Why You Don’t Actually Own The Money You Own

Open up your mobile banking app, and take a look at the balance. Whatever number stares back at you, that’s how much money you own, right? You worked hard for that money, you saved hard, and you may have even taken the risk of investing to help that number grow. It’s your money. Except, it isn’t really.

Fact is, you don’t actually control your bank balance, and that means you could instantly lose access to it. The cold, hard truth of traditional finance is that the balance you’re looking at isn’t a pile of cash. Rather, it’s simply an entry in a digital database, letting the bank know how much money you’re entitled to spend should you try to do so. 

The bank controls your money, not you. The moment you deposit funds, you’re no longer the owner. What you are is really just an unsecured creditor. Your money is not stored in a personal vault, it’s now owned by someone else, and they get to decide if they want to let you have it back, or not. Modern banking operates on a “permissioned access” model, and that permission can be denied.

It’s an illusion of ownership

Banks thrive on this illusion. People assume that because they have a plastic card in their wallet, they have full power over their wealth. But in reality, every transaction or ATM withdrawal requires approval. If you swipe your card to pay for a cup of coffee, the bank and its intermediaries use a bunch of algorithms to decide if you’re “allowed” to spend your money. 

Banks can do this because they own the financial infrastructure. They manage the databases and they make the rules. It means the bank elects if you’re able to survive in the modern world or not. Should it decide you’re doing something suspicious that goes against its rules, it won’t ask questions, it will just lock you out. 

We’re told that banks have these systems in place to prevent money laundering and fraud. But because blunt, hamfisted algorithms are making decisions, far too many innocents get caught out. 

Consider the digital nomad traveling through Southeast Asia. As they’re exploring the temples and relaxing on the beaches, they’re also paying for things. Hotels, cash withdrawals, card payments for meals and so on. For the digital nomad, it’s the adventure of a lifetime, but for the bank’s algorithm, all it sees is “high-risk” activity. Without any warning, the digital nomad’s money is taken away, their card declines, and they cannot make a withdrawal from the ATM. Suddenly, they’re stranded in a foreign city, unable to pay for the food they’ve just eaten or settle their hotel bill. All because of some ignorant piece of code. 

Small businesses are equally at risk. If a company starts sending thousands of dollars to a new supplier in Eastern Europe, it could find itself losing access to its entire cash flow in an instant, followed by demands to “verify” those transactions. The bank won’t rush to try and rectify the situation, and may insist on seeing all kinds of documents to verify those payments were above board. If that means the business is unable to settle invoices or make payroll on time, hard luck. 

Banking operates on flawed model

Financial institutions insist they’re trying to fix these problems with more innovative AI algorithms, and say that if people are more patient the false positives that cause so much harm will eventually go away. But this isn’t true. Because these mistakes are the symptom of a structural flaw that’s inherent in the “permissioned access” model. 

Morally, the banking system is fundamentally broken. No matter how fast a bank moves to fix errors, the reality is it’s not giving people access to their money because it has decided it doesn’t want to. Banking is built on a system of gatekeepers rather than a model of ownership. Improving this system is like designing a more comfortable cage, where the ability to enter and leave it is still dependent on approval. 

True financial independence is the only way for people to avoid falling victim to banks’ inefficient algorithms. That means moving their funds to a system that offers full self-custody, away from the model of permissioned access. 

When someone keeps their money in a self-custodial wallet, they finally hold the keys to their personal wealth. No algorithm can stop them accessing their funds on a whim, because they never need to ask permission to make a withdrawal or send a payment. The database entry that records their balance isn’t owned by a bank, instead, it lives on a distributed blockchain that nobody owns. 

The road to self-custody

The challenge for self-custody and blockchain is that it sits outside of traditional financial rails. For self-custody to become the norm, it needs to be integrated with the banking system. Users need a way to maintain control of their funds and also be able to spend them at any coffee shop or hotel. They need to be able to pay their bills and invoices from their self-custodial wallet instantly with a single, efficient click. They need a world where the rails are accessible, and the keys remain theirs. 

By building this world, we can ensure that nobody needs to “ask” to access their funds. Instead, everyone will become an equal participant in a financial system that’s designed to serve, rather than control them. It will eliminate the omnipresent risk of the middleman that has plagued finance for centuries. When someone is requested to make a payment or send some funds, only they can decide whether or not to go ahead with the transaction, and no shoddy algorithm will ever be able to stop it. 

No one should have to settle for the “promise” of money. Everyone deserves true ownership. But that will only happen if people have a way to maintain full control. Modern banks don’t let anyone else hold the keys, and until that changes no one will ever “own” the money they imagine they have.