When the US government decided to steer away from the Gold Standard and adopt a floating currency back in 1973, our paradigm of personal finance and lending shifted into the mysterious credit system. Comedian and current The Daily Show host, Trevor Noah bemoaned the over-indulgence of the American credit history in a hilarious bit and he might be right.
Due to various other factors, notably lax regulation as well as corrupt bankers, the banking model shifted to a profit-guzzling one wherein the customers’ needs became obsolete. Bankers indulged in questionable trading activities, causing several financial meltdowns. The CDO-fueled housing bubble crisis of 2008 forced global leaders to bring down interest rates paid out by banks to allow them to recuperate from their losses. This led us to near-zero interest-earning rates but credit-card and mortgage lending rates remain astronomical (in comparison).
Thus, current banking systems are unfair and broken!
This faulty banking system does not work for most of us but it is particularly bad for the young adult population that consists of millennial's and Generation X-ers. So much so that millennial's account for the largest demographic of the total “under-banked” people in the U.S.
Young adults are scrutinized and neglected by banks because they don’t have established credit histories (due to their young age). They are also unable to accumulate savings due to the low interest rates, the high costs of living in big cities and insufficient pay increases (to compensate for the other rising costs). The lucky ones who do have a credit score and a credit card end up paying interest anywhere from the low 20’s to mid-30’s, which ends up consuming most of their disposable income. Hence, the birth of the millennial crisis.
The solution to this millennial problem is to revolutionize the financial lending system. And, this innovation is provided by the blockchain technology because it is transparent, decentralized and non-discriminatory. The blockchain allows communities to form and act in each other’s best interests.