In the last article, I wrote about some of the limitations of cryptocurrency within the cryptocurrency space. I covered the innovations and experimental ideas currently being tested to overcome the necessary leaps into the commercial space.

Why the race to commercial use is so important

Over the past few weeks, the Australian government has conducted a Royal Commission to audit the financial industry. This commission has drawn out some major risks to all stakeholders that has ultimately weakened the financial sovereignty of Australia.

Because of this, the average Australian consumer has been exposed to severe financial risk, highlighting major mismanagement, potential corruption and a lack of care for social costs.

Today I want to discuss how these events can be avoided in the future by using cryptocurrencies to motivate public trust back into the sector.

GAA Accounting 2018

The Current Findings of the Royal Commission

On the 3rd of April, the Commonwealth Bank of Australia confirmed that it lost backup tapes containing 20 million Australian bank accounts that were never confirmed to be ‘destroyed’. These tapes included statements containing customers names, addresses, account numbers and transaction details from 2000 to 2016’ (ABC News 2018).

In other findings, the Australian Mutual Provident (AMP) financial advisors were charging clients for advice that they never received. Internal reports show that they were aware of this since 2011 but the companies’ policy remained unchanged. They continued to charge clients’ fees, even for three months after the advisor had ceased providing financial services (Rodtheyer 2018).

The Big Four Banks in Australia including AMP actively profited $220 million from financial services never provided. In response, criminal charges were directed by the commission towards the responsible upper management at AMP exclusively at this time (Buffini 2018).

If there hadn’t been an inquiry into the actions and accountability of the business as usual operations would this still be continuing today?

How cryptocurrency divided a country

The Icelandic Financial Crisis in Short 2008–2011

This Icelandic example shows how ‘power tends to corrupt and absolute power corrupts absolutely (Creihton 1887)’.

• It was found that bank employees were siphoning loans to overseas holding companies.

• Money was lent to the employee to buy shares in the same bank then these shares were used as collateral to issue new loans. These loans were essentially 0% interest loans with the expectation that the interest would be paid at the expiry. Days before the banks collapsed these loans were written off as bad debts.

• These holding companies essentially now held these banks’ bad debt and these companies essentially had free money as many were beyond Iceland’s jurisdiction (insert generic tax haven here).

The Consequences

• 500,000 depositors outside of Iceland lost access to their funds. These funds were paid back in a limited way eventually.

• The debt was 7 times the yearly GDP of Iceland.

• The Icelandic Krona saw depreciation in purchasing power.

• Theft through inflation occurred.

The public trust in its own banking sector was at an all-time historic low during this period. Naturally, there was local and international pressure for criminal charges against the mismanagement of the communities’ funds. Criminal charges proceeded and bankers were jailed on corruption charges.

Society now has the tools to fight back with cryptocurrency

A small left field blockchain project was consequently developed to provide hope with its goal to provide the Icelandic people power over their own wealth.

Auroracoin 2016

The public creators of the blockchain based Auroracoin took action into their own hands to create a blockchain currency for its people, independent of government and traditional banks. At the time, the official currency, the Krona, had problems of inflation and restrictions to transact internationally as a direct result of the crisis explained above. In 2014 the creators of Auroracoin showed that banking power could be taken away from a centralised banking system as public pressure to do so was increasing. Possibilities to threaten the banking and political ‘industry’ was now becoming real.

Auroracoins’ Vision for Iceland

• A simple method to distribute funds evenly to the ID holders of Iceland.

• Publicly transparent transactions.

• Public’s way to take back control of their wealth.

Auroracoin was too early for its time

Iceland and blockchain were ready for adoption in 2014 but blockchain wasn’t for Iceland. The essence of Auroacoin lives on to this day as the intentions behind the development remain strong to promote change. Corruption and mismanagement within the banking sector is an ongoing problem and without radical change, it will continue to be a way of life.

Australia wasn’t late to cryptocurrency, Iceland was just early

How Cryptocurrency Technologies can Solve Australia’s Financial Woes

The blockchain is a publicly distributed ledger with a static history. It cannot be tampered with if the ledger is evenly distributed across a network.

Commonwealth Bank of Australia

At this stage, it is unknown that customer data went into 3rd party hands. With a distributed ledger every time information is sent, it is recorded and cannot be tampered by any party. With these innovative changes we would know what happened to the data and therefore we would not be left with questions that can’t be answered.

AMP

In regards to AMP, the misleading of customers to pay for services that were never conducted has been exposed by the Royal Commission. If this did occur on a blockchain then both parties would have mutual transparency in the ledger, with permissions accepted by both parties before a transaction can take place. If a customer was misled into these transactions, then it would easily be identified by looking inside historic blocks created on the chain. Blockchain will create a transparency that would deter the organisation from corruption and purposely mismanaged actions for profitable purposes.

Royal Commission

The Australian Royal Commission is costing the public $75 million for actions the public is not liable for. Future inquiries could be avoided through cryptocurrency technologies. If there is any time for a country to invest in something that can solve so many financial issues it is now.

In the next article, I will talk to you about mass adoption and what is required in order for it to be successful.

Thank you for taking the time to read my articles as I am very passionate about how this technology can make a positive impact on society.

Feel free to contact me: https://www.linkedin.com/in/jack-lewin-33b6a720