Banklessness: How to Be Your Own Bank With Crypto

The idea of completely detaching from traditional banking might seem radical, but it’s increasingly becoming a reality for many. Crypto allows you to be your own bank. In a nutshell, when you send or store your money to a bank, you grant them custody over your assets. They can then choose to do whatever they want with your money within the regulated framework of their operations – such as lending your money out without your permission, and ceasing your withdrawals in times of financial crisis. 

Banklessness is an alternative solution to the problems with financial institutions and procedures of today. It allows you to gain full control over your financial assets forever. However, going fully bankless is not without its challenges. It requires a deep understanding of digital assets, blockchain technology, and cybersecurity. Users must be prepared to take full responsibility for their financial security, as there’s no central authority to fall back on in case of mistakes or fraud. 

Why You’d Want to Go Bankless

Banklessness is a shift away from not just the idea of traditional finance, but all the burdens that come along with it. 

When you deposit funds in banks, they assume ownership, lending your money at will and exposing you to potential mismanagement risks. Plus, traditional financial institutions also exclude vast populations through geographical, documentary, or financial barriers, and may also compromise your privacy through data collection and sharing. 

Banklessness sets you free from those caveats, financially empowering people to take control of their own assets. But is going truly bankless even possible? Let’s dive into why crypto is an interesting solution when it comes to banklessness.

How Crypto Relates To Banklessness

Crypto offers a solution for going bankless for a few key reasons. 

Resistance to Inflation

Before crypto, banklessness meant hiding stacks of cash under your bed or in a hole in the garden. The problem is with this method is that, firstly, someone could find it and steal it, and secondly, fiat currencies are controlled and issued by centralized entities, governments, and banks.

However, governments print money all of the time, and banks go bust and get bailed out by governments, too. This causes inflation, as the increase in supply erodes your purchasing power. Year after year, your fiat currency devalues as its maximum supply increases.

Decentralized currencies such as Bitcoin have a fixed supply. This means Bitcoin is inherently more scarce than fiat currencies, thus unaffected by world inflation. While Bitcoin is more volatile in the short term than most fiat currencies, its trajectory over the past ten years has been much more favorable than most government-issued currencies.

Decentralization and Ownership

Unlike traditional currencies, many cryptocurrencies are decentralized. On decentralized networks, you secure your cryptocurrency with non-custodial wallets, meaning you’re the only one with access to your funds. Your non-custodial crypto wallet issuer can’t access your funds and lend them out.

Even if your wallet provider goes bankrupt, you will still be able to access your funds. This contrasts with storing your money in a bank, where if the bank fails, your funds may disappear along with it. Only by using a non-custodial account on a decentralized blockchain do you have true ownership over your financial assets. 

Permissionlessness and Accessibility

Bank transfers are heavily regulated and rely on international partners with their own sets of regulations to send funds across borders. This has a huge impact on the accessibility of transfers. Including who is able to access them, where funds can be withdrawn, and the speed of the transaction.

In contrast, crypto makes it easy to send money beyond borders without the need for intermediaries or currency conversions. Anyone with an active internet connection can make a crypto transaction. This is true even during times of financial crisis, geopolitical turmoil, or regulatory challenges. Crypto is borderless and permissionless. Anyone can create blockchain accounts and use them to transfer assets without revealing their identity, country of origin, or any other sensitive personal details.

Plus, unlike international bank transfers, which can take several hours or even days to process, crypto transactions are much faster; their speed isn’t affected by the sender or recipient’s location. 

The Biggest Challenges of Going Bankless

So now you know why crypto can be a great help when going bankless, but in a world built around conventional TradFi infrastructure, banklessness comes with its hurdles. 

The biggest challenge of going bankless is using crypto in the everyday world. 

Crypto acceptance is growing among businesses of all sizes, enabling direct crypto transactions in plenty of retail and hospitality businesses you likely know. Some examples include Gucci, Twitch, Microsoft, and even KFC. However, as of today, most shops don’t accept crypto as legal tender. 

Fortunately, there are a few ways to tackle this challenge and use crypto for everyday purchases anyway.

How to use crypto for everyday payments

Let’s take a look at what you can do to buy everyday goods with crypto.

