filed with the SEC to purchase $1.5B (that’s right billion, with a B) in Bitcoin, as part of a plan to allow consumers to buy Tesla products (cars, etc.) with crypto.
Regardless of how much you know, or don’t know, about cryptocurrency/digital assets you might wonder, “why would Tesla need to own Bitcoin to accept them as payment for their cars?”
The answer is, “they don’t need to own them to accept them as payment; but, Tesla would need to own/hold Bitcoin if they want to LEND them out, or allow consumers to leverage them for financing as part of a new economy of digital payments and crypto-commerce.”
Tesla’s announcement wasn’t about electric cars, it’s about banking irrelevance.
Nearly a decade ago I spoke with a room full of financial institution execs and suggested ‘tomorrow’s consumer isn’t going to derive optimal value and return from a banking relationship with a financial institution (traditional deposits or loans); their primary value network and their path to wealth and flourishing will be merchant wallets and digital, non-dollar assets.
Our financial services industry was not built to evolve beyond the dollar and real digital transformation does not care about arbitrary nation-state currencies stored in outdated centralized core systems! There is no amount of careful shopping or clever contract negotiation for shiny online/mobile banking platforms that will make static deposit balances yielding shamefully less than digital assets have for the past 10 years sexy or engaging or relevant.
Merchants and markets create value and move merchandise. It’s what economies have done since the emergence of the modern era of conjoined industrialization and banking.
However, ‘modernity’ is relevant; and truly modern tech of the digital commerce and asset economy means merchants/consumers don’t need banks for value creation and exchange.
No best laid plans for ‘digital transformation’ via a new loan origination or core processing vendor will drive your community to accept slower, more expensive payments and origination in a world where they’re now seeing the efficiencies and value of decentralized finance.
If your local bank or credit union’s plans for this year don’t include educating yourself about plugging into the future of finance, this latest news release from Tesla should be a wake-up call. It heralds an approaching wave of such news, all but ensuring you can bank on merchants and manufacturers to educate your consumers about the fact that digital assets/crypto will provide better value, greater return, and fast/cheaper payments than your current centralized institution.
If you’re a banking/finance exec or board member focused on ‘strategy’ as an online banking/mobile banking switch, a magical loan origination platform, or ‘investing’ in core processing systems in the hopes of realizing digital transformation and remaining relevant … you’re missing the point. Merchants, like Tesla (and others fast to follow …) are already helping your consumers leverage their new digital wealth/assets and creating greater economic value–WITHOUT YOUR INSTITUTION!
DaLand has been prepared for this type of news since 2019; and we exist for the single purpose of teaching your trusted and worthy financial institution how to stay situated at the nexus of community and commerce – without expensive, unnecessary, and strategy-stifling bolt-ons (which won’t fix these kinds of problems anyway!).
