I’m always on the lookout for the best information for Off The Chain subscribers and 51pct is the only research that I would recommend. They release deep dive analysis on individual tokens every two weeks or so — easily the best research in crypto. You can signup here to receive their reports in the future. Enjoy!

The banking industry is under assault from technologists.

Robinhood, an investing platform popular with millennials, previously grew rapidly based on a commission-free investing model that resonated with a demographic fed up with rent-seeking middlemen. Earlier this year, the company then launched functionality that allows customers to trade cryptocurrencies side-by-side with stocks.

As if that wasn’t innovative enough, Robinhood announced a checking and savings product yesterday that puts it in direct competition with large banks. The new offering will charge no monthly fees, no overdraft fees, and no foreign transaction fees. It will require no minimum balance, has free access to 75,000 ATMs, and a free debit card. But best of all, customers will earn 3% interest on the money they deposit with Robinhood.

This is a game changer for the banking industry. Historically, big banks have offered negligible interest rates (0.06% - 0.09%) and suffocated customers with absurd fees. Those days are now likely numbered though. Robinhood previously forced competitors in the stock investing world to move towards a zero-commission model when they launched their first investment product. It wouldn’t be surprising to see this checking and savings product force big banks to increase interest rates in response too.

There is a twist to Robinhood’s announcement however — it is likely to be a loss leader for the core business. Most consumer banks spend ungodly amounts of money to get consumers to open bank accounts and deposit money. Once the money is deposited, there are numerous opportunities to monetize the customer with fees, upsells, and alternative products. Robinhood sees a similar opportunity it appears, because they require any potential checking and savings customer to also have opened a brokerage account as well. This isn’t a bad thing, but it is noteworthy.

So what exactly could the future look like for Robinhood (or other consumer-focused fintech companies)?

My belief is that every stock, bond, currency, and commodity will be digitized over time. These assets may or may not be based on blockchain technology and/or cryptographically secured. Either way, the idea of having separate brokerage and banking accounts will become archaic.

Consumers will have a single account that holds all of their assets, including cash, and allows them to buy, sell, or hold each asset based on the individual’s preference. The traditional business model of the banking industry won’t apply, so these new companies will refrain from fee-based revenue streams and instead focus on putting the customer first.

Rather than asking “how can we make more money?,” the Robinhoods of the world will be asking “how can we solve our customers’ problems?” This new approach to banking will create a cheaper, more efficient, and more enjoyable experience for consumers. There will be a shift from people hating banks to people buying into certain brands and their ethos.

In order for much of this to happen, there has to be a continued evolution in the underlying technology of assets though. Each stock, bond, currency and commodity has to be digitized — to rebuild the financial system, we need to update each single unit of value first. Think of this like assembling an airplane while in mid-air. Not exactly the type of risk that large financial institutions look forward to.

Robinhood is pushing the pace in an interesting and valuable way. There will be plenty more companies who join them in the assault on Wall Street. The big banks aren’t ready for the speed and innovation required to just keep up, let alone succeed.

Remember, the bigger they are, the harder they fall. This will be fun to watch.

-Pomp

The “Off The Chain” podcast has been downloaded 300,000+ times in 120 countries. You can listen to the latest episode with Howard Lindzon of Social Leverage now: Click here for Off The Chain podcast

THE RUNDOWN:

Bitcoin Bomb Threat Goes International as Scam Expands to Canada: Ottawa and Toronto became the latest cities to receive bomb threats asking for Bitcoin after the apparent scam spread across the U.S. earlier in the day. New York City’s police department said the threats were not deemed credible. Police departments from all over the U.S., including Oklahoma, Massachusetts, and Illinois, were among the many local authorities that reported the threat in the U.S. Read more.

What Basis’s Lead Investor Has to Say: Basis raised $133 million in venture capital earlier this year to develop a so-called stablecoin, a cryptocurrency whose price remains fixed, despite market volatility. The company said in a post on its website Thursday that it would return the remainder of its funds to investors. Salil Deshpande, an investor at Bain Capital Ventures who led the investment round in Basis, discussed Basis’ closure. Deshpande said Basis tried to make changes to its intended product that would make it comply with U.S. securities law—the cause of its undoing—but the company ultimately found this wasn’t worth the effort. Read more.

What's Going on With the Price of Bitcoin? What’s going on with the price of bitcoin? Experts, speaking at Fortune’s Most Powerful Women Next Gen summit, said don’t bother overthinking the cryptocurrency’s 80% drop in value this year. “Price is by and large a distraction,” said Kathleen Breitman, CEO of Dynamic Ledger Solutions and co-founder of blockchain start-up Tezos, which raised $232 million in its much watched “initial coin offering” in July 2017. “I’ve seen a lot of ups and downs. I have a lot of conviction in the technology’s long-term promise,” she said, adding “I never check prices…I think it’s kind of a distraction for people – for smaller minds.” Read more.

What Happened When the Marshall Islands Bet on Crypto: The country, facing rising seas and financial isolation, desperately needed a get-rich-quick scheme. Naturally, it decided to create a legal tender cryptocurrency. Here’s what happened next. Read more.

China’s Plan to Sideline Bitcoin: When Satoshi Nakamoto introduced Bitcoin to the world in 2008, he or she or they (the mystery endures) pitched it as a way to end the power of central authorities in finance. Ten years on, the Chinese government is adapting the ideas behind Bitcoin to do the exact opposite. The People’s Bank of China, the country’s central bank, plans to introduce a digital currency of its own. But unlike the decentralized blockchain-based offerings, this one could give Beijing more control over its financial system. Read more.

Crypto Hedge Fund Warns of Possible ICO Refunds After SEC Decision: Pantera Capital Management said about 25% of the blockchain and digital-currency projects that its ICO fund invested in could be found in violation of U.S. securities laws and may have to refund money to their backers. The Menlo Park, California-based hedge fund said the projects may be at risk after the U.S. Securities and Exchange Commission’s Nov. 16 announcement that two startups that raised millions by issuing tokens to non-accredited investors didn’t comply with securities laws. One of the projects, Paragon Coin, has already announced it may have to pay back investors. Read more.

Unabashed Bitcoin Bull Thomas Lee Says the Market Is Wrong: Back in May, Thomas Lee, head of research at Fundstrat Global Advisors was predicting a rally to $25,000 by the end of the year. And despite things not playing quite in his favor -- the cryptocurrency is currently trading below $3,400 -- he’s sticking to his guns. Read more.

If you enjoy reading “Off The Chain,” click here to tweet to tell others about it.

Nothing in this email is intended to serve as financial advice. Do your own research.

Subscribe now