Use a crypto debit card

Crypto debit cards bridge digital assets and everyday commerce, linking to crypto wallets instead of banks. They convert crypto to fiat for purchases and function like normal debit cards. 

Typically crypto debit cards are issued by centralized entities, which could potentially impact your custody, so it’s important to research the terms of its use. They may also charge conversion fees or percentages of your transactions in return for the convenience of carrying crypto in your pocket.

Use a crypto ATM

Crypto ATMs are physical machines in physical locations that let you buy and sell crypto with cash. If you want to buy crypto, they will typically issue you a paper wallet with a QR code containing your private keys, or alternatively they may let you load your cash into a wallet of your choice, in the currency of your choice.

Crypto ATMs typically charge higher fees (7-12%) than online exchanges but come with the added benefit of self-custody and the protection of your identity. Due to their challenges in tackling money launderers, some countries and regions have banned crypto ATMs, so they may have limited availability. 

Even if a crypto ATM is available in your area, verify its legitimacy before using it to avoid handing over your cash for nothing in return.

Use payment services that accept crypto, such as PayPal

Mainstream payment services like PayPal now support cryptocurrencies, allowing users to buy, hold, and spend digital assets within familiar platforms. This integration offers a user-friendly interface for crypto newcomers and enables crypto-to-fiat conversions.

However, it’s important to note that using a centralized service such as PayPal—especially if using its custodial account—is not truly going bankless. If the business that issued the wallet fails, your funds could be at risk.

How To Go Bankless with Crypto

Your journey to banklessness starts with reducing your dependence on centralized institutions and protecting your financial assets. Here are some key considerations to take into account.

Use a Non-Custodial Wallet

Exchange wallets are popular for buying cryptocurrency, but they don’t offer ownership of your assets. And they aren’t the only crypto platforms with a custodial approach either. Centralized lending and staking platforms will also affect your custody of your assets. If you want to go bankless, do your own research before using any platform offered by a centralized entity, as it may ask you to hand over custody of your assets.

Non-custodial wallets, such as software or hardware wallets, give you control over your private keys, and thus your funds. This is the essence of being your own bank: you’re not relying on any third party to access or manage your assets. Taking this approach eliminates the risk of a centralized entity freezing your accounts or mismanaging your funds. Only you can control how to manage your assets.

Avoid Centralized Platforms and Assets

You may think that with a non-custodial wallet, you’re set to go bankless. But going truly bankless also means considering which assets you interact with and how. 

For example, while stablecoins might seem like the perfect asset for those going bankless due to their lack of volatility versus fiat currencies, they’re simply not. Fiat-backed stablecoins have centralized issuers and rely on reserves. Centralized issuers who can decide to issue more stablecoins, or can mismanage their distribution, and reserves that are stored in banks. 

What’s the use of having self-custody of your assets if they are only representative of assets stored in a centralized bank? This introduces counterparty risk: if the bank fails, the stablecoin fails, your assets depeg from their original value and you’re left holding a bunch of worthless coins.

Prioritize your Security

After facing all of these challenges, what happens if you get hacked? Pretty simply, your funds will be gone, and there will be no one to call to get them back. 

With a non-custodial wallet, only you have control over your assets because you manage your own private keys. If anyone else gets access to your private key, it’s game over, so prioritizing your security when going bankless is paramount. 

To keep your keys secure, you’ve got to keep them offline, away from potential hackers on the internet. Hardware wallets are the perfect solution for offline storage as they also offer an interface so you can interact with the blockchain. Many of them also employ methods of resisting physical attacks too. 

For example. Ledger devices use Secure Element chip, a certified chip resistant to physical hacks. Ledger devices also drive their secure screens and operate their secure OS on this chip, meaning no matter the Ledger device, you can trust the transaction details the device shows.

Banklessness: On the Road To Financial Freedom

Banklessness used to be challenging, but with the rise of crypto this decade, it’s no longer about fiat money hidden in reserves with layers of secrecy and outside of public control. Crypto offers an alternative solution to finance. A solution that offers true ownership of your assets with the flexibility and speed of digital networks. No more waiting in lines, cross-border fees or reliance on centralized entities. Your finances are truly under your control.

Ledger device hardware wallets make banklessness a possibility, offering security in an ever-evolving blockchain ecosystem —without compromising your custody.