Will Offshore Banking be Relevant in a Crypto World?

 Years ago I recall reading an article about the beginnings of the Swiss Banking Act of 1934. It was ratified due to the rising threat from the Nazi regime in Germany. Many Germans saw the writing on the wall and needed to get their financial assets out of the country and into safer harbors. In response to that threat, Switzerland's banking system was a very good choice to park one's financial capital.

However, to ensure that Hitler's goons would not force any Swiss banker to reveal the identity of any account holder, anonymous accounts were created. Essentially the account holder would not have to divulge any personal details to the bank and his assets would simply be tied to a numbered account. A secret code known only to the owner of the account and the bank would act as the "password" to authenticate the rightful account holder to the bank. It was such an elegant and simple system and it worked for decades.

Unfortunately, the world keeps on changing and so do politics. Since the formation of the Organisation for Economic Co-operation and Development (OECD), and the September 11th attacks on the World Trade Center, a growing international movement is afoot to do-away with financial privacy all in the name of fighting terrorism (or drugs or child slavery or <name your boogeyman>).

Nowadays, there are no such things as anonymous bank accounts and offshore banks (even in Switzerland) are co-operating with international governments (mainly the US) to combat money laundering.

Again, the reason given is to fight the terrorists, but there have been many cases where prosecutions are brought forth against tax evaders and business people, not terrorists. The charges have nothing to do with sponsoring terrorism, yet they use the same anti-private banking laws to put these people on trial.

What strikes me as strange is that there really is a very high resemblance to the practices of the Nazis and current governments. In a word, extortion. The similarity is stunning. Nazis wanted to extort the Jews and rich of Germany in order to fund the regime. Is there any difference with our present-day governments? Except, instead of targeting the Jews solely, they target anyone who wishes to keep his financial matters private.

Now more than ever, the world should be screaming for financial privacy in their banking affairs. Instead, most simply accept the propaganda and convince themselves they have nothing to hide so it doesn't affect them.

I believe the current situation is only practicable under a reserve currency system such as we have today with the US dollar. You see, the US government can put immense pressure on non-compliant banks across the globe. If a bank refuses to play ball, they are disconnected from the financial system as most major transactions settle within the US banking system. And if you as a bank are excluded from the transacting in US dollars, you are out of business.

So it seems evident to me that offshore banking is nearly dead for all but the super rich and highly connected.But all is not melancholy. Thanks to Satoshi and the crypto community, we have a revolutionary new alternative that is many times better than traditional offshore banking. Crypto-currencies!

In just eight years the popularity of bitcoin and newer crypto-coins has exploded. I believe that this will be the death knell for the banking system as it stands today. Banks will either have to evolve or die. Maybe once they accept the notion of crypto-currencies, they can do what they traditionally used to do: keep healthy reserves and lend out money profiting on the interest rate spread [Note: that's a story for another day].

Think about it: if the majority of the world adopts a crypto-currency such as bitcoin as its reserve currency, the game is over. Everybody can be his own bank with 100% financial privacy. Having such is of the utmost importance and effectiveness towards diminishing the megalomania of the next psychopathic dictator.