In today’s Money Morning…what a turnaround!…public opinion always wins out…politicians see the writing on the wall…and more…
I drove out to Melbourne Airport last Thursday evening to pick up my parents, who were flying in from Perth.
It was the first time I’d been to the airport for a couple of years due to the COVID lockdowns.
Ever since I was a kid, I always get a pang of excitement going to the airport. It’s the idea that within 24 hours, you could be somewhere completely different.
Anyway, the airport itself had undergone a bit of a reno and was looking fresh.
Inside was a sea of glowing, modern-looking self-check-in machines. And apparently, you no longer have to take your laptop out of your bag when you go through security.
It’s the little things!
But what really caught my eye was something on the outside of the terminal…
What a turnaround!
You see, right outside the arrivals lounge was a special, dedicated Uber stand. It was the prime pick-up spot to pick up weary travellers.
Why did this catch my eye?
Well, I remember a few years back, I had a mate who was an Uber driver. He told me he could get $55 for an airport trip from the city, but the problem was the return journey.
‘Picking up a passenger at the airport is like trying to smuggle gold past the Spanish Armada,’ he told me.
The fact was, just a few years back, Uber drivers were not welcome at the airport. Taxi drivers harassed them, and airport authorities swiftly moved them on or fined them.
Huge Uber signs and a dedicated pick-up zone right outside the exit.
What a turnaround!
So what’s this got to do with anything?
Let me explain…
Public opinion always wins out
Despite the best efforts of the taxi industry and their captured political allies, the people wanted Uber.
And eventually, that public demand changed the minds of public officials, who, let’s face it, only have one goal — to stay in power.
So in a democracy, no matter how much pushback a new industry might face, eventually, if enough people want it, it’ll win.
That’s what happened with Uber, it’s what happened with Airbnb, it’s what happened with Amazon…as well as a host of other disruptive technologies.
The scepticism and pushback stage — usually fuelled by an inefficient, incumbent monopoly — is followed by the acceptance and adoption stage.
And it’s what’s happening with Bitcoin [BTC] and crypto right now.
Of course, the finance industry has a lot more power than the taxi industry. But it’s the same playbook.
The incumbent monopolies engage in a huge PR campaign to try to shake the public’s confidence in the new system (cast your mind back and think about all the ‘Uber driver rape’ stories there were four or five years ago).
They also use their influence with regulatory bodies to slow down entrepreneurs with threats of litigation.
But history suggests that despite any short-term success, ultimately, the weight of public opinion wins out.
And when that happens in finance, the effect on old money institutions will be as severe as they were for all the other disrupted industries that have fallen over the past two decades.
To be clear, although I’ve been banging this drum for around five years now, it’s not just me saying it these days.
The former CEO of Australia Post and current Latitude Financial boss, Ahmed Fahour, came out last week saying he expected to see the end of the Big Four banks within the decade.
As reported in the AFR:
‘Fahour is unequivocal that the fortunes of the big four banks are set for reversal within a decade.
‘“Without question, without question, without question, you will find that the largest financial institutions won’t be the four major banks,” he says. “Some may go on to survive and prosper. But because of the way technology is going, and the way they’re going, there is every probability that the [big] four will be challenged. It is emerging in front of our own eyes.”
‘Fahour points to organisations such as Block, Stripe and others that are using technology to muscle in on the banks’ bread and butter business, transaction banking.’
Tech companies are steadily chomping on the big banks’ lunch.
And blockchain technology — the technology behind cryptocurrencies like bitcoin — is at the forefront of this trend.
It allows the basic functions of finance to be done cheaper, faster, and in a more convenient way.
Ultimately, this is what the public want…
Politicians see the writing on the wall
While big finance still wields considerable influence, more and more politicians worldwide are starting to embrace this new world of finance.
In the US, you’ve people like former presidential candidate Ted Cruz hitching their fortunes to crypto, both literally and politically.
‘Cryptocurrency and bitcoin mining provide enormous opportunities. They are creating a vast amount of wealth. They are creating a hedge for people against inflation, inflation is a growing concern across the country. They are creating entrepreneurs in all 50 states.
‘I’m also particularly proud that my home state, Texas, is becoming an oasis for the blockchain community, for bitcoin miners, for innovators and entrepreneurs in the crypto world.’
Indeed, the Lone Star State has been welcoming crypto entrepreneurs with open arms this past year.
Governor Greg Abbott has even gone on record saying that he thinks bitcoin miners could radically improve their electricity grid by providing a strong financial incentive for power companies to invest in more capacity.
This flies in the face of the mainstream agenda attacking bitcoin’s energy use.
And bear in mind that Texas is a huge state. It would be the ninth biggest economy in the world if it were a country.
Throughout the US, from Wyoming to Pennsylvania, to New York and Miami, forward-thinking politicians of all stripes are starting to promote themselves as ‘crypto-friendly’ to their electorates.
With a reported one in five Americans having dabbled in crypto at some point, it’s no surprise politicians are starting to come around.
The same story is playing out worldwide.
A second country — the Central African Republic — made bitcoin legal tender this week.
Reports suggest a number of emerging markets, including Tonga and maybe even Mexico, are looking at following suit in 2022.
One by one, the dominoes are falling.
And although there are still strong pockets of resistance in the bureaucratic fiefdoms of finance, I feel we’ll see the financial equivalent of an ‘Uber stand outside the terminal gate’ sooner than most think.
Are you ready for that?
Editor, Money Morning
Ryan is also editor of New Money Investor, a monthly advisory aimed at helping investors take an early-mover advantage as decentralised finance and digital money take over the world. For information on how to subscribe and see what Ryan’s telling his subscribers right now, click here.