by Simon Black, Sovereign Man:

This morning I had the pleasure of spending an hour of my life tracking down a missing wire transfer that had been sent to a large, multinational bank more than two weeks ago.

I’m sure you’ve been there, being passed around various departments like the village bicycle, each time having to re-explain the entire situation to someone brand new.

Finally someone found the missing funds, and the person told me me they would release the money later today. But that it would still take 3-5 business days for the funds to hit the recipient’s account.

This is infuriating. It’s 2017. Seriously. It’s not like they have to load a pallet full of cash onto a cargo ship and float it across the ocean.

Banking is completely digital now, and transfers should be instantaneous. At most it shouldn’t take longer than a few hours.

As we hung up the phone I thought, “I can wait for cryptofinance to put you guys out of business.”

It’s true. There’s going to come a day when financial technology eradicates the entire banking system and renders it as obsolete as blacksmiths pounding on horseshoes.

Sending money overseas through the banking system can take several days and cost $20, $50, even $200 or more.

And while cryptocurrency transfers over the blockchain are taking longer today than they used it, transactions are still settled in a few hours, sometimes just a few minutes.

Transfer costs across the blockchain have increased as well. But you’re still talking about a dollar or less.

Compared to the conventional banking system, transferring funds via the blockchain is much more efficient.

The same goes with savings; it’s possible to deposit money directly within the blockchain instead of the banking system. No more fees, no more hassles.

And as long as you take the proper safeguards (just as you would take safeguards to protect your online bank account), holding funds in the blockchain is perfectly safe.

But… it’s not all rainbows and buttercups in the world of cryptofinance. This is a nascent concept, and plenty of unresolved challenges remain.

For starters– complexity.

Bitcoin has clearly become more user-friendly in its eight years of existence, and the other cryptocurrencies and blockchains will certainly follow that trend.

But if you look at Ethereum, right now the world’s second biggest blockchain platform, you need to be a HIGHLY experienced software developer in order to create one of its ‘smart contracts’.

Then there’s the issue of volatility… which may be the single biggest impediment to cryptocurrency adoption.

Again, look at the Ether token that runs on the Ethereum blockchain; on January 1st of this year the Ether price was less than $10. Today it’s nearly $350.

That’s a 35x jump in just over six months.

It’s hard to find another asset with that sort of performance. Ever.

Even John Law’s doomed Mississippi Company stock in the 1700s only increased 20x in a year.

In fact, Ether has outperformed the 17th century Dutch tulip bubble, the 18th century South Sea Bubble, and the 20th century dot-com bubble.

With cryptocurrency, the swings are violent in both directions. It’s NOTHING for Bitcoin or Ether to move up/down 10% in a single week. That level of volatility is almost expected now.

Again, this is a problem– volatility is a major hurdle to adoption.

As an example, big retailers (like Wal Mart) have razor-thin profit margins of less than 3%.

So if Wal Mart were to accept Bitcoin, it’s entirely possible that the Bitcoin price could drop more than 3% before Wal Mart converts the Bitcoin to US dollars… meaning Wal Mart would either lose money or pass the excess cost onto the consumer.

Either way, someone’s paying for the volatility.

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