Imagine you are standing in line at the bank. Yeah, that’s right. Put in those headphones with actual wires, blast some Britney Spears, and imagine that it is a dreary Tuesday afternoon in the early 2000s.
Look around. What do you see? Probably some drab furniture, burnished in colors like burgundy and maroon, a few people aimlessly milling about, some buttoned up men and women named Jeff and Karen with nametags and fake smiles, and, of course, the huge vault in the left corner of the room. Ya know, the big metal one that hides all of the money behind the reinforced steel + locking mechanisms.
You’re waiting in line to open a savings account at Wells Chase of America Bank and maybe get a loan to buy a car. Your new job is across town and it would be pretty nice to not take the bus everywhere. You’re young and broke, like most twenty four year olds.
The line is long. The person at the front is waiving their hands in the air like they just don’t care except by the tone of their voice it sounds like they really ~do~ care. So you wait. And wait. And look longingly over at the coffee maker in the back right corner of WCoAB, but you don’t want to leave your spot in line, so you try to make eye contact with Karen Paolinsky, the lady in the sweet pantsuit going around asking if people the really helpful question: “have you been helped yet?” If someone says yes, she nods and pats them on the back, if someone says no, she points toward the line and says “why don’t ya head over there, to the line that hasn’t moved and probably won’t move until hell freezes over, and wait to talk to an associate.”
Sometime between “wow these appetizers are taking really long” at Chili’s and “oh my gosh it’s only the fourth inning of this baseball game?” you get to the front of the line.
You’re excited. Pumped. Thrilled.
Gary Valumpoppy, rocker of a nice mustache, looks at you. Then looks back down at the papers you handed him outlining your identity, address, and small amount of wealth. He continues looking. Maybe he types something into his computer. Maybe he writes something down. He definitely looks up and asks you “is this {certain} piece of information correct?” Then he looks back down.
Your leg starts to bump and fidget. Who is this guy, to make or break my financial circumstances? This guy is really prepared to deteremine whether or not I can afford a car? You start to understand the concept of waiving your hands in the air like you just don’t care except really caring because you’re mad at the financial system.
Gary V, no relation to Gary Vee, after much rumination and deliberation, is ready to talk.
“I’m approving you for a savings account. $500 minimum, .5% APR, and a checking account that allows for debit card transactions. It’s a no-go on your loan. You don’t have the credit history yet, nor the funds to cover a loan, even a small one. Any questions?”
I bet you have so many questions. But you can here the people behind you fidgeting. Gary Valumpoppy doesn’t seem that interested in explaining the finer details on how he came to the conclusion that you basically get no interest and no loan on your money.
So you leave, like a dog with its’ tail between its’ legs, and go home to your small apartment. With a shoddy little savings account, a debit card that is basically another form of cash (so not that helpful), and no way to buy a car without crippling your savings/future.
The early 2000’s were a tough time for anybody trying to interact with financial services if they were young, poor, or didn’t fit neatly into the perfect credit history mold… but here’s a dirty little secret: the 2010’s were just as brutal.
I will not go into the DETAILS. Details are so boring. Just know that it is an innificient system, that banking. It’s hard to get good information, it’s harder to get good compound interest, and it’s even harder to access financial tools.
Decentralized Finance, aka de-fi, has changed the game.
Come back on Sunday to learn more about how DEFI works.
-Kram
KRAM 